Whether a first-time home-buyer or a current home-owner, it can be a difficult process figuring out the how's, when's, and why's of purchasing a new home. Here are a few quick resources to help get you thinking about the process.
1. Search Available Listings
Sure, there are thousands of other things to consider before you actually start looking for a home to purchase. But there's never any harm in just looking, and doing so does have its advantages.
a) You'll get to know the market.
Do you have a specific type of home in mind? Are you at the options available in your area? By looking at current listings, you can get a better idea of what the current market looks like and what to expect once you do decide to start working with a realtor. Too often, home-seekers are hoping to find a home in their ideal neighborhood even though their budget is quite a bit lower than the typical starting price for a home in that area. This is a standard example of buyer's expectations not matching the reality of the marketplace. By casually surfing the available listings before you even begin the buying process, you'll be able to get a better feel for what to expect with your budget.
Image source: Kistler House.
b) You'll be able to determine your criteria.
It's good to be realistic about your needs and your wants. Determine the things you expect out of a home (like the number of rooms, the location, etc.) and then search for homes that match this criteria. This can give you a good baseline for determining what it is you need out of a home and what to expect interms of price and availability when you do decide to start looking.
Image source: Paul VanDerWerf.
You can get started searching available listings HERE.
2. Use a Mortgage Calculator
Once you've gotten a feel for the housing prices and determined your criteria, now's the time to figure out what you can afford. Use a mortgage calculator to figure out what you'll be able to comfortably afford, the duration of the mortgage contract and frequency of payments, and what sort of down payment is realistic in your situation.
Image source: Nick Youngson.
Give yourself a little bit of leeway here. Sure, mortgage rates are low right now (and this is part of what's making the market so competitive), but remember that mortgage rates are always subject to change. It's best to plan in advance for the possibility that your regular mortgage payment could go up in the event of a rate increase.
Another useful feature of the mortgage rate calculator is the interest calculator. For longre term mortgages, it can take several years before you've established a significant amount of equity in your home. If you're on a longer term mortgage, it may not be realistic to sell your home just five or ten years down the road—at that point, your equity will be low and you would have paid a significant amount of interest on your loan. It's a good idea to determine what you're willing to pay in interest and whether or not you'll be living in the house for the long haul or if you'll be looking to move again somewhere down the road.
If you'd like to go a little bit more in-depth, RateHub has a great mortgage calculator you can use HERE.
3. Financial Planning
Once you've established your home criteria and how much you're willing to pay, your next step should be creating a financial plan. If you're looking to purchase a home within the next few years, you'll want to consider saving up for a down payment. It could also help to think about your future career goals and determine your future salary expectations, and budget accordingly.
Image source: Pixabay.
There are plenty of financial planning resources you can find online, but it might be a good idea to consider meeting with a professional financial advisor that can give you some expert advice on how to best hit your financial goals. They may also advise you on increasing your credit score, saving up for a down payment, and how to find the best mortgage rates.
Once you've got a financial plan, stick to it! And don't forget to occasionally revisit the first two resources—the real estate market fluctuates, and mortgage rates can always change!
4. Find a Realtor
Perhaps the most underrated tool on this list is the plethora of information available from industry professionals—us realtors!
Working with the right person who understands your needs can make all the difference when you're looking to purchase a home. The ideal realtor is helpful, informative, and an expert in the local real estate market. But you don't have to make your decision right now! Shop around, and consider following some realtors on social media—this will have the added benefit of keeping you more informed on what's happening in the market.
Rob Davies, Pemberton Holmes
Ray Murray, Pemberton Holmes
Feel free to contact us with any questions you might have. We're always here to help!