Buying a home now-a-days isn’t as easy as it once was! During the real estate crash back in the mid-00s, home prices were plummeting. As a result, buyers only had to show up with a pre-approval letter in order to walk away with the home of their dreams. Fortunately, the recession is behind us and the real estate market has recovered. With that being said, what’s good for homeowners isn’t exactly ideal for homebuyers. Today, lenders are stingy, home prices are skyrocketing, and the real estate market can be a crapshoot. With so many variables working against you, how can you walk away with the perfect home for yourself and your family?
While it is true that the market has moved toward the homeowner, that doesn’t mean that you should be without hope. In fact, thanks to the advice that we are about to give you, purchasing your next home might be more affordable than you could have anticipated. While buying your next home is going to be a process no matter what, you keep on reading to find ways to alleviate your financial burden. With any luck, the following advice will lead you to your dream home! Today, we are going to be showcasing how YOU can make buying a house in America today an affordable process.
Know When To Buy A House
If you want to find success in purchasing your first home, you are going to have to take a measured approach to the entire process. So often, we’ll see homebuyers enter into the market before they are ready to handle it. Buying a home, even if it isn’t your first home, is a gigantic step. After all, this will likely be one of the largest financial decisions that you make in your life. How do you know when you are ready? After all, purchasing a home comes with plenty of maintenance, upkeep, and hefty financial decisions. Should you be afraid of making your first purchase?
You are ready to settle
First and foremost, you shouldn’t purchase a home until you are absolutely ready to settle down. Think of your home as a place to grow your family, your life, and your career. Unless you plan on immediately flipping this potential piece of property, you are likely going to be in the same place for at least a couple of years. If you aren’t ready to settle down, your home could quickly begin to feel like an anchor.
You work in the area
When we say ‘area‘, we don’t mean just down the street. Commuting is a way of life for some people, but don’t buy a home that will put you significantly further away from your job than need be. When you work near your house, you minimize your commute time which thereby makes you a happier and healthier person. If you are considering buying a home far away from your current job, you’ll probably want to have a new job in place.
You understand your finances
We’ll get deeper into this discussion at a later point, but we’ll touch on it now. You should not consider purchasing a home until you have a firm grasp of your finances. If you are co-signing on a piece of property with a significant other, they also need to have their finances in order. Too many people get in over their heads by not really considering the financial impact that comes with purchasing, owning, and maintaining a home.
You are ready for the responsibility
Finally, you also need to have a grasp on the responsibilities that come with owning a home. If you are used to renting, you’ll likely be given a rude wake-up call when it comes time to fix your furnace or take care of your yard. Take a moment to look into what to expect when you own a home. If you are ready for that burden, you are ready to make your purchase.
How do these concepts impact the affordability of your home? How can knowing when to buy a house keep your costs low? That’s actually a deceptively simple question. If you know that you are ready to buy a home, by checking off the list that we highlighted above, you’ll have your finances and your mindset in order. A calm and collected buyer is a buyer who will get their money’s worth.
Hire An Experienced Real Estate Agent
While our first bit of advice may have intimidated you, we don’t want to leave you with that impression. Buying a house is a serious job, but it isn’t one that you need to fear. In order to make your home buying process easy and affordable, you should consider hiring a real estate agent to assist you during your journey. Now, we aren’t intending to toot our own horns, but we do believe that a qualified real estate agent can help to dramatically reduce the expenses that you are set to incur. What can a real estate agent do for you? How can an experienced realtor help you to save money?
We understand the market
Purchasing a home without the assistance of a realtor can be like stepping into a hurricane. Before you know it, you are drowning in information while preparing to make a semi-reckless offer. As an experienced real estate agent, we understand many of the intricacies of the market that are lost on the average homebuyer. We’ve been through countless sales, and we’ve seen how the housing market can jump, zig, and plummet. An experienced realtor can stop you from making an overpriced offer by relying on the analytics and understanding that is intrinsic to our work.
We can help you find financial aid
Grants and loans aren’t just for students! A good realtor will be able to guide you to potential money-saving financial assistance offers. Whether you qualify for the first time homebuyer credit or your status as a veteran offers you some financial relief, we are trained to impart that wisdom upon you. The truth is, homebuyers that don’t work with realtors often don’t even realize what they are missing out on.
We can help with negotiating
Negotiating a property contract is a pretty confusing task in even the best of circumstances. Without a realtor, one who is seasoned in the art of dissecting a contract, you might end up overpaying for less than what you deserve. Real estate agents are able to negotiate a variety of different benefits for you. From saving money to demanding upgrades be made before you move in, we can make sure that you are getting everything that you need at an affordable price.
