5 Things Smart Buyers Do Before House Shopping
You've been searching on Realtor.com for months. You pretend to be working while you scroll through listings on the Zillow app. You visit open houses every Sunday. You are ready to buy a house.
(cue dramatic music)
BUT WAIT! DON'T MOVE A MUSCLE!
Are you actually ready? Have you really thought things through, or are you just an HGTV junky? Do you have a game plan and an actionable path to success? If so, congrats. You are excused. If not, keep reading! Here are five things you should do before you start house shopping...
1.) Determine your reason for buying
Are you buying a home with the goal of living in it for decades? Are you looking for a worn down property that you can fix and flip? Are you looking for an investment property that will bring in healthy rental income each month? The answers to these questions will dictate many aspects of your shopping experience, from which type of loan to get, to how much money to put down, to the neighborhood and style of home you’re looking for.
2.) Calculate your budget
I can't stress this enough: get pre-approved! Ask your agent to recommend three loan officers or mortgage brokers in your area. Whether those people work for big name companies or small credit unions, it is important to have someone you can speak with at a moments notice and someone who will guide you through the process. They will crunch the numbers for you and determine a reasonable price range. You don’t want to fall in love with a place and find out you can’t afford it. It is critical to be honest with yourself and your wallet.
3.) Prioritize your wants and needs
Make a list of the features you'd like your future home to have. Then...delete the bottom half of it. I’ve written about this before ("Real Estate Described in Five Words") but it is a theme buyers need to get accustomed to: you will not be able to get everything on your list. Unless you get reeeaaalllyyy lucky, you will have to compromise on features, price, and/or location. Temper your expectations early in the process. Be realistic!
4.) Don't do anything
Wait....but this is an article about what you SHOULD do, not what you shouldn't, right? True. Except this refers to your financial game plan. You'll want to talk this over with your loan office or mortgage broker (remember, the person your agent recommended you to?), but in general it is best not to make any big transfers of money to or from your bank accounts in the months and weeks leading up to the purchase of your home. Why? Lenders prefer that your financial situation be steady and stable, not a whirlwind of activity. Steady bank accounts portray an owner whom the lender is more likely to lend to.
5.) Save, save, save
I guess technically that is three things, but the point is: SAVE! There are many expenses attached to the purchase of a home: down payment, hiring specialists for inspections, closing costs, etc. And just when you think you're done, the lender will want to make sure you have enough cash in reserve after you buy your home to ensure you can make your mortgage payments! Three words you'll hear over and over again in real estate: Cash. Is. King. Be sure to have as much of it on hand as possible. It will go a long way towards making your journey to homeownership enjoyable.
What questions do you have about the home shopping process? What do you want to know before diving in? What advice would you give to today's home buyers?
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