What to Do Before Buying Your Next Home
Before you look in the newspaper, check out local real estate sites, or walk in the first front door during your home search, there are steps to take that will make house hunting much easier and more successful.
Your mortgage payment will likely be the largest check you write each month. Before jumping into a new home, you'll want to do your homework to see what you can afford without significantly changing your style of living.
First, sit down and track all of your income.
You will want to base your budget from of this number. A good rule of thumb is that your home and home-related expenses such as utilities shouldn't exceed 30% of your total income.
Next, track your spending habits and include everything.
An easy way to capture where your money goes is to use a debit card rather than cash.
By swiping the card for everyday purchases, you can track every dollar spent with online banking. In an Excel spreadsheet, chart out how much you send on groceries, gas, restaurants, car payments, insurance, utilities, entertainment, and other monthly expenses.
Once you have a firm grasp of what's coming in and where money is flowing out, you'll want to do two things:
Remember, a new home is more than just a new mortgage. Homeowners insurance is more expensive than renters insurance. The electric bill of a one-bedroom apartment will be less than that of a 3-bedroom house. Look at each line item, do some research, and make estimates at a new budget.
Finally, determine how much home you can afford.
It is a good idea to arrange financing through MidCountry Bank prior to beginning the hunt for a new home. We can prequalify you for a loan amount that will help guide your real estate agent.
We will also provide you with a qualification letter to give to the sellers when you make an offer.
Make a Wish List
Once you know what you can afford, it's time to determine what you want. Make a list of everything that you'd like in a new home.
Once you have your dream-home list, prioritize it. You likely will not find everything you want in one place. What two or three items on the list are "must-haves?" What items on the list can you live without?
Finding Your Agent
Especially during your first home search, a good real estate agent can make all the difference.
He or she can help you to find the home you're looking for, tell you what it's worth compared to other homes in the area, and be your an educated advocate for you during negotiation.
Referrals are always a great place to start. Ask friends and family who they have had success with. But don't choose a realtor strictly on referral. You'll want a realtor who specializes in the style of home you're looking for as well as the location where you'd like to buy. One trick is to select a neighborhood that you're interested in and then drive through and look at for-sale signs.
If a realtor has several properties, they likely know the area. You will also want to interview several agents. Use the interviews to determine their commission fee structure. Ask about their availability to take you through properties. You'll want their schedule to match yours. Talk about their past experience in your desired locations.
What success stories can they share about helping someone find the right house?
Finally, you'll want to make sure you personalities match. You'll be spending several weekends walking through houses with this individual. Make sure you like him or her.
Communicate with Your Agent
You can use the newspaper and online resources to find houses yourself, but your real estate agent is your partner in the hunt. Remember that wish list we drew up earlier? Now's the time to bring it out. Walk through your priorities with your agent. This is no time to be wishy-washy.
Tell them exactly what you want and what you expect to spend. Your agent should listen to you and help guide you to the right property. A good agent should be an expert in house hunting, and you should listen to their recommendations, but remember that ultimately, the agent works for you.
With a budget in place, a preapproval in hand, and a good agent as a guide, you're ready for the fun part. Slip on some comfortable shoes and go find your dream home.
MidCountry Bank is your home loan expert. Call, click, or come in and one of our mortgage experts will help you find the right loan for you.
Minimum and Maximum loan amounts apply. Rates and programs subject to change at any time. Loans subject to borrower qualifications, property evaluation and credit approval. All rates and program guidelines subject to change without notice based on consumer eligibility and marketing conditions. All loans subject to credit approval and compliance with underwriting standards.