What You Need To Do Before Setting Out to Purchase a New Home

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It is a very exciting time to be buying a home, especially these days when the rates out there are so low that the cost of borrowing money is more than half it was just a few years ago. Couple that with housing prices that have not been this low in decades and rising inventory levels and it is a buyer’s dream scenario you do not want to miss. Here are a few things you should do to prepare for buying a new home:

Know What Your Purchase Power Is

Understanding the scope of your purchasing power is an important part of being able to effectively find a home that is right for you and within your means. Not only will it help to know what your price cap is on homes you can search but it will also be beneficial to have an idea of the type of property you can afford.

Obtain a preapproval from at least one lender, so that you can confidently view homes that are within your reach. It would also be a good idea to meet with your Realtor before seeking preapproval with a lender to determine what you feel your limit is, based on estimated monthly payments, including tax, title, insurance and everything else. Remember, preapproval and prequalification is not the same thing.

Identify the Things That Matter Most

If you can identify exactly the things that matter most to you in the purchase of your property, it will be easier to weed out the ones you come across that do not fit the bill. Though there is always breathing room and the capacity for some flexibility, you should know the basic requirements of you and your family and put them on paper – the “must haves”. Make a separate list of “would like to haves” and finally, compile a list of things that would be a luxury.

Once you have an idea of what you need, want and would love to have, make an appointment with your Realtor to further discuss the things on your list. Since real estate agents deal with potential homebuyers very frequently, they may be able to shed light on some areas you may not have considered. Conversely, they may be able to provide much-needed clarification on things you may not have thought of such as dealing with any unrealistic expectations you may have with your price point, for example.

Decide On a Bottom Line

It is a good idea to know what your bottom line is in terms of both price ceiling and flexibility with amenities and features of the home. For example, if you have listed “swimming pool” as one of your “would like to have” items then be prepared to expect a premium in price to be able to get what you want. How willing are you to forego the pool in exchange for ample living space? Would it be acceptable to have a smaller kitchen so that a home with a pool can be afforded? Knowing where you stand before it comes time to make an offer on a home or property is a good idea because it can save precious time that might otherwise be wasted in back and forth counter-offers. This will also be very useful during the negotiation stage.

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You can never be too prepared before taking a huge step like buying a home and taking just a few precautions and a bit of time before you begin the journey, could likely end up saving you a lot of money, countless headaches and get you in a perfect home within your means.