Whether you're an aspiring first-time home buyer or a seasoned veteran in the realm of homeownership, finding a new place to call home can be an intricate task. As a matter of fact, more than half of all buyers consider locating the perfect property as the most challenging step of the home buying journey.1 Purchasing a home represents a monumental commitment of resources, both in terms of time and finances. However, it's a commitment that can tremendously enhance your current lifestyle and future financial stability. Therefore, it's no surprise that the stakes are high.
Ready to dive in? Here are five steps to help you streamline your search, set your priorities straight, and approach your next home purchase with confidence. There's also a complementary worksheet below to help guide you through each step.
STEP 1: Identify Your Goals and Priorities
The quest for your dream home begins with understanding WHY you are planning to move. Is it to gain more living space? To be closer to top-rated schools? Or perhaps you desire less maintenance. Alternatively, you might be ready to quit renting and start building home equity. Identifying your reasons for moving will help you define your priorities and guide your home search.
Moreover, don't forget to consider future circumstances that may affect your needs. Are you anticipating a job change? Planning to expand your family? Considering a pet? The smart choice is a home that suits your family's requirements for the next five to seven years at least.2 Your goals should reflect these considerations.
STEP 2: Set Your Budget
Many finance experts advocate the "28/36 Rule" to decide your home buying budget. This guideline suggests you should not spend more than 28% of your gross monthly income on housing costs (e.g., mortgage, taxes, insurance) and should limit your total monthly debt obligations (housing costs PLUS other debts like car loans, student loans, credit card debt, etc.) to a maximum of 36% of your gross income.3
However, the 28/36 rule should be considered a rough guideline rather than a hard rule. Getting pre-qualified or pre-approved for a mortgage BEFORE starting your home search provides a more accurate estimate of how much you can borrow. Add your pre-approved mortgage amount to your down payment to understand your maximum purchasing power.
STEP 3: Select a Location
In real estate, WHERE you buy is just as crucial as WHAT you buy.
Are you attracted to the tranquility of a rural area, the buzz of an urban setting, or the balance of a suburban locale? How far are you willing to commute? Which neighborhoods are zoned for your preferred schools? Your choices will shape your daily life while living in the home.
Also, consider the potential appreciation of your chosen location over time. The right neighborhood can boost the profitability of your home when you decide to sell. Look for areas with high home-ownership rates, low crime rates, well-maintained surroundings, good schools, desirable retail outlets, and renowned employers.4
STEP 4: Pin Down Your Home Preferences
Begin with the basics, such as your desired number of bedrooms, bathrooms, and square footage. Do you prefer a single or double-story layout? Is a swimming pool on your wishlist?
Realize, though, that you might not find a home that ticks all your boxes within your budget. Most of us need to make a few compromises when purchasing a home. Some buyers may opt for a longer commute to secure a larger, newer suburban home. Others may forgo hardwood floors or an upgraded kitchen to ensure their children attend top-tier schools.
When faced with difficult decisions, return to STEP 1. Reflect on your primary goals and motivations for moving. Recalling your genuine priorities can often bring the clarity you need.
STEP 5: Engage a Real Estate Agent
A skilled real estate agent can alleviate much of the stress and uncertainty inherent in the home search process. From goal setting to loan securing, from choosing the best neighborhood to meet your needs, we will be by your side each step of the way.
No one has more access to home listings, past sales data, or market statistics than a professional agent. We can establish a personalized search that alerts you as soon as a new listing fitting your preferences appears. Even better, we often get notified about the most desirable homes even BEFORE they enter the market.
You might imagine that such VIP service comes with a hefty price tag. However, the great news is, our complete home buying service comes at NO COST to you. Indeed, the home seller pays the buyer agent's fee at closing. So, you can benefit from our time, expertise, and experience without spending a penny. It's no wonder that 87% of buyers opt to purchase their homes with the assistance of an agent.1
Although listed as STEP 5, there's never a wrong time to reach out to an agent about buying a home. Whether you're planning to buy now, next month, or next year, there are steps you can take to prepare for your purchase.
Give us a call today to schedule your complimentary consultation!
The information above reflects an opinion and is for informational purposes only. It is not intended as financial advice. Consult with a financial professional for advice suited to your personal needs.