House Shopping Guide: Tips And Tricks For House Hunters

Making the decision to buy a house can be one of the most exciting times of your life. Before you dive in, it’s important to ask yourself a few questions and explore how to balance your wants and needs with your budget. We’ve put together a complete house hunting guide to help you find the home that’s right for you at a price you can afford.

Step 1: Determine Your Budget And Start The Approval Process

Before you begin looking at houses, determine how much home you can afford. Use an online budget calculator to determine the mortgage payment you can afford each month. Keep in mind that your mortgage payment isn’t the only cost you’ll incur each month as a homeowner. Be sure to factor the following into your budget, too:

• Property taxes
• Homeowners insurance
• Home maintenance and upkeep
• Homeowners association (HOA) fees
• Utilities (gas, electric, water)
• Unexpected expenses (medical emergencies and unexpected home repairs)

Use a mortgage calculator to estimate your monthly payments based on factors like the home price, down payment, loan term and mortgage interest rate. Be sure to get initial mortgage approval with a preapproval letter, which is different from a prequalification letter. Let’s take a look at why.

• Prequalification letter: When a lender says you’re prequalified for a certain amount, they’re giving you a rough estimate of what you can afford based on a verbal confirmation of your income and credit score.
• Preapproval letter: A preapproval letter from a mortgage lender states the mortgage loan amount that you qualify for. It holds more weight than a prequalification letter because lenders calculate it based on official documents, including your bank statements, W-2s and credit report.

Even with a prequalification letter, many real estate agents won’t work with you until you get initial mortgage approval.

If you want to increase your chances of making a successful offer, consider getting a Verified Approval Letter (VAL) from Rocket Mortgage®. A VAL can help make your offer stand out in a competitive market because it shows sellers that your financial profile – including your assets, credit score and income – has been thoroughly vetted by our Home Loan Experts. In other words, Verified Approval shows sellers that you’re qualified and ready to buy.

Step 2: Create A House Shopping List Of Must-Haves And Nice-To-Haves

To ensure you start on the right foot, shopping for a home might involve some prioritizing. We suggest starting by listing each room you would like your house to have. Then, go room by room and write out the features you want each one to have.

You might consider organizing these features into three categories: must-haves, nice-to-haves and deal-breakers. When you’re done going room by room, consider must-haves and nice-to-haves for the home as a whole.

Must-Haves

When something is a must-have, you simply can’t live without it in your home and it’s among the things you’ll use to weed out homes that just won’t work. For example, you might absolutely need three bedrooms to accommodate your family, a well-lit room for your remote home office or plenty of garage space for the classic car you restored.

With a list of must-haves, you’ll be able to sift through real estate listings more efficiently. Maybe you’ve found what looks like the perfect home in every way, but it doesn’t have a backyard and is located miles away from the nearest school. If you have a large family with young children and a dog, then outdoor space and proximity to a school are going to be deal-breaking must-haves for you.

On the other hand, if a home doesn’t have one of your must-haves right now but has the space or potential for renovations to make it happen, you may want to keep the house on your list as a viable option.

Nice-To-Haves

Nice-to-haves are wishes, not essentials. They’re features in your home that you’d like to have, but aren’t necessarily at the top of your priority list. You might prefer that your new home has a pool in the backyard, updated appliances, a spiral staircase or a firepit, but in the grand scheme of things, these probably aren’t deal-breaking requirements.

The nice thing about having a list of nice-to-haves is that, when you’ve narrowed down your list of houses, they can be used to help you decide between your final candidates.

Step 3: Check House Hunting Websites And Apps

Browse houses for sale online or through a phone app to get a feel for your local housing market. House hunting websites can give you a close look at how much the average home sells for in your area and provide a more realistic idea of what type of home you can afford.

Researching homes online also allows you to scope out potential neighborhoods for schools, shopping, crime rates and anything else you might want to consider. Apps can help streamline your process, providing organized access to listings.

Compare the prices of what you see in the marketplace with your budget. Then, write down a few addresses and contact your real estate agent or the real estate companies that listed the homes you’re interested in.

Step 4: Connect With A Real Estate Agent Or REALTOR®

A reliable real estate agent or REALTOR® is an expert in your local market who can make home shopping easier and less stressful. They can help narrow your search, give you a better idea of how to get the most out of your budget and show you more homes than you’ll be able to view on your own.

