The last couple of years has been a roller coaster in the housing market. For first-time homebuyers met with bidding wars and a pandemic, it’s been tricky, to say the least. Whether you’re looking to buy your first home or your tenth, we’ve rounded up some home buying tips to make the process easier.
With many homebuyers looking to create more space at home, downsize, or sell to take advantage of record-setting equity, it’s a great time to become a homeowner. From setting a budget to getting pre-approved think of this as your home buying checklist.
1. Get a Handle on Your Budget Before Buying a House
When you’re buying a home, a budget is a great place to start. To kick things off, start by writing out all your income and expenses. Whether you’re looking for URB Chicago owner financed homes or to buy a home in cash, a budget is key.
When you’re writing out your expenses, you’ll want to be as detailed as possible. Include everything from your average weekly groceries to your student loan payments. Average out what you spend at the gas station and how much you spend on take-out and delivery.
The more detailed your budget, the better. Before you can determine your housing budget, it’s helpful to see what you typically spend each month. Make sure to also include your credit card payments.
If you have a high credit card balance, include your minimum payments to get the most accurate picture of your finances.
2. Start a Savings Plan in Advance
Before you buy a home is a good time to make some budget cuts if you can. You may find you’re still paying for a yoga class you haven’t gone to in two years, or you have two music subscription services you don’t use. Anywhere you can make some cuts can help you reach your savings goal.
This is an ideal time to start thinking about your down payment budget and what you’d like to have as a savings goal. If saving is overwhelming, try breaking down your big goal into a few smaller goals.
A big goal could be to save an extra $200 a month for a year, for example. Your smaller goals could be to bring your own lunch to work every day or to cancel a TV streaming service. These little changes will help you reach your bigger goal faster.
3. Making a Wish List Will Help You Decide What’s Most Important
Once you have a good picture of your finances, you can start thinking about your wish list for a house. Wish list items could include a home with three bedrooms or a yard with a fence, for example.
While you may not get everything on your list, it’s helpful to have these in mind when you go to look for homes. You can prioritize what’s most important as you start to look online or tour homes.
4. The Right Real Estate Professionals Makes all the Difference
Another important item on the home buying checklist is to find a realtor you can trust. Real estate professionals can help you narrow down your wish list, find homes within your budget, and give you insight into the local market.
When it comes to important home-buying tips to know, getting real estate referrals can be a game-changer. Check out this definitive guide on having real estate referrals to boost your home-buying expertise.
While you likely have already started looking online for a home, your realtor can take you on yours and bring you to homes in person. Your realtor will help you through the negotiations and the rest of the home buying process as well.
5. Get a Mortgage Pre-Approval Before You Make an Offer
The next important step in the home buying process is to get a mortgage pre-approval. If you’re getting a mortgage loan for a home, your lender can pre-approve you for a loan amount. A pre-approval gives you a better idea of what your home budget is.
When you go to buy a home, a pre-approval also shows sellers that you’re a serious buyer. A pre-approval shows you’re working with a lender, and you’ve been qualified to make an offer on their home. Your mortgage pre-approval will also show you a sample of what your monthly payments are as well as your interest rate.
It is worth keeping in mind that when looking for mortgage pre-approval, better rates are generally offered to those with a good LTV ratio – the loan-to-value ratio being the amount of the mortgage compared with the value of the property. There are many solutions on the market to help prospective homeowners calculate this, with Simon Conn’s LTV calculator being just one of them.
6. Narrow Down Your Location to Simplify the Home Buying Process
As you start house hunting, it can be overwhelming to search a large area. Give some thought to where you’d ideally like to live. For some buyers, the local schools are most important while others like to be near their office or workplace.
Your location will also play a big factor in your budget and the type of home you can afford. In most major markets, homes are in low supply. Your location will affect everything from the size of your home to the type of home you can afford.
7. Don’t Get Caught Up in the Market Frenzy
When searching for homes for sale, it’s easy to get caught up in the excitement of it all. Homes are selling faster than ever and for more money. Try and keep a level head while you house hunt and take a step back every once in a while, to make sure you’re staying within your financial comfort zone.
One of the most important things you can do is to determine how much you can comfortably afford to spend on a home each month. A financial rule of thumb is to keep your housing expenses within 30% of your income each month. While this isn’t always feasible for everyone, it’s a good starting point to help you come up with a comfortable budget.
You’re One Step Closer to Home Ownership with These Key Home Buying Tips
If you’re looking to buy a home this year, you’ve come to the right place. With the ups and downs in the real estate market in recent years, buying a home can be intimidating. To help you navigate the home buying process, we’ve rounded up seven home buying tips to make the process easier.
From setting a budget to getting mortgage pre-approval, these tips will help make your home buying journey easier.
For more real estate and finance tips, check out the blog section.