11 tips for buying a house out of state

Moving can be a hassle or an adventure, no matter how far you’re going. When buying a home out of state, expect to face a few more hurdles than you would moving across town. While every situation is unique, it’s helpful to be prepared for the specific challenges of moving out of state.

1. Decide which state you want to live in

The first decision is which state you want to move to. This may be decided for you if you’ve accepted a new job or are moving to be closer to family or friends.

If you’re free to decide where you’d like to live, important criteria to consider include your budget, city life versus the suburbs, job opportunities, and climate. While this decision may feel overwhelming, it boils down to what’s most important to you.

2. Decide whether to sell or rent out your current home

If you’re renting, this won’t be an issue. If you own your home, there are pluses and minuses to renting it out or selling. Renting out your home can generate income, but you’ll have to manage and maintain the property. You’ll also have to pay the mortgage, taxes, and insurance on the home, regardless of whether you currently have a tenant.

Selling your home may be more work in the short term – you may have to sell and buy a home simultaneously — but it’s simpler in the end to have only your new home to worry about.

3. Determine how much you can afford to spend

You’ll need to set a budget for your new home in a new state. You can estimate how much house you can afford to buy by reviewing your income, which may change if you’re moving for a job, and expenses such as:

• How much you can afford for a down payment
• Closing costs on your new home
• How much you can afford for a monthly mortgage payment
• Property taxes
• Homeowners insurance, including flood or earthquake insurance if you’re moving to a state where those are risks.
• Homeowners association fees, if applicable

Your plan also should consider your timeframe for moving and your plans for the future, such as if you plan to start a family or expect to care for parents or in-laws in your new home.

4. Research the area and cost of living

The cost of living varies significantly depending on where you live. You’ll want to make sure you know what to expect when it comes to paying everyday bills such as:

• Utilities
• Transportation
• Property taxes
• Medical care
• Child care
• Groceries
• Entertainment

To help you gauge the potential shift in expenses that come with the change of scenery, you can use a cost-of-living calculator.

5. Find a local real estate agent

When traveling, and you want the inside scoop on the best eats and haunts, wouldn’t you ask a local? The same rules apply when working with a real estate agent.

Local real estate agents possess in-depth knowledge of neighborhoods, property values, and market trends. They can help you understand the market and narrow down your choices.

Here are some things you can look for in deciding who to work with:

• Proven track record
• Credentials
• Expertise
• Communication style 
• Other criteria (i.e., works with families, same-sex couples)

To find the right local real estate agent, check local listings and websites, skim online reviews, and read up on neighborhood forums. Ask any friends and family in the area for their recommendations.

6. Get mortgage preapproval

Mortgage preapproval is a lender’s estimate of how much you can afford to borrow, based on a review of your financial information. This helps you set a budget for buying an affordable home.

It’s a good idea to talk to lenders in your new city. That way, you can determine what’s an affordable, realistic mortgage range. You’ll also want to do your research and compare rates and terms from different mortgage lenders.

7. Consider virtual home tours

Ask your agent to show you homes virtually, either with a live video call or a video walk-through. This can help you tour more homes, wherever you may be.

8. Visit the city and potential homes

It’s important to visit your potential new home in person. It’s the only way to get a real sense of a neighborhood, its safety, the quality of nearby parks and walking paths, schools, and shopping options. Try to tour the area during the day and at night. Plan on spending at least a few days and consider staying in a hotel or a nearby Airbnb. That way, you’ll get the best sense of whether relocating there is the best choice for you.

9. Make an offer

When you make an offer on a house, consider the closing timeline in addition to the price, terms, and conditions. You’ll also want to include the appropriate contingencies, such as a home inspection contingency, which will allow you to walk away from a deal if something goes awry. Once you and the seller agree on a deal, you both sign a purchase agreement to make it official.

10. Close on your new home

If you have mortgage preapproval, then applying for the mortgage should be straightforward. Your lender will underwrite the loan, and the home will be inspected and appraised. You can close on the sale in-person, which may make it easier to ensure all details are accounted for, or remotely with an e-closing, which offers convenience.

11. Get ready to move in

Packing up and moving across state lines can be time-consuming and expensive. Be prepared by getting multiple quotes from moving services as far in advance as possible. That will make relocating to another state that much smoother.

Is it difficult to buy a house in another state?

Depending on your situation, securing financing to buy a house can be more challenging. If you’re moving without a new job lined up, it can be more challenging to get a mortgage.

Will there be an overlap between your two homes? When buying a second home, you’re looking at higher down payment requirements. Plus, you might be paying two mortgages for a stint.

If you plan to convert your current home into a rental property, you may need to refinance to a non-owner-occupied mortgage. Expect higher down payments, higher interest rates, stricter credit requirements, and shorter terms.

The bottom line: Be prepared before buying a house out of state

Buying a house out of state can be exciting, but it also can present hurdles. Planning ahead and being prepared will help you avoid potential problems. You can check out more resources from Rocket Mortgage.

Ready to kick-start your home buying journey? Get started with an online application today.