Buying a home can be a very exciting but also daunting task. You may find this process easier to tackle by creating a list of priorities to focus on. Here are the six priorities we believe to be focal points that break down the enormity of home buying into smaller, more manageable tasks.
Find a local broker or lender
Not all lenders or brokers are a fit for you. Be picky and do your research prior to choosing a lender or broker. You want to ensure the financial institution you look into offers the loan product you want to utilize such as VA, Jumbo, Non-QM, 100% Financing, VA, VHDA, etc. Wondering what questions are good questions to ask your lender? Read our blog “What Questions to Ask Your Lender” and make sure you receive answers you do not only feel confident in, but also understand. Education is key during the borrowing process. Ensure that the financial institution you decide to utilize informs you throughout the process and educates you every step of the way. Do not borrow blindly. This is a large purchase, oftentimes the largest you will make in your lifetime. Do not be afraid to ask questions because a great lender will have your best interests in mind at all times guiding you through loan products, making recommendations to benefit you long term, and will check in on you regularly providing information, answers, and explanations when needed.
Get pre-approved before house shopping
We cannot stress this enough, but, PLEASE get approved prior to beginning your home shopping experience. Okay, yes, it’s an extra step in the process but trust us you want to do this. How disappointing would it be for you to go see a home, fall in love with it, and decide to put an offer in, only to get approved for under the asking price? Receive a pre-approval prior to house shopping so as to avoid this kind of let-down. Getting pre-approved is easy! Most loan companies and institutions have online forms that can be quickly filled out and will generally be followed up with a phone call. Visit our apply now page to take the step towards obtaining a pre-approval with us! Just to ensure the pre-approval process goes smoothly and efficiently, please have on hand the following information:
- Income Verification
- Debt Statements
- Proof of Assets
Lastly, it is a good rule of thumb to not make any major lifestyle changes during this process such as large purchases (cash or credit), opening new lines of credit, depositing large sums of money into your account (venmo dumping, etc.) that are not regular payments such as your paycheck.
Establish a budget
Start preparing a reasonable budget for your purchase by determining what is financially feasible and what is not. Ensure that you incorporate a cushion in your budget to account for closing costs, Earnest Money Deposits, and other costs such as inspection and appraisal fees. Do your research to gauge market value of inspection and appraisal service fees and know that closing costs are typically 2-3% of the purchase price but can vary depending on various factors. When establishing a budget for purchasing a home, also consider what you are willing to pay monthly as a mortgage payment. Decide upon an ideal mortgage payment and the highest you are willing to pay per month. This will help determine which loan product or loan term will best suit your financial needs.
Make a list of your wants and needs
It is quite easy to get caught up in the whirlwind that is buying a home. By making a list of your wants and needs you are better able to establish which home is going to be the right fight for you. Going into the home buying process knowing what you are willing to negotiate or compromise on and what you must have, will narrow your pool of options.
Time is money in the real estate and mortgage industry and we want to make certain you are fully prepared going into the search. Consider the neighborhood and location, size of lot, year the home was built, bedrooms, bathrooms, amenities, etc. when narrowing down your list. Prioritize these wants and needs as well so you know whether a fourth bedroom is more or less important than a bonus room or office. This way you can sift through properties quickly and find the one that gives you exactly what you need and more.
Set reasonable expectations
Finding the perfect home for you does not happen overnight. Being honest with yourself during this step of the process is critical. Unless you are planning on having an unlimited budget, odds are you will have to compromise on one or more things. Not all homes will be new builds, some may need a little love and cosmetic upgrades. Are you willing to take on this task and does it fit into your budget? Managing expectations in the real estate market is hard. You may be faced with a 10-plus offer situation on a home you really love. Is offering over asking something you are able to do? If so, by how much? Take into consideration the timeline. Are you in a position to have a longer escrow period and closing date or do you need the process expedited because you are expected to be moved in X amount of time for your new job or position? All of these points come into play when setting expectations during the home buying process. Please be forthcoming with yourself but also kind. This is not meant to be a step in your life that brings you stress but new beginnings. Be patient and think everything through.
Find a trusted realtor
Lastly, find a realtor who works with you and for you. Your choice in a realtor should coincide with your goals for homeownership. Look for an agent that you get along with very well and communicates with you effectively. You will be communicating with each other for the next month at the very least! Make sure this is an individual you can listen to, feel comfortable being candid with, you feel heard by, and most importantly has your best interest in mind at all times. Take into consideration their prior experience. Who taught them their trade and what kind of experience will this agent provide you? Make sure that you ask them about the area you are looking to move to. You want an agent that knows the location like a local and can guide you knowledgeably.
When looking into their references, do not just go by word of mouth. Search through their online reviews. You want a well-rounded opinion before deciding. Ask them about their fees. Do they charge an extra percentage for commission? How are they paid? DO NOT let any realtor or agent push you around. In a market that is constantly changing, some real estate professionals will just look to make a quick sale and commission and push you into a home and contract you are unhappy with. Check if they can adapt to your viewing needs and not just look through their own personal perspective. Remember, you are the average of those you spend your time with. The same goes for the work environment. Look at a realtors team, their reviews, and who they are as it could be a determining factor. Lastly, check their negotiating skills. Ask for examples of negotiations in past sales. What did they yield?
We hope that you have taken away at least a few pieces of advice to help your home buying journey! Information is power – especially when it comes to purchasing a home. Now, good luck and happy house hunting!