Buying a home is one of the most significant milestones of your life. While house-hunting for the right one might be exciting in prospect, it might be harder than you imagine. Then there are also the other big decisions of finances, the landscape of the housing market, and landing the right deal at the right time.
In the US, homeownership numbers are gradually increasing since the market dip in 2016. As of 2019, the homeownership rate is 65.1%. In the next few years, the growth would be more as 30% of Millennials are hoping to invest in property in the next five years. This increase in demand is not going to make home purchasing any easier in the near future. Nevertheless, with low mortgage rates, it might be the best time for buyers to make a move.
Here are some tips to navigate the process while avoiding mistakes and save some money in the course.
1. Prepare for Mortgage Application
Unless you are funding the home purchase yourself, you are most likely to be depending on a lender for the finances. Working on your mortgage application before proposing an offer would give you an idea of how much you can afford. It will also ensure that any delays and problems with the mortgage won’t derail the process. Most real estate agents recommend that you have a mortgage in principle before shopping around for houses.
2. Include all the Additional Costs
Many home buyers tend to exclude closing costs when setting the budget. There are expenses other than the buyer price associated with a property purchase such as title fees, underwriting fees, mortgage insurance, homeowner’s insurance, taxes, brokerage fees, and many more. It could add up to an additional 2 to 5% of your loan amount, on top of your down payment. While these costs are unavoidable, you can compare prices for certain ones such as insurance, titles, and inspection to find the best price.
3. Shop Around for Mortgages
Finding the right mortgage package is very similar to finding the right house. The variables differ from one lender to another, from rates to fees, along with additional costs. If you are not sure about the right approach, you can always work with a mortgage broker who can guide you through the process and help with the budget. Meanwhile, keep in mind that your credit plays a very significant role in mortgage decisions, so hold off any other bug purchases or activities that might adversely affect your credit score.
4. Find the Right Buyer’s Agent
There is nothing wrong with doing a house search on your own. But with an expert, it would be much more manageable, especially for your first big purchase. You can easily find the right agent through UpNest based on their customer reviews and personal interviews. Finding an agent who is knowledgeable about the local market, experience in the field, and share a rapport with you is crucial to you landing the right house and the right deal.
5. Buy For The Future
Instead of buying a house that meets your current needs, you should be looking at properties that would address your future requirements as well. Unlike renting, you are most likely to be spending a few more years in the house. It would be wise to think of your life plans, whether you would be starting a family, would you have any pets, would you need additional room? Weigh all the possible scenarios before you make a final decision.
Your first home is the biggest purchase you have made up to this point in your life. At times, you might have to make compromises or keep your fingers crossed to get the best. Stress is almost inevitable in real estate, whether you are wondering how to sell your home or buy one. As nerve-wracking it might be, it is also one of the most exciting journeys you would embark on.