Are you ready to purchase a new home? While your initial response may be “YES!”, you may not be as ready as you think. Before you hit your first open house, you should make sure you’re actually ready to purchase a home. While far from conclusive, the following points should serve as a checklist of what you need before you consider yourself ready to buy a home. Preparing now can mean avoiding delays later that could cost you your dream home down the line!
- Know what you’re looking for: Deciding to move is a big deal, and reaching the conclusion that it’s time to make the move now can take a lot of thought and consideration. Whether you’re looking to buy your first home, looking to upgrade to a property with more space, or just looking to make an investment, you need to do your due diligence to know what you’re looking for. Compile a list of your wants and needs for the new property, and begin searching in your area for neighborhoods that might work for you. This will help you get an idea of how much you’re looking to pay for a home, and can impact the type of financing you’ll want to use.
- Clean up your credit: your credit score not only impacts your ability to secure a mortgage in the first place, but it will also determine what interest rate you’ll pay. Start by finding out what your credit score is. You can request a free copy of your credit report from each of the three major credit reporting agencies- Equifax, Experian, and TransUnion. If you’re worried about your credit score, work towards raising it by paying all your bills on time and keeping your balances low. Pro Tip- don’t be afraid to speak to an experienced mortgage professional before ever applying. They can advise you on which aspects of your credit report may make the biggest impact on your overall score, and can give you better information on what your credit score should be in order to be approved for various amounts.
- Save Up: A down payment isn’t always necessary, but it will almost always improve your chances of not only securing a loan, but also at better rates with lower monthly payments. It can also help you avoid having to pay for private mortgage insurance (PMI). 20% is generally considered a good down payment, but you’ll want to save more than that, if possible. Market prices can fluctuate, and it can be helpful to have a little extra to negotiate with. Also consider the benefit of having emergency funds- if your move is delayed, you may need the money to rent a hotel room in the meantime. While your new home has been inspected, you should always be prepared for the possibility of sudden repairs popping up once you’ve moved in- you’ll want the cash to make any fixes immediately!
- Get pre-approved for a mortgage: Getting approved not only says “I’m ready” to sellers, but it also lets them know you are a serious buyer. While prequalification is good, it’s little more than an estimate of what you could borrow. Pre-approval is a more concrete sign that you’re good to go, and the loan will be approved. It also shows sellers that you’ve let your entire financial situation- debts, income, assets- be considered by a bank…again, showing that you’re a stand-up buyer who’s ready to make a legitimate offer. Being pre-approved means your offer is favored against others without approval. Sellers looking to get through the purchase process quickly will appreciate your willingness to get pre-approved.
- Follow-through: It’s one thing to find a nice house you like in pictures or video, but another entirely to go there and get a feel in person. Before you consider placing an offer, visit a property multiple times, if possible at different times of day and on different days. For example, is the home you like on a street drivers use to dodge traffic on Main Street. Will you encounter school drop-off or pick-up congestion that will make getting in or out of your driveway a hassle? How about early morning church bells or that fire house whistle? Consider all these factors, and anything else that may appeal to you, or bother you personally. If you think its love at first sight, remember that a home is not your dream home if it includes deal breakers that create an unsafe, negative environment for you or your family.
- Find the right real estate agent: Whether this is your first or fiftieth home purchase, it’s still wise to enlist the help of a buyer’s agent. After all, it doesn’t cost you anything out of pocket typically, and a good agent will help you by sharing their inside knowledge not only of the neighborhood, but also help establish what’s a good value in your price range. A good agent will be happy to help answer any questions you may have. Their experience is priceless! Plus, they’ll arrange showings on your behalf and they may also be able to alert you to red flags you’d otherwise miss while touring properties. These seasoned experts will be happy to refer you to other pros you’ll want on your side, such as home inspectors, attorneys, and lenders.
Buying a home can be a long, involved process, but following this advice can help you avoid much of the common frustration associated with buying a home. Prepare in advance and don’t waste your time when it comes to finding a home that meets your needs, securing financing, and making the move. Avoid buyer’s remorse and end up with a house you’re happy to call home!