The best way to be successful in your house hunt is to be well educated in the process from start to finish.
Making the decision to buy your first home is an exciting milestone in your life. Part of the American dream is staking your claim on a piece of land that belongs to you.
Naturally, you would think that the first step in this process is to start looking at what homes are available in your area. The problem with looking at homes too early in the process lies in the fact that you might be looking in the wrong price range for your budget and your family.
The best way to be successful in your house hunt is to be well educated in the process from start to finish. Following these three simple steps will simplify the process and get you into the home of your dreams.
1. Get preapproved for a mortgage
Do you know the difference between prequalified and preapproved? Mortgage terminology can be confusing.
Prequalifying means you’ve been initially screened by a lender. It is only the beginning of the process. Usually, you will submit some basic information, and the lender will provide a rough estimate of what you might be able to afford. Notice the key words here… “rough estimate” and “might be able to afford”. This is a ball park estimate of your affordability range and will not help you seal the deal on a home.
Conversely, Preapproval is the bigger beefier brother of the loan world. This takes the prequalifying a step further. Your lender will gather additional financial information like a credit report, tax returns, bank statements, and employment verification. With a preapproval letter from your lender, real estate agents and sellers know you are a serious buyer and you have a firm idea of what you can afford.
This letter can be shown to sellers when bidding on a property. It proves that you already have backing and the ability to go through with the sale, which makes you a much more attractive buyer to sellers.
2. Find a good agent
Schedule a counseling session with your agent. This is where the agent asks the first time buyer questions like why they are buying a home, if they have spoken to a lender, what are their needs, what are their wants and preferences. Why waste time seeing property after property that are inadequate. Your agent needs to know the big picture so that they can help you find just the right home.
Keep in mind that not all Real Estate Agents are created equal. It’s important to be working with an agent you can trust. You want to research any agents that are recommended to you by checking their online reviews and talking with their former clients. Some agents take a no nonsense approach and some are very social. The key is finding an agent that fits well with your needs and personality so you can work together well.
3. Do your homework
By this point in the process, you know what price range you are searching in. Make a list of features that you are looking for in a house and separate that list into “needs” and “wants”. You may want a newly remodeled kitchen but you really need at least 3 bedrooms. Make sure to go see properties that line up with your “need/want”. Visit no more than 3-5 properties at a time, and don’t waste any time going to see something ‘just to see it’.
It is a sellers’ market right now which means that there are many buyers looking for a new home and a severe lack of inventory. A good agent will keep you up to date on new properties. By being the first to see a new listing you are likely to get in the first offer. This gives you an advantage because the seller will most likely come to you first with a counter offer or notification of a competing offer. You will start your negotiations from a position of power. Many times the seller is so happy to get a fast offer that they will accept before anyone has a chance to enter competing offers. Your agent will help keep you abreast of the lasting listing that fit your needs.
When you enter the market as a serious buyer, it is best to come prepared. These three simple steps will ensure that you are set up for success.
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