Are you looking to purchase a home in today’s market? Whether it be you’re a first time home buyer, if you’re upsizing or even downsizing, or adding to your investment portfolio, you should be informed and educated. This is going to be one of the biggest financial decisions you make, so being prepared is a crucial first step in your real estate journey.
Take the time to educate yourself about what you are getting into before you commit to buying any property. The following tips are here to help you get started.
1. Have a Lender Pre-Approve you Before Shopping
By doing so, you’ll know your spending power and won’t look at places you simply cannot afford. Pre-approval means you should be able to get the loan as long as nothing changes about your financial situation or your credit score.
A pre-approval letter also helps when you want to compete with another buyer for a home you love. One of the first things most sellers are going to ask their agent when receiving an offer is how qualified the buyer is to purchase. Sellers want to feel comfortable knowing the buyer is not going to get turned down for the loan. To get pre-approved lenders will verify employment, income, and credit.
2. Know your Credit Score
Your credit score is one of the biggest factors in what your loan terms will be. Know your score before you ever try to get a loan and take the time to repair it if it is lower than 700. A good score which leads to a low-interest rate can save you tens of thousands of dollars over the life of the loan.
3. Know about Closing Costs and Other Fees
Insurance, repairs, association fees, property taxes – you should have the income and the budget to handle all of these things if they are relevant to your purchase. Your realtor will be able to inform you about most of these costs, as well as your real estate lawyer. You should also have some savings to cover emergencies with the home.
4. Work with a Skilled Realtor
Working with a real estate agent that understands market values in your area is critical if you want to avoid overpaying for your house. Ask your realtor for a financial analysis of the neighbourhood, the future projections in value and how the listing compares to others in the same area. In addition to the actual purchase price, there are other fees like appraisal and inspections that can cost you more when you don’t understand the value of the home.
Choose someone that is full time working in the business every day and has a recent history of successful and happy clients. The better the real estate agent knows the area, the better equipped they will be in understanding the differences in market value from one property to the next.
5. Know the Potential Growth of your Investment
Buying a fixer-upper in an area that is growing offers the possibility of an increase in the value of your home versus others that are completely finished. In contrast, buying the nicest house in the area may not have much of an upside.
Consult with your real estate agent and ask them their opinion on the prospects for profit if the general area continues to rise in value. Will the home lag the market or be a stalwart? If the return on investment is necessary, this is surely something you should find out.
By educating yourself on the real estate market, and preparing your financial situation, you’ll ensure the home-buying process is seamless and enjoyable. It really is possible.