Home Buying 101:
Thinking of Buying?
Top 5 Tips For Getting Started!
Does purchasing a home feel overwhelming or even impossible? Do you even know where to start? Have you started a search only to wind up frustrated? Read on for helpful tips that take the guesswork out of home buying.
1. Meet with a lender FIRST.
There’s a lot to learn about home financing so it’s best to start here for several reasons. Firstly, you’ll begin to get educated on how mortgages work and what types of loans are available (20% down payments are not the only game in town anymore, low interest/smaller down payment loans may be an option). Secondly, your lender will review all your financial information and check your credit. This will allow you to troubleshoot any issues. Thirdly, you will find out what your budget should be and how much of a loan you will qualify for. Lastly, you will be able to obtain a pre-approval letter, which ensures sellers you are qualified to purchase the home they are selling. Pre-approval letters are essential when putting an offer in on a home.
Meeting with lenders does not cost you money and does not require you to obtain your financing with those you meet for pre-approval. Ask those you trust for referrals to great lenders and while you’re at it, I recommend meeting with several lenders. Different lenders (large banks vs. mortgage brokers) specialize in different types of loans and meeting with several types allows you to see all the options available to you and decide with whom you feel most comfortable working.
*Note: Pre-approval is NOT the same as pre-qualification. Pre-approval is based on actual income, debt and credit. Pre-qualification does not require documentation of stated income, etc. and is therefore not an acceptable substitution for a pre-approval letter.
2. Set your budget.
After you meet with your lender, you’ll know what type of loan you qualify for. But, what a lender can offer you can be very different than what you feel comfortable spending. Remember, this is your home and your money, and you need to feel at ease with your monthly payments. Be realistic, as unexpected expenses can and do come up when you’re a homeowner.
Many websites offer mortgage calculators, but not all include the additional fees homeowners pay on top of their mortgage. Your lender will be able to give you a breakdown of what your monthly payments will look like, including items like taxes and insurance. Also, be sure to figure in the other fees that you may not be accustomed to, for example: utilities, routine maintenance (pest control, landscaping), and HOA’s (Homeowners Association fees - if purchasing a condominium).
3. Only look at homes within your budget.
That’s worth repeating: Only look at homes within your budget.
You probably aren’t going to adhere to that rule and I totally get it. It’s enticing to look at all the gorgeous properties that are just outside of your price range. But, it can also make the search frustrating—it’s human nature to want what we can’t have! So, do yourself a favor and be very responsible about looking only at that which you can afford. Then, use your creative energy to imagine the possibilities of the homes within your price range. It’s pretty amazing how knocking down one wall and adding a fresh coat of paint can completely transform a space, and the internet is brimming with great ideas for sprucing up rooms on a budget. When you’re a homeowner, the possibilities are endless.
4. There is No “Flawless” Home, So Come Up with Your Own Top 5 List.
It may be hard to believe, but even in the luxury home market there may be undesirable qualities about the home or where it is situated. This is why I like my buyers to come up with their “Require or Desire” lists. You may not be able to get everything you want, but you’ll hit on the most important qualities.
Try this: Envision yourself in a new home and neighborhood, spend some time thinking about what your daily life would be like, and start answering the important questions. How many bedrooms do you need? Can you live without that extra bathroom? Is reserved parking essential? Do you thrive on being able to walk to shops and cafés? Is your heart really set on a particular architectural style? Once you have a detailed list, sort these into “Require” and “Desire” categories and try to limit your “Require’s” to 5 to begin with. Next, project 5 years into the future. Does your “Require or Desire” list change? Staying in a home for at least 5 years is useful in helping to safeguard against economic downturns and ensure that you don’t outgrow your space too quickly. That is not to say that you can’t buy, turn around and sell 2 years later and turn a big profit, but it isn’t wise to bank on that!
5. Trying to Time the Market Perfectly is a Useless Exercise.
We all want a great deal but trying to anticipate the housing market is impossible. Real estate goes up and down for a multitude of reasons. The best time to buy is when you find a great home that you can see yourself living in for several years and you can afford it. If you try to wait for the perfect time, you could miss out.
Think less about timing and more about your own personal and financial readiness. Though home buying can feel like an emotional roller coaster at times, it’s important to stay calm, gather all the information you can, and make informed decisions that are based on facts. If you do that, you’re ahead of the game.
The idea of homeownership may be daunting, but the ability to create your own sanctuary while building equity is one of the most liberating and rewarding experiences!
Thanks for reading! If you live in the Los Angeles area and are interested in learning more, feel free to contact me: firstname.lastname@example.org
Sarah McMaster is a Los Angeles based Real Estate Agent whose top priority is helping her clients achieve their personal and financial goals. With honesty, hard work, in-depth market research, and an eye for design at the forefront of her skill set, Sarah focuses on making the process of home buying and selling as informative, result-oriented and stress-free as possible.
Sarah McMaster / Keller Williams Realty
*Please note that not all experiences, beliefs and ideas are shared by each member of the “The New Hollywood.” We are a group of shepherds, not sheep.