7 Things to Do Before House Hunting
House hunting can be overwhelming, especially if you’re a first time buyer.
It’s exciting and exhausting at the same time. How do you even know where to start in the process?
Whether you’re hunting for your very first house or your fifth, the process will be much smoother if you have a plan and a house hunting checklist.
If you’re jumping into the real estate market, here are 7 things to do before you start house hunting.
1. KNOW YOUR CREDIT SCORE
First things first: don’t go house shopping without getting a mortgage pre-qualification.
Have you found a house online you’re just dying to see? Don’t pull into the driveway until you’ve talked to a mortgage broker first.
There’s nothing worse than putting in an offer on your dream home, only to find out you don’t actually qualify to purchase it. That’s unnecessary frustration not only for you, but for the sellers and realtors as well.
As a former mortgage broker, it was so hard for me to tell someone they didn’t qualify to purchase the listing they had just laid on my desk, but sometimes I had no choice. I felt like a dream killer more than once.
Your credit score in particular is important because only two things determine the interest rate you get on your mortgage: the amount of your down payment and your credit score.
There’s nothing that will kill a sales contract faster than finding out you can’t qualify to buy a home. If you find out your credit isn’t up to par to buy a home, work on fixing it first, and put your house shopping on hold for a while.
Don’t panic — there will be plenty of homes available once you’re able to start your search again.
2. MAKE A BUDGET
You should decide ahead of time what amount you’re comfortable with paying per month for your mortgage. Then go to your bank for your pre-qualification letter.
Hopefully you already have a budget and know what will work for you and what won’t, but if you don’t, now is the perfect time to start one. It’s important to do before you have a mortgage payment.
A budget is important because by using one, you’ll always be aware of where your money is going. If you currently use one, then you’ll already have a good idea of how much you can comfortably afford.
Don’t get starry-eyed and blow your budget if your loan officer tells you you’re qualified to purchase a more expensive home. Know your max, and stick to it.
A budget will also help you determine how much you can afford to pay for utilities, furnishings,and decorations for your new home. It’s easy to get carried away with buying new items for your home, but a budget will help you manage these expenses.
3. FIND A DILIGENT REALTOR
The next step is finding a realtor who will work for you. You want someone who will stand up for you in the final walk-through or at the closing table if something doesn’t go right.
You also want someone who has lived in the area for a long time, who knows the market, and who is knowledgeable about the costs of home repairs and upgrades.
A good realtor can point out problems with potential homes before you get too attached to them. I appreciated having a realtor who pointed out disadvantages to specific properties, especially as a first-time home buyer without good knowledge of basic home repairs.
The best way to find someone who will work hard for you is to ask for recommendations from friends and family members. (The same rule applies to finding a reputable mortgage broker.) They’re making a lot of money off of you, so they should be in your corner at all times.
I’ve seen many bad realtors and many great realtors, so if your realtor isn’t working for you, find a new one. There’s not a shortage of realtors these days, so make sure you are happy with yours.
4. MAKE A LIST OF NEEDS, MUST-HAVES, AND WANTS
You may end up seeing so many properties your head will be left spinning. You might forget some of the things you were looking for in the first place.
Before you look at any houses, make a list of your needs, must-haves, and wants. This way, if you get overwhelmed after seeing too many homes, you can simply refer back to your list and remember what it is you’re looking for.
This will also be helpful for your realtor to reference as well.
So many people say that when you walk into the right home, you’ll just know. That certainly isn’t true for everyone, and it wasn’t true for me.
When I first looked at my current home, I appreciated it, but I didn’t get an overwhelming feeling about it.
It actually wasn’t until I slept on it that I realized it would make the perfect house for us. It had everything we needed for our family at a ridiculously affordable price. I didn’t fall head over heels for it at first glance, but now I’m so happy with my choice.
Don’t let anyone tell you it will be love at first sight, because that doesn’t always happen, especially if you’re in the market for a fixer-upper or a foreclosure.
5. CHOOSE YOUR LOCATION
It’s going to be really hard for your realtor to show you the best housing options for you if you don’t know the area you want to reside in. You’ll end up all over the place if you don’t.
If you aren’t sure about your specific location, spend some time in the areas you’re interested in at different times of the day to get a feel for the area. Good times to visit are rush hour times and nighttime.
Afterward, ask yourself these questions:
- Do I feel safe there?
- Is there an abundance of traffic at rush hour?
- Is it on a busy road?
- Does the neighborhood look clean and well-kept?
Choosing a set location ahead of time will help narrow down the list of properties you see. It will also help you avoid seeing tons of houses that are in a less than desirable location.
6. SAVE AN EMERGENCY FUND
If you don’t have an emergency fund saved yet, buying a house isn’t a wise option.
Houses mean constant maintenance, even if you buy new. You don’t want to be caught without heat in the dead of winter just because you can’t afford to fix your furnace.
You also don’t want to be forced to pay for it on a credit card when you realize you really can’t live without heat.
Don’t put yourself in this position and end up sinking. Save for emergencies.
7. CHECK YOUR EMOTIONS AT THE DOOR
Buying a house is an emotional process, but do your best to keep your emotions out of it before you make a hasty and unwise decision about a house that’s financially out of your reach.
Buying a house is a business transaction, so play it cool and keep your emotions in check. You’ll be thanking yourself later.
When I bought my first house, I was so set on finding a charming, vintage bungalow, that I let everything else about the house blind me.
I finally found what I thought I wanted, for about $20,000 more than my original budget. The house was a dream, but it was on a really busy main road, and in a less than desirable school district.
It barely had a yard, and our neighbors were practically on top of us on all sides.
I bought the house anyway, and for the next two years, I never went in my front yard. I constantly worried about our privacy, and I kept my blinds closed at all times.
It wasn’t exactly what I had envisioned when I was signing the closing papers on my house.
Source: Everything Finance Blog