Homebuyers are falling in love with their budgets?! What is going on?
As fall finally arrives and we get an update in our weather, I want to take a moment and give you some updated thoughts for those of you looking to buy.
As I have mentioned before, two of the best things you can do is:
Ruthlessly pay down debt.
Scrimp and save every dollar you can.
Simple to say, disciplined to do.
Now, let’s say you are doing the work, what’s next?
If you are a first-time homebuyer, let me assure you, we are living in tumultuous times.
The 2020s decade is unprecedented. First, price appreciation pegged unsustainable acceleration. Second, interest rates plummeted to historically low levels. The combo created an outlier event, not a new normal. As a result, we are now readjusting expectations to meet current conditions.
What adjustments must we make?
#1: Regardless of any anecdotal examples getting repeated on a podcast, timing the market is a futile endeavor.
Why do I state this? Because buyers often plague themselves with “what if questions.”
What if I buy now and…
What if I don’t buy and…
Perhaps a better question to ask is “when.”
When my debt load reaches…
When I have saved…
When my credit score reaches…
When I find a home that makes sense…
#2: Browse now, buy later.
Do yourself a favor. Look at what you can afford. Therefore, drive by most Open House. Why? Because invariably, the house you tour is priced way too high. And what happens? You fall in love with it. Think of it this way. Your budget can afford a used Honda Civic. And, on a whim, you drop in at a Range Rover dealership.
By viewing homes within your budget, you can determine priorities. A large primary closet and two sinks in the owner’s bath are important; a man cave is not. Or a man cave is essential, and I’ll hang my clothes in the storage shed.
Here is a good rule of thumb: fall in love with your budget before you fall in love with a house.
#3: Before viewing homes with your Realtor, have a Mortgage pre-approval letter in hand.
Better yet, have your lender secure their underwriter’s approval upfront. This brings confidence to both you and the seller.
#4: Be open minded.
Some buyers get locked into a single neighborhood resulting in regrettable missed opportunities. Other buyers focus on something like square footage, style, or commuting distance. Here is a recent assumption: old houses are a better value than new ones.
Yes, older homes usually enjoy fully developed landscaping, but other factors need to be considered. Let me provide three:
Maintenance costs on older homes may prove exorbitant.
Older homes are far less energy efficient.
Builders are still providing handsome incentives. Some of my new home buyers were able to purchase a larger house with more amenities.
#5: Remember, you are buying a neighborhood not just a house.
Prior to making an offer, drive the streets. Are there broken down Junkers and unsightly yards? Walk about when owners are walking their dogs. Talk to them and find out how they feel about where you might live. If you have children, is this neighborhood a kid friendly place?
Meanwhile, be patient. Market conditions will gradually improve. As they do, not only will you be financially ready, you’ll be personally prepared to seize the day.
Let me know how I can help you not only purchase your home but protect your future. I am here to help!