We’ll show you the right homes
If you are a first-time homebuyer, this is a particularly important benefit. An experienced real estate agent will find you homes that meet all of your needs while also allowing for you to save money. Experienced realtors will be able to smooth over cheap cosmetic problems in order to help buyers see the potential underneath. Conversely, experienced realtors will make sure that you are sticking to homes in your price range. Real estate agents are kind of important, after all.
We are not saying that real estate agents are some kind of monolithic hero, brought to you in order to deliver an affordable home on a silver plate. What we are saying, however, is that experienced real estate agents are good at their job. When you get a real estate agent that is good at their job, you know that you’ll be saving money hand-over-fist.
Understand Your Deal Breakers
By this point in time, you have a realtor by your side and a firm grasp of your social situation. You understand what you can afford and you have the means to start looking at houses within your price range. With all of that being said, your dream house isn’t just any house and you shouldn’t be forced to settle for less. At this point in time, if you want to keep your costs down, you need to understand what your deal breakers actually are.
Let’s say that you want a home with three bedrooms and two bathrooms. You also want a large backyard and an attached two-car garage. Simple, right? Wait, there’s more! You also want your home to be within twenty minutes of your office while also being convenient for local shopping. Suddenly, your demands have seriously limited your options. In order to get the perfect home, we now have to thread the needle through the tip of a pencil. Put simply, your demands may have just priced you outside of your budget.
Let’s comb back over our list one more time. What ‘demands’ do you think you could actually live without? If your dream home cost $175,000 but a similar home is available, sans the attached two-car garage, for $140,000, do you opt to drop one of your deal breakers from your list? Of COURSE, you do! Deal breakers are a great way to guide your search, but they shouldn’t be set in stone. Understand what you are looking for and what you desire, but also keep in mind the realities of your search. If you can get 95% of your dream home for 70% of the price, that’s impossible to ignore.
Purchase a Fixer-Upper
The easiest way to make buying your home affordable is by looking for ‘fixer-uppers’. Purchasing a house that needs a bit of work can be a great way to save money, build equity, and personalize your property. While most home buyers go into the process with the idea that they’ll get a move in ready home, that isn’t always going to be the case. In fact, many experienced buyers will demand to see the homes that need work before heading to the homes that are move in ready.
The simple truth is that when you purchase a perfect home, you end up paying for it with your mortgage loan. Homes that are immaculate and move in ready will always cost more, thus moving you further away from building any real equity with your property. If you can withstand a bit of work while retaining your patience and sanity, a ‘fix-it’ home might be the best option that you have for buying a houseat a cheap price.
Understand Your Money
Alright, I promised we would come back around to this subject, so here we are. In order to get a great deal when purchasing your home, you are going to need a firm grasp on your finances. Understanding your finances and how to make them work for you will take a multi-pronged approach. Let’s go ahead and outline the financial aspect that you need to understand during the buying process.
Get your credit in check
Before you even start shopping around for pre-approval letters, you should know your credit score. Your credit score will be directly tied to your lending rates. Your lending rates will decide how much your home actually ends up costing you. If you have outstanding debts that you can take care of, thus reducing your debt-to-income ratio, knock that out. Order a free credit report and take a long hard look at what you need to do to repair your credit.
Save for your down payment
Most people plan to have about 20% of their home’s value prepared as a down payment. Having a healthy down payment prepared will go a long way toward getting the monkey that is private mortgage insurance (PMI) off of your back. Additionally, the higher your down payment, the lower your monthly payments will be.
Shop for lending rates
All lenders are not created equal. Before you sign on the dotted line, get quotes from several mortgage companies. You might even be able to find an affordable rate through your primary banking institution. The reason you want to shop around for lending rates is simple. Your lending rates will impact how much your home costs you. Higher rates will turn into higher payments.
Stop opening loans and credit cards
At least until you purchase your home, that is. Every time that you apply for a loan or credit card, your credit is hit with a hard inquiry. Hard inquiries directly impact your credit score which can make it harder for you to get affordable loan rates.
As you can see, there are many ways that you can cut down on your final price at closing. The big thing that we want to urge you to understand is this, be prepared for the long-haul. Purchasing a home isn’t a simple transaction. Don’t let the moment overwhelm you and don’t begin rushing simply to get the job done. Stick to our advice, hire an experienced real estate agent, and go out in search of the home of your dreams.