- House Shopping
A Guide To Shopping For A Home
Shopping for a home can be one of the most exciting times of your life, but it’s important to ask yourself a few questions and explore how to balance your wants and needs with your budget beforehand. Here are some tips to help find the home that’s right for you at a price you can afford.
How To Start House Hunting
Here’s the home-searching process broken into five easy-to-follow steps.
Step 1: Determine Your Budget
Before you begin looking at houses, determine how much home you can afford. Use an online budget calculator to track your expenses and figure out where a house payment may fit.
Keep in mind your mortgage payment isn’t the only cost you’ll incur each month. Consider property taxes, insurance, maintenance costs and homeowners association fees when creating your monthly budget. Leave yourself plenty of financial wiggle room for things like medical emergencies and unexpected bills. You can use a mortgage calculator to estimate what your monthly payments would be.
In addition to budgeting, you’ll need to get a mortgage preapproval. A preapproval is a letter from a mortgage lender that tells you how much of a loan you qualify for.
Note that a preapproval is different from a prequalification. When a lender says you’re prequalified for a certain amount, they’re giving you a rough estimate of what you can afford. For a prequalification, most lenders only ask for verbal confirmation of your income and credit score.
Preapprovals hold more weight than prequalifications because lenders request access to your bank statements, W-2s and credit report. With a preapproval in hand, you can start looking at homes within your budget.
Step 2: Make A Checklist Of Things You Need, Deal-Breakers And “Nice To Haves”
You probably have a vision of what your perfect home looks like, but shopping for a home might involve sorting out your priorities. Create a list of ideal qualities you want in a home and sort them by importance. You might consider organizing these features into three categories: needs, deal-breakers and “nice-to-haves.”
When something is a need, you simply must have it in your home. For example, you might absolutely need three bedrooms to accommodate your family. Ideally, you’d want the home to already have this feature, but you can always invest in it yourself after purchase.
A deal-breaker is a feature in a home that immediately takes it off your list. For example, maybe a home you’re researching doesn’t have a backyard and that’s something you can’t live without. Whatever those deal-breakers may be, they’ll help you sift through real estate listings more efficiently.
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. For example, you might prefer that your new home has a pool in the backyard, but it’s not a requirement.
Step 3: Check Around Online
Browse available homes online to get a feel for your local housing market. Online real estate websites can give you a close-up 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.
Compare the prices of what you see in the marketplace with your budget. Then, write down a few addresses and contact 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.
You might notice that some real estate professionals are real estate agents while others are REALTORS®. A real estate agent is a professional who has passed the necessary licensing examinations to be a real estate agent 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, have a strict code of ethics and a clean professional conduct record.
Look for credentials in your real estate professional such as Accredited Buyer Representative (ABR) or Certified Buying Representative (CBR). You might also consider a professional who holds a real estate broker license, which means they’ve gone even further in their 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 set expectations and needs 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. 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 decide to buy the home.
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 neighborhoods 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 for you.
Find out what you can afford.
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Other Tips And Tricks
Still having trouble finding the perfect home? Here are extra tips to make shopping easier.
Consider Other Types Of Homes
If you’re coming up empty-handed, it may be time to think outside the box. Why not look into short sales, foreclosures or other types of properties?
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 to avoid foreclosure.
On the other hand, foreclosures are triggered by a lender when a homeowner has stopped making monthly payments. 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. An experienced real estate agent can do a lot of the heavy lifting for you if you want to explore alternatives.
If you’re a first-time home buyer, you might want to choose a starter home. Starter homes are often smaller and more economical, so they can be ideal for first-time buyers 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.
Keep Your Options Open
During your home search, you may realize that your wants and needs don’t match with your budget. Maybe your heart’s set on a four-bedroom home, but they’re all out of your price range. Can you add a bedroom in a basement? Turn an existing office into a bedroom? Think carefully and creatively so a home that may appear off-limits could potentially make it back on your list.
And finally, if you’re still having trouble finding the right home, you might have to adjust your needs and nice-to-haves lists.
Finding the right home can take some time. Start by getting a preapproval from your mortgage 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.
It’s definitely important to find a home you’re happy with, but it’s also important to stick to your budget. If you’re having trouble finding the right house, consider looking at short sales, foreclosures and starter homes. Reset your needs and wants to find an affordable home that checks all the boxes on your list. Rocket HomesSM can connect you with a real estate expert in your area to help you in your home buying journey, and Rocket Mortgage® by Quicken Loans® is here to help you figure out which loan option best fits your financial situation.
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