A good real estate agent or REALTOR® will also carefully consider your individual needs as they suggest homes to show you, rather than simply trying to push you toward the biggest sale and commission.

So, what’s the difference between a real estate agent and a REALTOR®?

• A real estate agent is a professional who has passed the necessary licensing examinations to do business in your state.
• REALTORS® are real estate agents who are members of the National Association of REALTORS®. They must hold a valid real estate license, be active in the market, adhere to a strict code of ethics and have a clean professional conduct record.

Either can be a great help while house hunting. Work with a real estate professional who is certified as an Accredited Buyer Representative® (ABR®) or Certified Buyer Representative (CBR). You might also consider a professional who holds a real estate broker license, which means they’ve furthered their real estate education.

Ask for references from previous home buyers and interview a few candidates before committing. Since you’ll be spending a lot of time together, choose an agent whose personality meshes well with yours, and make your expectations and needs clear upfront.

Step 5: See Houses In Person

Many sellers have open houses for their properties where anyone can walk inside and take a tour of the home. You can also arrange personal viewings with your real estate professional of choice.

When viewing a home, don’t be afraid to be a little nosy. Test outlets, showers, toilets and kitchen appliances to make sure they work. Make a mental note of repairs or replacements you might want to ask the seller to complete if you decide to buy the home.

Don’t limit your hunt to just the house, either. Where you buy a home is just as important as which home you buy. Your real estate agent can help you explore neighborhoods as well as properties.

Drive around areas you think you might like and compare local amenities and features to your budget. As you tour more homes and check out each neighborhood, you’ll get a better idea of the right home and community for you.

Whether you’re looking for the perfect home online, with help from a real estate professional or through an open house, it’s important to have initial mortgage approval before you jump in. That way, you know exactly how much house you can afford, and you can make a strong offer when you decide on a property. Having Verified Approval could also improve your chances of getting your offer accepted.

Still having trouble finding the perfect home? Here are some more top tips.

Consider Short Sales And Foreclosures

If you’re coming up empty-handed in your search, it may be time to think outside the box. Why not look into short sales, foreclosures or other types of properties?

• Short sales: A short sale is a real estate transaction that involves selling a property for less than what the owner owes on the mortgage. Short sales are usually initiated by the homeowner through the lender in order to avoid foreclosure. As a home buyer, you can expect to find highly motivated sellers.
• Foreclosures: Foreclosures are triggered by a lender when a homeowner has stopped making monthly payments. In many cases, the home has been abandoned or left in disrepair by the owner. In a foreclosure, the lender attempts to recover the money owed to them by forcing the sale of the home.

Both short sale and foreclosed homes can be less expensive than regularly listed homes, but you might have to do some extra digging to find them. You may need to search bank websites, look up government-owned listings, visit county offices or pay for a foreclosure listing service.

You should also expect a more involved and lengthy process than with a normal sale. An experienced real estate agent can do a lot of the heavy lifting for you if you want to explore these alternatives.

Look Into Starter Homes

If you’re a first-time home buyer, then you might want a starter home, which is often smaller and more economical for those on a budget. Keep in mind that opting for a smaller home doesn’t mean you have to live there forever; you can always upgrade down the road. When you’re ready, your real estate agent can help point you in the direction of starter homes in your budget.

Keep Your Options Open

While house hunting, you may realize that your wants and needs don’t match with your budget. Maybe your heart is set on a four-bedroom home, but they’re all out of your price range. It’s time to make the hard decisions or get creative. Can you add a bedroom in a basement? Can you turn an office into a bedroom? A home that may appear off-limits could potentially make it back on your list.

If you’re still having trouble finding the right home, you might have to adjust your list of must-haves and nice-to-haves. If there’s something on your nice-to-have list that’s preventing you from settling on a house within your budget, consider getting rid of it.

Finding the right home can take some time. Start by getting initial mortgage approval from your lender and setting a budget. Then, look at your local housing market, both online and with a real estate professional. Decide what your ideal home needs to have and narrow your search. When you decide on a few properties that interest you, schedule visits and attend open houses.

Are you ready to start house shopping? Start the mortgage approval process to see what you qualify for today.