￼You’ve finally made up your mind and you’re ready to ditch the rental market and become a homeowner. Owning a home has many advantages, including the freedom to personalize your space and the opportunity to build equity and increase your net worth.
Before you jump head first into the process there are a few things to keep in mind.
Don’t make a hasty decision
Don’t rush the process. Get a feel for the market and understanding the full and complete process. There are a lot of details to take in and you don’t want to take any of it lightly. From property inspections to mortgage loan fine print – you want to have a thorough understanding before you get started.
Remember to budget
Most of us aren’t in a position to buy a home outright, so it’s important to consider your overall financial picture. Before you start looking know exactly what monthly payment you’re comfortable with. The reason that you being firm on your maximum monthly payment is so important is that you may actually qualify for more than what fits your budget. Don’t let ‘shiny object syndrome’ steer you towards being house poor.
- Compare lender rates (yes, different lenders can have different rates for the same loan programs)
- Chose the loan program that works best for you
- Check out programs that provide the best terms (i.e.: NACA or FHA loans)
- Stay true to your monthly payment and not what the lender says you qualify for
Tip: Check out mortgage rates here: https://www.spencersavings.com/loans/mortgages/todays-mortgage-rates/ – you want to be in the know.
Hire the right agent
Your agent is extremely important to a smooth home buying process. They are there to represent your interests, make sure that you have a strong understanding of what to expect, and negotiate on your behalf. You’ll be working closely with him or her, so it’s essential to find someone that is a good personality fit, is knowledgeable of the area, and has a great reputation for buyer representation.
What type of property works best for you?
When we think of homebuying, we usually start thinking of single-family homes. While that might fit your needs if you want more space and room to grow, there are other options to consider. For example, do you want minimal maintenance? … or concierge type amenities? If so, you may want to consider a condo or townhome. Just keep in mind that each option has its own pros and cons. And get clear on the details: neighborhood covenants and restrictions, homeowners association fees… etc.
Know the area… very well
It’s not just the right neighborhood you’re looking for, the community is just as important. Know the local crime statistics and quality of schools (yes, even if you don’t have kids this is important for resell value). How close are you to major roadways and shopping?
Tip: You definitely want to drive through the neighborhood on different days and at different times. Pay attention to things like foot traffic, noise levels, and the overall upkeep and pride of ownership in the area.
It’s okay to negotiate
Not many people truly understand how much can be negotiated during the homebuying process. And while this is subjective to your local real estate market, you want to be sure that you’re not missing out on major savings. Have a thorough home inspection to uncover any major repairs that the seller may need to cover, or provide an allowance for. Is the seller willing to pay towards your mortgage closing costs? Is the home in desperate need of updating or renovation? Ask for a decorating allowance. How many days has the home been on the market? Long market time could mean the seller is ready to be a little flexible on the price.
Tip: There are other things that you can negotiate (especially if you’re in a buyers market). This post covers a few: https://www.huffingtonpost.com/entry/9-things-you-can-negotiate-when-buying-a-house
The homebuying process can be stressful and overwhelming. You may have unexpected circumstances, like a seller that decides that they don’t want to sell their home after all – right in the middle of the transaction. Yes, it happens. You may have found your dream home only to discover that it has major foundation damage that is too costly to repair. Or your mortgage financing may fall through – even though you had a rock-solid approval with a reputable lender.
Remember that it’s just a process… a lengthy one, but still just a process. The better you understand about the homebuying journey, before you start, the less stress you’ll experience along the way.
Tip: Here are a few tips for staying stressfree while buying a home: https://www.thebalance.com/how-to-cope-with-home-buying-stress