Buying a house - whether it’s your first or fifth - can be a bumpy process. Between the financing, the availability (or scarcity) of homes on the market in your price range that meet your needs, the offer process, the appraisal and the inspection, there’s a lot that can go wrong between deciding that you are in the market for a new home and turning the keys for the first time in your new front door.
But there’s a lot that buyers can do to make the process smoother. Here are six key tips.
1. Check your own credit
If you’re like most Americans, you’ll need a mortgage loan in order to purchase a house. The amount of money that a lender is willing to loan you will depend on several factors, including:
Your current income
The amount of down payment that you’re bringing to the table
You might or might not have a lot of influence over your current income, and you might or might not have wiggle room to save up for a down payment, but one thing that you can almost always work on is your credit. Get copies of your credit report to ensure that everything on it is accurate; fix any errors, and consider talking to a credit expert who can tell you which payments to prioritize and how to improve your score.
2. Research sales prices in your area
While you’re considering exactly what kind of home you want yet (and we’ll get to that), you’ll also want to think about how much that home might cost. This would be a good time to talk to an expert, like a real estate agent, about the sales prices in the area.
An agent can show you current active listings and do a market analysis for you. An agent is also a good resource to tap when you have other financial questions about homeowners’ insurance or other costs of homeownership, like common maintenance costs in the area.
3. Consider all the costs
There’s more than PMI to think about when it comes to a mortgage loan - you will also be paying:
Homeowners’ insurance premiums on the house
Flood insurance, and often supplementary earthquake policies are worth considering (depending on the location)
You will likely need to pay closing costs, and you probably have furniture and items to move, so you’ll have to cover those expenses. And then there’s the wear and tear on the home and the cost to repair it, and the costs of utilities from month to month; a good local real estate agent can help you figure out what to expect.
4. Get to know your deal-breakers
Almost as important as knowing what you want in a home is knowing what you definitely don’t want. But don’t confuse a “dislike” with a true and genuine deal-breaker - a feature of the home that you can’t realistically fix.
If you haven’t tapped into the expertise of a real estate agent yet, now would be the time. An agent can help you understand what’s fixable and what’s not in a house you may be considering.
5. Search accordingly
One tool that real estate agents have that the general public doesn’t is access to the local Multiple Listing Service (MLS), where homes are actually listed for sale. Once you understand your must-haves and your deal-breakers, your agent can set up a personalized alert anytime a home that meets your exact criteria is listed on the market.
6. Think competitive but reasonable
You probably want to avoid a bidding war (not great for your wallet!), so you’ll want to make an offer that the seller will consider competitive. At the same time, you don’t want to pay more when the seller would accept less; an experienced real estate agent can help you navigate the field of exactly what to pay and come up with an amount that’s a good deal for you and priced high enough to capture the seller’s attention.
Don’t forget that there are other concessions you can make to sweeten the deal beyond sales price - like giving the seller control over the closing timeline or offering to split the price of any necessary repairs discovered in the inspection. Your agent can walk you through popular options here, too.