Now that spring is in the air (along with a lot of moisture) people are increasingly expressing interest in entering the real estate market as buyers. If the Federal Reserve is successful in calming inflation, then mortgage interest rates ought to start a downward trend toward the 5% range when industry “experts” think there will be a surge of real estate interest.
Accordingly, if there might be a real estate transaction in your future, smart money says to be ready for it by preparation. The below article by Sophie Lee is a pretty good guideline to that end; preparation is the key to success.
Preparing to buy
Customer Marketing Manager at ListReports®
Whether it’s your first time buying a home, or you’ve done it many times before, there are always unexpected hurdles and things we wish we’d known sooner. The experience of buying a home can vary greatly depending on market conditions, local nuances, or loan programs used. Here are some steps you should take and things to know before committing to your next property.
1. Gather necessary documents ahead of time
You’ll typically need bank statements from the past two months, detailing funds entering and leaving your account. A pre-approval letter will also help things move along more quickly because you’ll know how much you can afford, and which homes you should be considering. Lenders like to see financial stability, so it’s ideal to have a steady income to indicate credit worthiness.
2. Find a trusted real estate agent
A great relationship with your agent can make your experience a lot easier and more fruitful. Ask your friends and family for recommendations or give your local broker a call for help! Take your time finding the right match, as you’ll be spending a lot of time with them and having the right guide is imperative – especially as a first-time buyer.
3. Distinguish between your needs and your wants
Make a list of must-haves and nice-to-haves! Know what you’re willing to compromise on, and which drawbacks will immediately eliminate a home for you. Kitchen appliances or flooring shouldn’t be a deal breaker, as these things can be easily replaced over time. Having a list of priorities saves you time because you’ll be able to whittle down your list when it comes to submitting an offer.
4. Be aware that you’ll need more than your down payment
Talk to your agent to understand the costs involved in buying a home. You’ll need to set money aside for your down payment and closing costs, and consider ongoing fees associated with the property, such as property taxes, HOA fees, homeowners, and mortgage insurance etc.
5. Know how much you can afford
Getting pre-qualified by a loan officer is the most important step in any home buying journey. Avoid looking at homes until you know how much you can borrow. This will prevent you from falling in love with a home that is out of reach. You want to be able to afford a comfortable lifestyle, not just an empty shell that you can’t afford to furnish!
6. Consider where you want to live
Do you need good schools nearby? Are you okay with driving everywhere or do you prefer somewhere more walkable? Do you need to live near your office or relatives? Location impacts many of your daily activities and can enhance or hinder your lifestyle.
7. Ask yourself: Is this a forever home, a flip, or a temporary equity-building expedition?
If you’re trying to get your foot in the proverbial real estate door, you could consider buying a townhouse or a condo. You’ll still elevate your investment portfolio and build equity. Don’t feel pressured to buy a single-family detached home immediately – especially if you don’t need the extra space or don’t plan to house hack.
8. Consider the condition of your local real estate market
Learn whether you are in a buyer’s or seller’s market by doing your research and initiating conversations with local, trusted real estate agents. This will give you an idea of how demand may or may not be affecting prices and give you a leg up when submitting offers.
In short, there are many factors to consider when buying a home, but a good agent will guide you to the best of their ability, helping make your journey to home ownership as smooth as possible.
This article was first published in The ListReports® Blog, https://blog.listreports.com/.