1. Preparing to Buy a Home
Preparing to Buy A Home
Buying a home is an exciting but sometimes stressful and complicated process. Your home buying journey will be smoother and more enjoyable if you answer these questions first.
What's Your Why?
Why do you want to own a home, or sell the one you currently own and buy a new one? Here are some of the most common reasons:
- To own a home where you can live the next chapter of your lives.
- You need a larger home for a growing or multi-generational family.
- To be closer to family and friends.
- To have a home with less space to care for and maintain.
- For the financial benefits of homeownership.
What's Your Timeframe?
While you could find a house and close on it in just a couple of weeks, when you take time to plan, do your research and get your finances in order, the smoother and less stressful buying a home will be. Not being realistic is the single most significant factor that drags out home buying and causes tension in family relationships.
Three to four months before your ideal closing date, we’ll start showing homes that you’re interested in enough to consider buying.
What's Your Budget?
How much do you want to spend on your home? What will that get you in your market? In deciding how much you'll spend, what are your priorities for location, home size, or amenities? We often meet with future buyers many months before they plan to buy to help them sort out these essential questions.
You can also start the process by using an online affordability calculator. You input your income, debts, and living expenses to learn what you can likely afford to spend. Then an online mortgage calculator will give an estimate of monthly payments, including insurance and taxes, at different price points.
Remember to plan for expenses beyond mortgage payments, taxes, and insurance. Especially if you're a first-time home-buyer or you're moving to a new area of the country, you need to investigate the total cost of ownership of a particular property.
Homes in places with cold winters have higher maintenance costs than homes in year-round sunny climes.
Older homes may have significant future expenses like the cost of a new roof or replacing heating and plumbing systems. New construction can have upfront expenses for finishing after purchase, like decorating and landscaping.
Do You Need a Mortgage?
It would be frustrating for you to start your home search without knowing the amount that you can finance. To be taken seriously by sellers and their agents when you write an offer on a home, you will need written verification from a reputable lender that you can close.
Pre-Approval Letter: This shows that a lender has run a credit check and verified your income and assets. It shows that you likely have the financial resources to purchase a home in a specific price range.
Pre-Qualification Letter: This letter is a lower level of information about the loan you can afford. It shows that you’ve talked with a lender who has run a basic credit check and spoken to you about your financial situation.
How's the Market?
Is the area you're looking in a buyer's market, a seller’s market, or a balanced market? We describe a market by how long it would take to sell all the homes on the market at the current rate of sales. We call this "months' supply of inventory."
In a balanced market, there is a steady stream of buyers for the number of homes for sale. Prices are stable, and the houses that sell are on the market for about four to six months.
Buyers have the advantage in a buyer's market. When there are more homes for sale than there are buyers, sellers are often more willing to negotiate if their home has been listed for more than a few months. A buyer's market has more than six months of inventory.
In a seller's market, sellers have the upper hand because there aren't enough homes to meet buyer demand. When buyers compete in a tight market with limited inventory, sellers are pickier about offers. A seller's market has less than four months' supply of inventory; homes often sell at or above list price, often in multiple offer situations.
We built our business on market analysis and client education. We help our clients understand market trends, prices, and how to make the best possible decisions. We’ll do the same for you, too.
Do You Currently Own a Home?
If you decide to sell your current home, rather than holding it as an investment and renting it out, you have three options:
- Sell Then Buy: Not having a home to sell puts you in an excellent position for buying. The downside of this approach is that you will need short term housing and move twice.
- Buy Then Sell: Not having to coordinate two transactions at once makes for a less stressful experience, but you will have the expense of carrying two homes for some time.
- Buy and Sell Simultaneously: The advantage of this approach is that it minimizes the risk and expense of owning two houses at once, but the downside is that it can be more stressful. For more advice on buying and selling a home at the same time See Here.