Buying a house - whether it’s your first or fifth - can be a bumpy process. Between the financing, the availability (or scarcity) of homes on the market in your price range that meet your needs, the offer process, the appraisal and the inspection, there’s a lot that can go wrong between deciding that you are in the market for a new home and turning the keys for the first time in your new front door.
But there’s a lot that buyers can do to make the process smoother. Here are 6 tips.
1. Check your own credit
If you’re like most Americans, you’ll need a mortgage loan in order to purchase a house. The amount of money that a lender is willing to loan you will depend on several factors, including:
- Your current income and debt
- The amount of down payment that you’re bringing to the table
- Your credit
You might or might not have a lot of influence over your current income, and you might or might not have wiggle room to save up for a down payment, but one thing that you can almost always work on is your credit. Get copies of your credit report to ensure that everything on it is accurate; fix any errors, and consider talking to a credit expert who can tell you which payments to prioritize and how to improve your score. Many of my lending partners offer free credit repair services to help you quickly raise your scores and lower your debt.
2. Research sales price in your area
While you’re considering exactly what kind of home you want yet (and we’ll get to that), you’ll also want to think about how much that home might cost. This would be a good time to talk to an expert, like a real estate agent, about the sales prices in the area.
An agent can show you current active listings and is also a good resource to tap when you have other financial questions about homeowners’ insurance or other costs of homeownership, like common maintenance costs in the area.
3. Consider all the costs
There’s more than PMI to think about when it comes to a mortgage loan - you will also be paying:
- Property taxes
- Homeowners’ insurance premiums on the house
- Flood insurance, and often supplementary policies are worth considering
While we may be able to get some seller concessions, you can expect to pay at minimum 3-5% towards a down payment and closing costs. Other expenses to consider are buyer commission fees, historically covered by the seller, but could be a fee the buyer covers in the future, inspection costs, utility transfer fees, & moving costs.
4. Get to know your dealbreakers
Almost as important as knowing what you want in a home is knowing what you definitely don’t want. But don’t confuse a “dislike” with a true and genuine dealbreaker - a feature of the home that you can’t realistically fix.
If you haven’t tapped into the expertise of a real estate agent yet, now would be the time. Let me help you understand what’s fixable and what’s not in the house you’re just not sure is a good fit.
5. Search accordingly
One tool that real estate agents have that the general public doesn’t is access to the local multiple listing service (MLS), where homes are actually listed for sale. Once you understand your must-haves and your dealbreakers, your agent can set up a personalized alert anytime a home that meets your exact criteria is listed on the market. While Zillow provides a lot of this information, I have access to additional information like documents, agent notes, and off-market properties that have expired but may be available again soon. A real estate professional can give you inside information about the history of the home from previous sales that aren't available to the consumer nor would be shared by an agent representing the listing.
6. Think competitive but reasonable
You probably want to avoid a bidding war (not great for your wallet!), so you’ll want to make an offer that the seller will consider competitive. At the same time, you don’t want to pay more when the seller would accept less; an experienced real estate agent can help you navigate the field of exactly what to pay and come up with an amount that’s a good deal for you and priced high enough to capture the seller’s attention. Real Estate agents also have approved forms that allow us to negotiate contingencies when offers are placed that may beat your initial offer, but allow us to stay in the game automatically.
Don’t forget that there are other concessions you can make to sweeten the deal beyond sales price - like giving the seller control over the closing timeline or offering to split the price of any necessary repairs discovered in the inspection. I can walk you through popular options here, too.