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Want to get off on the right foot for your home-buying journey? Keep reading for two important tasks to complete first.
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The current housing market is difficult, to say the least. And yet, there are plenty of people (including yours truly) who are preparing to enter the fray and attempt to find a new place to call home. If you’re among them, you might be feeling stressed out and wondering where to begin. Should you start attending open houses, or refreshing Zillow listings every hour? Nope. Focus on these two moves first.
1. Shop around for a mortgage loan
It’s important to be realistic about how much you’re going to pay for a mortgage loan in this market — more than you want to, no matter your financial status. As of this writing, the current average rate for a 30-year fixed loan is 7.5%, according to Freddie Mac — in the first week of 2022, that number was 3.22%.
With these higher rates in mind, your best move at the start of your home search is to seek out pre-approvals from a handful of mortgage lenders. Try to get a diverse group — think online lenders, traditional banks, and even local banks or credit unions. Target lenders that work with people with your financial profile — if you’re a first-time buyer and your credit isn’t in the best shape, think FHA lenders. Or if you’re a current or former military service member, a VA loan could be just the ticket.
When you send over your financial details (like tax returns, W-2s, bank statements, and beyond), a lender will be able to get an idea of how much you can afford for a home purchase. This is crucial information at the beginning of your search, and if you couple it with your own calculations (try our mortgage calculator), you’ll emerge with a target home price in mind, and can tailor your home search accordingly. If you know $300,000 is the top end of your budget, you can avoid homes priced above that — thereby sparing you some heartache and also the temptation to stretch your budget to afford more.
2. Find the right real estate agent
The other crucial step to take before you start looking for homes to buy in earnest is to recruit your best friend and biggest advocate for the process: a real estate agent. The right real estate agent can make or break your home search — you want someone who is committed to helping you find the best home for you. Plus, housing supply is limited and competition is fierce as a result. A good agent will do whatever they can to help you craft the best offers that are likely to be accepted.
There are a few ways to approach finding the right agent. If you have contacts in your city who’ve bought homes, ask them for recommendations. You should also check online reviews for agents you’re considering. When you reach the point of that initial phone call or email, go in with a list of questions to ask. How long they’ve been an agent, whether they work full time, and how well they know the area are all of particular importance, so focus on these.
And don’t forget to ask how they communicate, because this is one area where you might find a mismatch. If you prefer texting or email, and they want to chat on the phone, either or both of you could quickly become frustrated with your home search. And if you end up needing to part ways with an agent, do so gracefully.
There’s no guarantee of having an easy time buying a house in any market, and if you’re hoping that buying in the near term will be light on stress and high on reward, you should probably readjust your expectations. With that in mind, making the above moves can help set you up for success, even if the process is more stressful than you’d want. Good luck out there.
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