Beyond the Pre-Approval
Things to keep in mind as you are preparing to purchase your next home.
In a competitive market it pays to be prepared for the wonderful adventure of home buying!
Many home buyers make the mistake of moving their money around while shopping for a home, which leads to unexpected issues for them; such as buying a new car and taking out a new loan, carrying low level debts that could be paid off easily, changing jobs or opening a new credit card. Other common mistakes range from trying too hard to time the market looking for the “best” deal and letting that “really amazing house” get away and by not factoring in the neighborhood and/or the future life of your dream home. Remember that you’ll most likely own your home for several years, if not several decades, think about your plans for the future and how well your home will work for you. These tips should help you become a much more savvy buyer and put you in a solid position to feel great about your home purchase.
Keep Your Money Where it is
It’s not wise to make any huge purchases or move your money around three to six months before buying a new home.
You don’t want to take any big chances with your credit profile. Lenders need to see that you’re reliable and they want
a complete paper trail so that they can get you the best loan possible. If you open new credit cards, amass too much
debt or buy a lot of big-ticket items such as a car or new furniture, you’re going to have a hard time getting a loan.
Don’t Try to Time the Market
Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing
market is impossible. The best time to buy is when you find your perfect house and you can afford it. Real estate is
cyclical, it goes up and it goes down and it goes back up again. So, if you try to wait for the perfect time, you’re
probably going to miss out.
You’re Buying a House – Not Dating it
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up
making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going
with your instincts means that you recognize that you’re getting a great house for a good value. Going with your
emotions is being obsessed with the paint color or the backyard. It’s an investment, so stay calm and be wise.
Research the Neighborhood
Before you buy, get the lay of the land – drop by morning noon and night. Many home buyers have become completely
distraught because they thought they found the perfect home, only to find out the neighborhood wasn’t for them. Drive
by the house at all hours of the day to see what’s happening in the neighborhood. Do your regular commute from the
house to make sure it is something you can deal with on a daily basis. Find out how far it is to the nearest grocery store
and other services. Even if you don’t have kids, research the schools because it affects the value of your home in a very
big way. If you buy a house in a good school district versus bad school district even in the same town, the value can be
affected as much as 20 percent.
Think Long-Term & Think Re-Sale
Are you planning to have kids? Will you be taking care of elderly relatives? You might be planning to live in your first
home for only a few years. In that case, who is your target audience when it comes time to sell the house? If you buy a
house in a very bad school district or a house on a very busy street, when you are ready to sell the house, most families
with children will be out of your list of potential buyers.
Look at All the Expenses when Budgeting
When budgeting for the house, don’t stop with principal, interest, taxes and insurance; add in utilities, cost of commuting,
HOA dues, property taxes, maintenance costs, and upgrades. Call the utility companies that service the house you are
considering and ask for an estimate of what the cost will be, whether there are any budget plans available, etc. Will the
gas budget for your car go up if you are moving further away from the places you frequently visit? Budget all of these
expenses and see if you can still afford the house. Your Realtor can help you estimate these costs for your area.
Look Beyond the Staging
The psychology of staging a home really works; staged houses look far better than houses that are still being occupied
or are completely vacant. For example a house might have nightstands with lamps next to the bed that really increase
the appeal of the room. In reality, though, there may not be plug points anywhere near the lights. So practically that
setup would not be possible without remodeling. When you are considering a house, mentally try to remove the staging.
Pay more attention to the layout of the house and the structure itself. Ugly wallpaper and paint can be easily fixed later.
Try Not to Buy the Most Expensive Home on the Block
When a wise man once said to never buy the most expensive house on the block, he was talking about appreciation.
Over time, home values in a neighborhood tend to even out. So if you have the most expensive home, its value won’t
increase as much as will a low- to mid-priced home in the same neighborhood. If you want to get the most bang for
your housing buck, buy a less expensive model on the best block you can afford. Remember, location is the one thing
you can’t change. So, if you are buying the least expensive house on the street in a good location, the value has nowhere
to go but up.
Call me to dive deeper into these tips, I’m here to help.