Searching for a new home is an exciting proposition, but it can also be scary, especially at a time when the cost of living is rising. If you’re ready to relocate, or you’re keen to buy your first home, it’s essential to be prepared. In this guide, we’ll outline some simple steps to take before you start your search.
Analyze your finances
The first thing to do before you start looking through online listings or contacting real estate agents is to analyze your finances. Check your balances, go through your statements and check your credit score. In an ideal world, it’s best to save as much as possible for a down payment and improve your credit rating before applying for a mortgage. This is beneficial because it affords access to preferential interest rates, which means that you’ll pay less for your mortgage. In reality, many buyers can’t put down a 20% deposit or reach the threshold for an excellent credit rating. Don’t panic if you’re not in this position. Some lenders will accept a smaller down payment and you can take out a mortgage if you have a good credit score rather than the top rating.
Use a monthly budget to determine how much you could afford to spend on a mortgage. If you’ve been renting, or you’re moving out of your parent’s home, for example, it’s important to factor in living expenses, including utilities and insurance. You’ll also need to cover legal fees when you buy your new home.
Research mortgages
Whether you are buying your first home, or you’re selling a property and relocating, it’s critical to research mortgages before you apply for a loan. There are many different types of mortgages available and there’s a huge range of lenders. Look for mortgages that are relevant to you, read the terms and conditions and make sure you understand how different mortgages work. There are special types of mortgages available for first-time buyers and veterans, for example. Research VA jumbo loan limits, seek professional advice and take the time to compare quotes before you make a decision. Always ensure that you can afford the repayments before you apply for a loan. If you miss repayments, this will impact your credit score. Avoid putting yourself under too much pressure. You want to be able to enjoy your new home without worrying about money constantly.
Establish a maximum budget
When you have analyzed your finances and compared mortgage offers, establish a budget for your search. This will help you to narrow down the options and minimize the risk of falling in love with a house or an apartment you can’t afford. Set filters on property websites and let your real estate agent know your maximum budget.
Decide where you want to search
Location is a priority for most buyers. Decide where you want to live and create a short list of your favorite places. Think about whether you are willing to compromise on the location or explore areas you don’t know as well. If you’ve chosen real estate hotspots, and the demand for housing is high, you might find that there aren’t many properties available within your price range. If this is the case, it’s worth expanding the search zone, including different types of properties in your search and looking for areas that are becoming more popular. You can often get more for your money if you’re willing to swap established, sought-after neighborhoods for up-and-coming communities. It’s also worth looking at condos, apartments and semi-detached houses if detached properties are too expensive.
If you are relocating to a town or city you don’t know, take time to visit different areas, get a feel for them and meet with local realtors. It’s also beneficial to research online, join community social media groups and get advice from people who live there.
Your lifestyle should be a priority when choosing locations. Think about how you want to live your life. If you’re eager to swap the hustle and bustle of city life for tranquility and easy access to green spaces or golden beaches, for example, don’t include urban areas in your search. If you want a better work-life balance, look for houses or apartments that are close to your workplace or within easy reach of transport links.
Create a wish list
Most of us have to compromise to a degree when buying a new home. The perfect house might not exist or it may not be attainable within the budget. Creating a wish list is a useful exercise, as it encourages you to think about what you really want and need. Decide where you’re willing to make compromises or sacrifices and establish non-negotiables. You may be open to expanding your search area if it means you can have a garden or an extra room to use as an office or a guest bedroom, for example. Alternatively, you might be willing to buy a smaller house or an apartment if it means you can be closer to work.
Get an idea of what’s out there
Before you start organizing viewings and going to open house events, it’s worth spending some time with a real estate agent and using websites and online directories to see what’s out there. Looking through listings and brochures will help you to get an idea of how far your money will stretch and the kinds of properties that are available. This is useful for managing expectations and deciding which types of houses and apartments to view and which areas to visit. When you’re ready to start your search, you can schedule viewings and liaise with agents to find homes that meet the criteria.
Looking for a new home should be a positive experience, but it can be stressful. Before you start your search, it’s beneficial to lay the foundations. Analyze your finances and research mortgage types and offers. Seek expert advice and take your time to make a decision about which mortgage is best for you. Choose locations, conduct research and visit places on your shortlist. Create a wish list and get an idea of what’s available within your price range.