Buying a home comes with a lot of uncertainty. Let’s face it, it is one of the biggest financial and emotional decisions you will make. That need and desire to get it right certainly puts a lot of pressure on you and any decision that you will be making. You need to have the information to feel confident that your decision is the right one! Here it is:
Find the right brokerage and agent
First and foremost, you need a brokerage and an agent that you firmly trust and believe in. It can be difficult to know who is right for you, so you need to ask the right questions. You will know when you have found the right brokerage and agent because they will help you to feel confident; they will have access to the resources you need; they will know your market; they will listen more and talk less; and most importantly, they will ask you the kinds of questions that are essential to them providing the best experience possible, for example:
- What are your goals?
- What do you expect from this experience?
- What are some of the concerns you have?
- What are the biggest obstacles you expect to face in buying a home?
- How can I best serve you?
- How do you want me to communicate with you?
- What is your schedule like?
Knowing what to expect is important, too. Your real estate agent should be a wise teacher who can help you understand the ins and outs of the process. They will, of course, show you properties and help you write an offer to the seller. They should be a solid negotiator who can go to bat for you and help you achieve your goals. They also need to be market experts and be attuned to what is happening in the local market where you hope to buy a property.
There is no time like the present
If you want and need to buy a home, if your rent continues to skyrocket, if you are ready to settle down and know where you want to do it, then you should make your move. Get pre-approved by your lender and lock in your interest rate as soon as possible. But… make lenders work for your money. Have them bid against one another to get the best rate that you can get. Ask your agent for recommendations. They have been working in the industry and know lending in and out, so utilize that knowledge.
Likewise, home prices are not going to go down. They won’t likely go up this year either, which gives you the buyer the ability to take a breath! But, you have heard the stories from the wise… “Gee, I sure wish I would have bought it back in 1975. That property was only $20,000 dollars.” Don’t get caught saying that 20 years from now.
Also beneficial to buyers this year is there likely won’t be as much competition for a single home. You won’t have to go up against 30 other buyers, some of whom were offering 30% plus over asking prices as was often the case in 2021-2022.
Manufacturing is also in full-swing again which means more building materials. More building materials mean more construction and new homes thereby easing the competition for existing homes while helping keep home prices in check. And because of the current economy and interest rates, you likely won’t have to contend with the high numbers of buyers all vying for the same home, making the buying experience a little more slow paced and a lot more enjoyable. In other words, if you can find a home you like that is in your budget, then now is the time to go for it.
Financial readiness is key
Making sure you are financially ready is certainly essential. The right time is greatly dependent on the individual and the situation. Make sure you have a good work history which means at least two years of stability and reliability.
Look at your debt-to-income ratio. Your lender is going to be looking at your bills, your credit cards, your car payments in comparison to how much you are making. It is a great idea for you to try to calculate your DTI before you approach a lender. It is likely that they will want it to be less than 40% in order to qualify for most mortgages and loan types.
Whatcha gonna put down?
An important piece of home buying is the down payment. Do you have enough? While you can get a home without money down, it is very difficult, and most likely, you will need a minimum of 3%. Equally important, the more you can put down, will improve your chances of getting a lower interest rate.
Also, there will be closing costs which will be determined by your loan type, the lender, and your location. You can expect approximately 3-6% which includes appraisal fees, title insurance, and agent commission. If you qualify for a government loan, you will most likely need to pay insurance and a fee for funding before or upon closing.
The time for buying a home is different for everyone and every situation. Utilizing your resources is one of the best ways to make an informed decision. First, talk to your financial advisor and make sure you are in a solid place for such a large purchase, and secondly, call 616 Realty. They are a hometown brokerage with centuries of collective real estate experience you can utilize to get all the information you need to make the right decision for you.