Congratulations on deciding to buy a home! For most of us, a house is the most expensive and most important investment we will make in our lifetimes. It’s more than just a property, more than just building materials. A house is an investment in our future – a safe and comfortable place for our families to grow and prosper, a place to feel safe and comfortable, a place to age gracefully, a place to call our own.
If this is the first time you’re buying a house, you may feel a bit confused about what to do first. We recommend knowing these five things before you enter the real estate market, before you ever see a single for-sale listing.
5 Things to Know Before You Start Your Home Search
1. Get pre-approved.
Pre-approval is a specific estimate of what you’ll likely be approved to borrow when you’re ready to apply for a mortgage. The process is more rigorous than pre-qualification. Lenders will request W2s, pay stubs, bank statements, and tax returns. It probably seems like a hassle, but it is worth doing before you start your home search.
Pre-approval helps you save time and sets realistic boundaries on what you can reasonably borrow and pay back. Ultimately, it narrows your search to houses that are within budget.
Eventually, when you decide to make an offer, pre-approval isn’t a guarantee of a home loan, but a pre-approval letter verifies to sellers that you’re a serious buyer. Your offer becomes much more meaningful when a pre-approval letter is attached.
2. Know your musts.
Before starting your home search, make a list of the home features you want and need. Include structural features, cosmetic features, and external features like location, commuting distance, and accessibility to public transportation.
Some features will be more important to you than others and there are a lot of things to consider. (For more on how to rate home features objectively, read this related article about home shopping.)
Know what you want before you start shopping and be realistic. It’s fun to imagine living in a castle with 60 rooms on 100 acres of land, but unless that is within budget, you’re better off sticking to features you can actually expect.
3. Explore the area.
Don’t just research prospective neighborhoods – explore with in-person visits! Dine the local eateries, visit community parks, and discover the local library. Attend public events – like concerts or fundraisers. Traverse Main Street and drive around the back streets too. Time your commute to work by driving it, not just with GPS. Join the local online social groups to learn what matters most to the community.
Consider spending a night in a local hotel and view the neighborhood as a tourist might. Sometimes a neighborhood is so appealing, you get comfortable compromising on certain home features. Whatever you think you know about an area, you can learn a lot more from living there, even just for a day.
4. Trust your Realtor®
Realtors® are local market specialists. They know the business better than anyone. They’ll search through thousands of listings to find properties for you to consider at the price you can afford. They have tremendous professional networks of contractors, lenders, and appraisers, and they know all the steps to get you from your first open house to your closing signature.
Trust your Realtor and tell them what you’re thinking. Share your concerns, communicate your confusion, and ask your questions. Tell them if your needs change. The more information they have, the easier it is for them to help you find the home you’re looking for.
5. Visualize Potential
As you start to consider listings, be open-minded to the potential in each property. Sometimes all that a house needs to become a home are minor cosmetic changes – a new coat of paint. If more structural improvements are needed, your Realtor will negotiate on your behalf to ensure the price you pay accommodates those renovations. You’ll likely be living in this home for a long time – so it’s important to remember that not every change needs to be done immediately. A house is never only what you see today, but what you imagine it could be tomorrow.
You’re all set! With this knowledge, you’re ready to begin your home search in earnest.
Speak with a Realtor® about how you can get pre-approved and what a realistic mortgage looks like within your budget. Know what you need and want in a new home and explore potential new neighborhoods before narrowing your search down. Trust your Realtor and to you through the home-buying process, and keep an open mind to the potential every property has hidden beneath the surface.
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