TL;DR–Diligence Pays Dividends
You’ve made the decision and you’re ready to buy a house. Congratulations! Whether it’s your first or fifteenth property, a new home is an exciting investment. It’s the beginning of another chapter, sometimes including a growing family, new friends, or even a new city or town.
Home buying has its challenges, though, particularly if (so to speak) it’s your first time around the block. Below, I’ve compiled five recommendations to help you take charge of the house hunting process and get you into your new place:
Get to know your target market.
Pinpoint a county, city, or even a neighborhood that you’d like to live in, and then check out what’s on the market. I recommend doing this first, because it’s easier to adjust your expectations than your budget. You can explore your options online, in person, or both—which I also recommend, so that you don’t feel catfished because the house you fell for on the internet turns out to be in an area you hate.
You’ll begin to get a sense of the types of homes that are available in various price ranges—and once you know what you want, it’s time to get to know yourself a little better. Which brings me to…
Understand your financial situation.
I cannot stress this enough. Take the time to dive into your accounts and get an accurate picture of what’s going on. If you’re married, or buying with another party, this is the time to have a frank discussion about dollars. While it might be uncomfortable, it will save you from future surprises that could prevent your closing.
Some key areas to review:
- Your income–both gross and net; this will help you think about what you could get approved for vs. what you can comfortably afford
- Your credit score AND history
- Any debt—revolving or installment
- Your current rent payment, and what you think you’d be comfortable spending monthly on an investment of your own
- How much you have for a down payment, and the source of those funds
It isn’t imperative, but also I strongly recommend taking your financial pulse before contacting a real estate agent. It will make your home search more productive and allow you to identify any areas you’d like to improve before approaching the bank for a loan.
Finally, don’t assume that a student loan balance or less-than-perfect credit will preclude you from getting a mortgage. There is an option for just about everyone, so it’s important to find a financier who is willing to work with you to obtain a responsible amount. Speaking of which…
Get pre-approved by a quality lender.
Repeat after me: “Pre-qualification and pre-approval are not the same thing.” Good. Now say it again.
I cannot tell you how much stress and gray hair I would have avoided had I understood this point when I bought my first property. Learning Moment:
Pre-qualifications are a quick-and-dirty estimate of the loan amount a bank might be able to approve you for if all the stars align. For some, this might match the final approval amount—but for others (like me), further analysis of income, credit, down payment, or any number of other factors could result in a very different number. Trust me, you don’t want to get your heart broken because you can’t afford as much as you thought, and you really don’t want to be in the position of delaying your closing because you’re trying to get financing in order at the last minute. Understand the pre-qual for what it is—a tool to give you a general sense of your buying budget.
Now let’s talk about pre-approval (hint: you want this one if you’re a serious buyer): Pre-approval takes a bit longer, but it’s a conditional commitment from your bank that they’re prepared to offer you a specific loan amount. Once you’re pre-approved, you can have a fairly strong expectation that you’ll be able to close on time and with minimal hassle.
Find an agent who understands you—and be willing to think outside the box.
You’ve made a huge decision and are preparing to make an even bigger purchase. The process can be thrilling, emotional, and nerve-wracking. This is going to be your home, and you deserve to work with someone who understands that.
Find a person you click with, who knows your market, and who, most importantly, you trust. We’re called agents for a reason: it’s because we represent you. Don’t be intimidated into forgetting that.
As an aside, once you find that person: Listen to his or her suggestions about options you might not have considered. You might be surprised to find a hidden gem.
You will probably have to compromise on something.
Finding a home that matches every item on your wish list might be difficult. You'll usually have to be flexible with at least one category–price, location, amenities, or finishes. It may make sense to rank those four priorities and decide what you can work with and what needs to be in perfect order. Again, if you're buying with someone else, make sure you understand one another's goals.
Now, go forth and conquer that house hunt! Rather than letting it rattle you, try to enjoy the process–you're getting ready to make a change for the better.
Need help finding your dream home? Contact me!