What To Do Before You Start Home Shopping
Purchasing a home is one of the largest financial expenditures you will make in your life. We want it to be fun and exciting, not nerve-wracking, and daunting. So, we’ve created a home buying guide to streamline the process. This is the first of a two-part series and focuses on pre-house hunting steps. Next week’s installment will address what to do once you’ve found your dream home!
Get Your Fiscal House
#1 Determine Your Budget
Determining your budget BEFORE you begin your search will help you narrow your focus, saving you time. And frustration. If the first house you visit is a 5,000-square foot home, with every inch updated, when your budget will only realistically allow for a fixer-upper half that size, you’re setting yourself up for disappointment. All subsequent houses within your budget will suffer by comparison. It’s easy to avoid this trap by seeing how much home you can afford.
Get a quick estimate of your monthly mortgage with this easy-to-use mortgage calculator.
#2 Save for a Down Payment To Lower Your Interest Rates
There are no hard and fast rules regarding how much you need to put down on a house. A typical down payment is 20% of a home’s sale price, but there are mortgage loans that require as little as 3% or 5%. Some carry no down payment at all. However, the more money you put down, the lower the interest rate you will secure. And keep in mind that if you are putting less than 20% down, you should factor in private mortgage insurance (PMI).
#3 Secure a Home Loan
FHA, VA, Conventional, HARP, Jumbo (Lions, and tigers, and bears, oh my!) There are all kinds of mortgages for all kinds of budgets. Add to that fixed-rates versus variable, 15-year term or 30-year term. Is your head spinning yet? There’s no need to figure out which mortgage is best for you. Let a mortgage professional do the work for you. Aksarben Mortgage is a kwELITE preferred partner and can be contacted here.
#4 Budget for Closing Costs
There are costs associated with the closing of a house. These typically run between 2% and 5% of the home’s final sale price, so factor in this cost into your budget.
#5 Get Pre-approved
It’s wise to get pre-approved before you start the house hunt. Increasingly, sellers are expecting to work with buyers who have secured their mortgage loans. Pre-approval speeds up the purchasing process and makes you a more competitive buyer. Sellers are more apt to accept your offer over another buyer without pre-approval status should you find yourself in a bidding war. Pre-approval provides bargaining power for the same reason. It is convenient for a seller to work with a buyer who is prepared to move forward with the sale now rather than at some unknown time in the future. Contact Nick Zwiebel or John Major at Aksarben Mortgage to get pre-approved!
#6 Establish The Location You Want To Live
Research the prices other homes on your block or in your subdivision have garnered. These are called comps. It’s fiscally prudent to be buying within the comp range. Typically, you don’t want to be the most expensive house on the block because the chances of recouping your investment when and if you sell are limited. Comps become less important when you are looking for your forever home. kwELITE’s website has Featured Listings and Top Areas pages to narrow the search.
#7 Find a Buyer’s Agent
Because the seller pays all commissions, enlisting the help of a real estate agent won’t put a dent in your home-buying budget, but it WILL gain you access to more available homes and valuable expertise.
kwELITE agents are the most highly trained agents in real estate. They have the latest technology to make home-buying a breeze and excel at customer service. To find an agent who will give you the VIP service you deserve, click on our agent list here.
Congratulations on starting your house hunt! It’s such an exciting time, and we are happy to be a part of this milestone. Make sure you check back with us next week when we look at house hunting and post-hunting steps in the second installment of the home buying series.
And remember, we are always here to help you navigate the home-buying process. You can easily meet with both a realtor and mortgage professional at our new kwELITE office located at 180th & Dodge in the Advent Building! Our one-stop-shop allows you to save time and money while securing your new home. Contact us today and take your first step toward move-in day!