The new year is underway, and perhaps this is the year you have been considering the purchase of a home. Without a doubt, this is one of life’s biggest and most exciting purchases. It’s the “American Dream” to own a home, generally a solid investment, and offers stability to you and your family in the way of a place to live. While there are many positive benefits, it may be easy to feel overwhelmed with the process, and even where to start. We have compiled a few tips that will ease the transition into purchasing a home. See below for some of our thoughts:
- Research lenders and become pre-qualified. This is one of the most crucial steps in a home purchase. Unless you are able to pay cash for an entire home purchase, you will likely need a loan. Several programs and options exist for loan types. FHA, conventional loans, and VA loans are amongst the options. It is essential to know which is the right fit for you. In addition, pre-qualification through a lender will give you an idea of how much a lender would consider loaning you, so you know which price range of properties to research. Note, though, pre-qualification is not the same as pre-approval. A pre-approval is more detailed and in-depth, and gives a more accurate picture of how much a lender will loan. If you are nearly ready to purchase a home, you may consider this additional step.
- Research Realtors® to lend expertise throughout the process. Realtors® are the generally accepted experts in the realm of home purchasing. A good Realtor® will be able to direct you towards the right type of neighborhood or area for your needs, the pros and cons of certain home options, and the complicated process of the real estate paperwork. A Realtor® will also show you property and assist with making an offer on a home, negotiations, and the entire sales process. Generally, the best option is to work with a Realtor® who knows the local area, and may offer a history of experiences and depth of knowledge.
- Know what you need, want, and are able to afford. Start looking at the homes currently on the market; this will give you a good idea of what you get for your money in the different areas, that way you’ll be confident in your offer when you find the perfect house. In addition to this, make a list of items you must have in a home, vs. items you desire in a home. Experience teaches us that some compromises must occur. For example, if you want a home with 4 bedrooms and acreage, but are unable to find an option within your price range that offers both, which is more important? Would you be willing to compromise on the number of bedrooms or amount of land? Naturally, this is person specific, but it is always helpful to know what you actually need when looking into a home purchase.
- Consider interest rates: Recently, the Federal Reserve raised interest rates for the first time in nearly a decade. While the increase is expected to remain minimal, it is always advantageous to purchase a home with the lowest interest rates possible. We are still seeing historic lows, but logically purchasing on the front end of the increase makes sense.
- Consider the costs: they may be more than just the mortgage. Just because a lender says you qualify for a specific monthly payment does not mean you can afford it monthly. Understand what your monthly payments will total, and factor homeowner’s insurance, homeowner’s association fees (HOA), and property taxes into the equation. Be sure any credit issues are fixed, and that you are able to maintain a monthly budget that would sustain your mortgage. Streamline your expenses and start saving some money each month, that way the loan process will be that much easier. Also, factor in any additional expenses, such as repairs or emergency funds. Homeownership brings many rewards, but there is also no landlord to call if a pipe breaks or an immediate repair is necessary. Be sure to save enough money for any unexpected expenses.
The above tips begin to scratch the surface of the home purchase process, and areas you may prepare yourself to buy a home. The Durango Team would love to talk with you to address any specific questions you may have, or if you need help determining a timeline to purchase a home. We are passionate about real estate and the benefits of home ownership, and love to help others achieve this dream.
This post has been provided by The Durango Team