Hey there! Taylor here, sharing with you how to get the ball rolling on buying a home and my tips when you start shopping. First off, CONGRATULATIONS!!! Starting the home buying process is a big deal and as you know the rewards and benefits of being a homeowner are exponential.
Before diving in, I want to remind you that this experience is different for everyone and these simple tips are here to help jumpstart and ease the process. Buying a home can be intimidating and feel overwhelming quite quickly, which is why I decided to break it down and keep things simple! Most importantly, this is an incredible accomplishment and it should be fun, exciting and rewarding so let’s get started!
Decide + Plan Your Mission
Now, is when you should start thinking if home buying is the right move for you. Are you relocating soon? What’s your timeframe on your current living situation? (Is your lease up soon? Is your family growing and you need more space? Are you ready to invest? Want to build wealth? etc. etc. etc. Look at all your options and plan accordingly.
Setting the intention of buying a home is important. How often do you execute a mission without a plan? (Successfully that is…) If you’re ready to tackle the home buying process start gathering your documents and let’s game plan!
Unless you’re purchasing your home with cash, you’ll have to take out a loan. Some necessary requirements in the loan approval process include having sufficient, stable and consistent income to afford monthly payments, utilities and cost of living. Your credit score can also make or break your loan approval.
Although you may still be in the early stages of home buying, after setting your timeframe and evaluating your financial situation, you should now pick a Realtor that you trust and meet with your Loan Officer to gain clarification and possibly get pre-approval.
Save $$$ + Build Credit & Pay Debts
There are quite a few expenses that go into purchasing a home such as providing a down payment and paying for required home inspections, necessary repairs, appraisals and closings costs. (We’ll dive into those things later on)… The main point, is that you START saving your money!
a brief breakdown:
Home inspections can range from $350+, appraisals are typically $600+ and your closing costs are anywhere from 1-2% of your purchase price. Down payments are typically anywhere from 0%, 3%, 5% and 20%+ down depending on the type of loan you will be using.
Building your credit score is key to getting a loan that you desire. Building your credit also shows your lender/bank that they can trust you to make payments on your mortgage and not default. Unless you are new to credit, It’s extremely important to NOT open any new lines of credit in this stage of home buying because too many credit cards/loans could affect getting approved for a home loan. If you’re not sure what your credit score is or how to keep tabs on it, I recommend the credit karma app linked here.
Bye Bye Debt
This ones simple folks, pay down your debts! If you have college loans, car loans or credit card debt it’s important to minimize this amount if possible. Lenders will look at your debt-to-income ratio and if it doesn’t meet a manageable percentage you may not be approved. In simple terms, the less debt you have, the greater chance you’ll have of being pre-approved for a loan at a higher amount.
Pick your Realtor & Meet with your Loan Officer
We touched base on this earlier but at this stage you should be working very closely with your trusted Real Estate professionals now. This is the fun part, you should be actively looking at homes and open houses and making decisions on your needs vs. wants. See below for my recommendations while on your house hunt.
1. Location, Location, Location!
You can renovate your interiors, you can redo the landscaping but you can’t pick up your house and plop it down anywhere you wish. Location is sooooo important because it plays a big factor in the price of the home. “Does it have an ocean or mountain view?… Is it on a corner lot or cul-de-sac?… Is it in a safe/desired neighborhood? Is it facing a loud busy street?” These are some questions I recommend asking yourself when shopping for your new home.
2. Buy under the market
Consider if you need the stainless steel appliances and renovated everything… Also consider if you have the time, manpower and funds to renovate while living in your new home…Often times older properties with dated features are priced lower to attract buyers, the same way that newer homes with updated and renovated features are listed at a higher price tag. Make a list of what you want and what you need in your new home to help narrow down your options.
Obviously, buying under the market (purchasing a home in the cheaper price range) compared to others in the neighborhood could really help your potential resale value and make it a great investment.
3. If you have the cash, put it down.
Making at least a 10% down payment will make a difference in your monthly payment, especially if interest rates are on the rise. The best way to save $$ on interest is to put a large chunk of change down to cover some of your principal balance and pay off your home as quickly as possible.
4. Think longterm (5+yrs)
Where do you see yourself in five years? More than that? Ok it may be hard to imagine but it’s something you should think about because purchasing a home is a long-term commitment. Most mortgages are for 15-30 years, and although you may not see yourself living there for that long, you very well may earn some equity in 5-10. Keep in mind your plans for the next years to come and if the home you’re considering fits your lifestyle.
5. This is your FIRST home it may not be your FOREVER home
Keep in mind that you will probably sacrifice a few things and it’s ok to not have everything you want in your first home. However, it’s important to remember that this initial investment can help you get to your next chapter! Go with your gut and stick to it!
Got questions? I’ve got answers, as a licensed real estate agent i’ve helped multiple families buy their first home. Are you ready to take the first step? Let’s talk about your goals here!