The home-buying process can be a long one, and there are many different aspects of it that can be trying. Most people choose to work with a realtor who can help make the experience more positive for them, and they’ll be there to help guide you through the process. Still, you’ll want to know more about the process before you work with a realtor to make both of your lives a little simpler.
The following tips can help make the home-buying process simpler and more enjoyable.
1. Finding the Right Realtor Makes a Difference
It’s important for you to find the right realtor when you’re starting on your home-buying journey. Your realtor is someone who will be on your side during the process, which is much needed. They’ll serve as a guide, help you protect your best interests and accurately present the facts about properties without misrepresentation or exaggeration. They’ll also cooperate with other industry professionals to help you get the home you want. Fom helping with negotiations to guiding you on the best mortgage lenders they’ve worked with, they can help in many ways.
2. It Pays to Be Patient
When the real estate market is as unusual as it is now in 2023, patience is key in the home-buying process. It may take time to find a home on the market, especially since there are few homes on the market (a housing shortage). There can also be hiccups during the offer or buying process — all of these situations require you to be patient as your realtor and the seller’s realtor work together to find solutions, negotiate, and settle the sale.
3. Not all Homes Are as They Appear
You’ve probably heard the old adage, “Don’t judge a book by its cover.” The same can be said for homes. You’ll want to go into homes and really look at them — take a look at the floor plan, size of the rooms, proximity to the places you go or people you care about, and other factors before you say no. Remember, it’s possible to change siding or your roofing if the exterior of the home isn’t what you like, but changing the layout inside can be much more difficult.
Keep in mind: Your realtor will help you avoid fixer-uppers if you don’t have room in your budget to make repairs.
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4. Your Credit Is Key to a Fair Mortgage Rate
The next thing to keep in mind is that your credit matters, especially now that mortgages are at a 23-year high with rates as much as 7.49%. Generally speaking, borrowers who have credit scores of 760 or above get access to the lowest interest rates — that’s particularly valuable when rates are at peak levels. To offset higher-than-normal interest rates for your mortgage, plan to put down a larger down payment on any home you look at.
5. Preapproval Shows You’re Serious
With the housing shortage in full effect, now is the right time to get the preapproval for your mortgage before you view a home. Having a preapproval shows the seller that you’re serious about buying the home and have the lender’s support to take out a loan that is enough to cover the cost of the home. That said, there are other elements that go into a final approval, such as inspections and any changes in your credit (more on that shortly).
For now, getting a preapproval can give you a competitive edge over the competition. While many people may be cash buyers, those who cannot offer cash but who do have a preapproval letter are more likely to get their offers accepted than those who don’t and are “wild cards.”
6. A First-Time Buyer Program Could Support Your Purchase
If this is the first time you’ve purchased a home, you may be able to benefit from a first-time buyer program. Depending on your state and where you intend to move, the eligibility requirements and other factors, these buyer programs can be a great help for those who qualify.
First-time buyer loans are made available through resources such as banks (Bank of America, Chase Bank), mortgage lenders (Rocket Mortgage), and state organizations, such as the Kentucky Housing Corporation, or Federal organizations, such as the U.S. Department of Housing and Urban Development. Even if these resources can’t get you a loan, they are usually able to refer you to further information about where to find one based on your specific needs and qualifying factors.
7. After Preapproval, Keep an Eye On Your Credit
After you get a preapproval for the mortgage you want, you need to do everything in your power to avoid harming your credit. If anything happens to your credit at all, it should be for the score to increase. The reason for this is simple: The bank or lender decided to give you a preapproval based on your circumstances at the time of your request. If you have a major change in your circumstances, then it may decide it doesn’t want to fund your purchase after all.
Even minor changes to your debt-to-income ratio can make a difference when it comes time to actually fund your purchase with a true mortgage. For that reason, set your credit cards aside and make sure not to make any purchases until you’ve closed on your new home. If something can’t wait, reach out to your lender and discuss the purchase before you make it. They may be comfortable with the changes it will cause, but they may also tell you that your purchase will upset the preapproval process.
8. Your Job Matters When You’re House Hunting
As you go on this home-buying journey, another aspect of bring able to qualify for a mortgage comes down to your employment. Now is not the time to start making big changes unless those changes improve your income in a significant way.
Job stability shows a lender that you’re reliable and can make your payments on time. Unless you’re getting a promotion or raise, deciding to change your employment can be a big red flag for lenders. They could go as far as to decide that they don’t want to work with you, which could lead to you not getting the home you want.
Before you start the home-buying process and get preapproved, take a look at your employment and make sure it’s stable. If you’ll have any significant positive changes, you may want to bring them up to the lender during the preapproval process. And, if you get fired or get demoted? Let your lender know right away. They’ll find out when they reach out to your employer, so being transparent is the best way to move forward.
9. A Home Inspection Is a Must
Although they are not always required by lenders, getting a home inspection is an important part of purchasing a home. They may cost several hundred dollars, so it’s necessary to set aside that money when you know you’re going to look at homes. You don’t have to have every home professionally inspected, but if you make an offer, having the home you want to purchase inspected is always a good idea.
While you are probably thinking that any home is going to have its own issues, and you’re right, having an inspector come and perform an inspection can save you a lot of trouble and money down the road. You can even make an inspection part of your offer, so you can back out if the home has damage you didn’t know about and that wasn’t disclosed by the seller.
When you choose an inspector or inspection company, ask them what kinds of reports they do. You’ll want a comprehensive report. It’s smart to have them look for signs of termites and insect damage as well as the general condition of the home. They should look at all major appliances and machinery in the home, from the HVAC system to the washer or dryer. Additionally, the inspector should be able to identify signs of water damage and mold, damage to the roofing, the roof’s age, and other factors that may influence your decision to purchase the property.
Once you have this inspection completed, your realtor can take this information to help you negotiate with the seller, back out of the purchase, or go ahead with the purchase as is.
10. You Can Be Too Picky
Part of the home-buying process is seeing many different homes. No, you shouldn’t settle on a home that isn’t what you want, but you also have to be realistic about your expectations. The chances are that your perfect home doesn’t exist — there could be damage that has to be repaired, a location that isn’t quite right, or other factors that make it difficult to take the leap into home ownership. That being said, if you find a home that meets your needs and at least some of your wants, it may be time to jump on that purchase.
The average time from listing to sale on today’s market (2023) depends on where you are. In the fastest-selling state of Utah, homes only stay on the market for an average of 27.07 days. If you view the home and other offers that are pending or in the works, you could find that the home you wanted to purchase is sold right out from under you.
So, be decisive — when you think a home might be right for you, it’s time to take that leap and make an offer.
Buying a Home Is a Challenge, But Now You’re Ready
Buying a home can be a tricky situation, but if you’re prepared to work with your realtor, get preapproved, and stay on top of your finances, you’ll be in a better position as you look at potential homes. The right mindset and approach make all the difference and can turn this sometimes challenging situation into an enjoyable one.
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