June 2nd, 2014
In a competitive housing market with low inventory of available properties, homebuyers can have trouble closing on a property that is their ideal home. Given that inventory is a problem that continues to plague many consumers in the first-time buyer group during the housing recovery, there are a few tips prospective homebuyers should follow when searching for their dream house:
Understanding personal finances
A big part of getting the right property is tailoring expectations within reasonable limits. This means buyers need a solid grasp on their financial standing, including their credit history, credit score, current debt, employment stability and income. Developing a budget can help determine how much someone can spend on a mortgage each month.
This step also means that prospective buyers should secure financing in the form of a mortgage preapproval. Among the many homebuyer tips to follow, this is one of the most important. Preapprovals are useful in a competitive market, where sellers want assurance that offers are backed by loan or cash.
Buyers should also factor in other costs – including the down payment, closing costs and moving expenses – which are usually paid out of pocket. There are also property taxes, utilities and possibly homeowners association expenses to consider when budgeting for a new home.
Researching the market
Although housing data isn’t always the most appealing information to read, taking some time to get a feel for the real estate market on both the national and local level is essential. Doing so can give buyers more accurate expectations for home prices, inventory and mortgage rates.
There are many industry reports that provide this data, especially from government departments, such as the U.S. Federal Housing and Finance Agency and the Census Bureau. Real estate trade groups such as the National Association of Realtors and National Association of Home Builders also publish reports on housing activity.
Having this information can help buyers determine what communities fit their needs financially. From there, they can begin to tailor their search based on certain features and amenities. While considering all the variables can noticeably decrease buyers’ options, it is often better to understand those limitations rather than finding a home that fits the criteria but is unaffordable. Depending on the buyer, few options could mean that the home search needs to be postponed or some compromises need to be made.