Your Home in a Changed World: Navigating Post-Pandemic Real Estate

Financial Readiness: A Checklist for Prospective Home Buyers Are you ready to make your dream home a reality? It's an exciting journey, but preparation is vital to snagging that perfect place. Don't worry; there's no rush—the timing is all about when you feel ready, personally and financially. Buying a home can feel overwhelming, but it's also one of the most thrilling adventures of your life. Here's a simple checklist for prospective home buyers like you to get started. Let's turn your home-buying dreams into reality—one step at a time! Identifying Your Dream Home Before you begin browsing listings, take some time to think about what you want and need in your new home. Making a list of these preferences will help you create a checklist for buying a home. This will guide you when you're looking at different properties. Consider what type of property you're looking for. Do you prefer a condo with many amenities, an apartment, or maybe a gated community? Your choice will depend on your lifestyle and what you're expecting. Setting Your Budget Now that you know how you want your home to look, it's time to sort out your finances. Experts recommend allocating no more than 30% of your monthly income to your mortgage payment. Saving up for more than just the loan is critical when buying a home. You'll need money for the down payment, closing costs, and other fees. Your down payment might be as little as 3% or as much as 20% of the total loan. Closing costs and other fees, like inspections and appraisals, could add up to 5% of the loan. Homeowners now spend an average of $17,459 a year on their homes, not counting the mortgage. This includes things like utilities, taxes, and insurance. Even though this might seem small compared to your rent, it adds up! Assessing Available Finances Now that you know your budget, it's time to see what type of property you can buy and if you qualify for a home loan. Meeting with your bank manager can help, as they can tell you how much money the bank might lend you based on your income. This helps you understand how much cash you need for a down payment when looking for a property. Look at your savings to see how much you can put down for a home. You can also review any other financial products you've invested in previously. If you can pay 20% or more upfront, you won't have to pay for private mortgage insurance (PMI). That's a good thing because PMI is an extra cost you want to avoid. A more significant downpayment can also get you a lower interest rate on your loan. That's because it makes the bank feel safer lending your money. When you put more money down at the start, you pay less interest over the life of your loan. That means you save a ton of money in the long run. Plus, a more significant down payment means your monthly mortgage payments will be smaller. And get this—making more significant payments now could make it easier for you to borrow money in the future, like for a car or credit card. Find the Right Real Estate Agent Let's discuss why having an agent is helpful when looking for a place to call your own. You can look online for houses, but sometimes the info is old or incomplete. That's where a real estate agent comes in handy! Whether browsing online or going to open houses, having an agent with you can make a big difference. They're experts on the housing market. They know all about the latest listings in your price range, making it easier to find the perfect place. Your agent can also give you lots of details about each property—stuff you might not think of asking about, like how much you'll pay for things like homeowners association fees or insurance. And having that info can help you get a better deal on your new home. Real estate agents can give you essential tips to help you understand everything about the home you're interested in. Usually, they charge a fee, which is about 5% to 6% of the price the house sells for, but sometimes they charge a fixed amount. You can discuss the fee with them; they only get paid when the sale is finished. Just remember, the seller is the one who pays this fee. Preparing Yourself Emotionally Looking for a home can be exciting, but it also has its challenges. Sometimes, you might see a house online and think it's perfect, but it doesn't meet your expectations when you see it in person. This can happen a lot during the home-buying process, and you might have to make some compromises. Take time to think about what you want and need in a home. Make a list of essential things for you, like how many bedrooms you need or if you want a big backyard. This can help you decide if you need to keep looking or if you've found the right place. It's also important to listen to your feelings, even if other people try to sway you. Buying a house is a big decision that will affect your life for a long time, so it's essential to make sure you're making the right choice. Remember, buying a home is a big financial commitment lasting many years. Some people find that renting is a better option, depending on their financial situation. Think carefully about what will work best for you now and in the future. Considering the Right Location When looking for your first home, finding a city with short commutes, good schools, hospitals nearby, and lots of fun things to do is crucial. But there are other things to think about, too. If you buy a house in a risky area, you might have trouble getting insurance; if you do, it could cost a lot. Also, if your house is near a busy road or highway, it might not be worth as much when you want to sell it because of noise and pollution. It would help if you also thought about natural disasters like wildfires and floods. Even if a house looks cute, it might not be a good investment if it's in a risky spot. Your real estate agent can help you find homes that match your needs. They use a multiple listing service (MLS), which has many listings that are up to date. Just remember, the MLS doesn't have homes for sale by the owner. Creating a Convincing Purchase Offer Your real estate agent is great at helping you make a convincing purchase offer on the perfect home. Talk to them When you decide how much to offer for a house, your offer isn't just about the price you want to pay. You must also consider other things, like when you want to move in and if you need to sell your old house first. Here are some things to consider: Purchase Price: How much are you willing to pay for the house? Earnest Money: This deposit shows you're serious about buying the house. It's usually 1% to 2% of the house's price. Pre-Approval Letter: This shows the seller that you're approved for a loan and ready to buy. Closing Details: These are the costs you'll need to pay and what you expect the seller to pay. Contingencies: These things must happen for the offer to be valid. For example, you might want a home inspection to ensure everything is okay before buying. If something isn't right, you can ask the seller to fix it as a condition of the sale. Scheduling a Home Inspection Once your offer is accepted, a home inspection ensures the house you're buying is safe. Inspectors check for bad wiring, roof problems, mold, pests, and plumbing issues. Depending on the house's size, this process takes about 3 to 4 hours. It takes the inspector a few days to a week to finish the report. Usually, inspections happen after the offer is accepted, but you can ask for a "pre-offer inspection" too. Just be careful, because the seller might think you don't trust them if you do. The seller should inspect the property before listing it, but hiring your inspector is wise, too. That way, you can ensure you're paying a fair price for the house. While you wait, your lender will have someone else appraise the property. If the appraised price is much lower than what you agreed to, you can ask the seller to lower the price or cover some of the closing costs. You'll also need homeowner's insurance, especially with a mortgage. You might have to show proof of insurance at the closing. This is also an excellent time to do one last walk through the house to ensure everything looks okay. Closing a Home Purchase Offer Closing is the last step when buying a home. It's when you officially sign all the final paperwork to become the owner. This usually happens 30 to 45 days after your offer is accepted and your lender gets the purchase contract. The day before closing, your real estate agent will arrange a final walkthrough to ensure everything in the house is okay. You'll see your agent, a closing attorney, an escrow officer, a home inspector, a title insurance agent, a loan officer, and the seller at the closing. Check all the documents carefully to avoid any surprises. Closing is just making sure everything goes as planned. There shouldn't be any surprises. The process might take time because you'll have to sign many documents, like the deed of trust or mortgage, promissory note, and closing disclosure.