If you are thinking about buying a home, there are many considerations. Here are a few.
How long do you plan to be in the home? Are you going to grow out of it quickly, get transferred, change jobs or take on family members? The average homeowner today stays in their current home for about 9 years. Usually enough time to realize appreciation and write-offs to be considered a sound decision. You should commit to staying 5 years. If you do, in most markets you should realize a profit. So be ready to put down some roots.
What can you afford? Most people can qualify for more than they are comfortable spending. There are many online mortgage calculators available. Work out that payment before you do anything else. Don’t forget to add in insurance and taxes. Nobody wants to stay up nights worrying about their payment.
Only 3% of people have a written home budget. Be in that 3%. And figure out a “survival number” an amount that you need to get the basics paid each month. (This does not include Lattes, expensive dinners and clubs. You can survive without those. Sorry)
Talk to a trusted mortgage advisor. (If you don’t know one, call me. I have a superstar lender who will care about you)
GET EVERY PIECE OF PAPER THE LENDER ASKS YOU FOR. UPFRONT. Before you start looking. Do it first. Approximately 70% of potential Buyers don’t do this. They have a talk with a lender, get put through desktop underwriting (an automated program used by lenders to qualify for Fannie Mae guidelines) and go out looking. If and when they get an offer accepted it’s a scramble, under a timeline, to get the documents to be fully underwritten by a human underwriter. Problems can arise. It can cause extensions or worse, you can be denied the loan after sending money on appraisal and inspections. Getting approved is a pain in the neck. Do it completely without the pressure of an escrow timeline ticking. You have to do it anyway. The listing agent will understand the value of you having done it. And things will go much more smoothly during a stressful time.
The house: figure out what you need and what you want. What is a deal killer and what isn’t. It will save you time.
Having a “rolling top 3”: 3 homes that you like the best, ranked. Even if you are just looking online. If a new home come up that becomes number 1 drop number 3 and move the other 2 down. You can remember 3 homes. It is very difficult to remember 10…or more. It will make you more clear and able to make decisions.
Use the 85% rule. If a home has 85% of what you’re looking for you should probable take a swing at it. (That number could change depending on what is happening in your market) Don’t expect 100%. It’s probably not there.
Buying a home is a big, expensive, stressful event. Have a plan. Execute the plan. It won’t guarantee success, but it will increase your chances. And likely make the experience much better.