Everything You Need to Know About House Hunting
Buying your first house is a big deal. Even if it isn't your first house but rather the search for your new home, it is such an exciting process. It's fun to dream about where you will -- or just want to -- live. It's so much fun that some people go to viewings without even planning on moving. When I was young, I used to love to go to open houses with my mother and grandmother, even though we were not planning on moving houses. It was just fun to see the different designs of houses and build my own dream house in my head.
If you are really serious about buying a house, then just going to a bunch of open houses is not enough. House hunting takes effort. I will give you some tips on preparing for house hunting, and then I will go step by step to explain how to find a house. After that, I will show you some helpful apps and websites for house hunting. Finally, I will go over the dos and don'ts of house hunting, so you don't make some common mistakes of house hunters.
Prepare Yourself for House Hunting
House hunting requires preparation. If you go into the house hunting process prepared, then you will save yourself time and stress later. Before beginning your house hunting, try to do as many of these preparation steps as possible.
Make a budget
Before you start house hunting, you need to know what kind of house you can afford. The best way to figure this out is by making a budget. Before making your budget, you should read up on some effective budget management skills everyone should know. Then you can decide which budget is right for you. There are many different types of budgets, but two to consider are the 50/20/30 budget and the zero-based budget.
It doesn't matter which type of budget you decide to use. What matters is that you get a bigger picture of your financial situation. From there, you can determine how much you can afford to spend on a house, as well as how much you are willing to spend on a house. Trust me, you don't want to fall in love with a house out of your price range. You can prevent that from happening by being realistic and going into house hunting mode after deciding on a house budget.
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Set Priorities
This goes along with the previous point, regarding your budget. It is important to decide your budget before house hunting, but this requires you to set priorities. Setting priorities can be anything from deciding how much money you are willing to spend on a house -- maybe you can afford $100,000 but only want to spend up to $80,000, so that you can afford to send your kids to college -- to deciding which add-ons are essential and which would just be nice to have -- such as a pool in the backyard or a kitchen with all modern appliances.
Some things may be essential to one family but only a nice add-on for another. For instance, maybe you will decide that you don't really need that nice fireplace that you had been wanting, but you do really need that large kitchen with the nice island, since you often cook large meals for your family. Or you don't need the fancy kitchen, since you prefer ordering take-out, but you have children who love to, so you want a pool in the backyard for their entertainment and exercise. This is the time to decide what your priorities are, before you start house hunting.
Save Save and Save
You want to save at least enough to pay your down payment, which may be at least 10-20% of the total house price. Doing this will save you a lot of money in interest and fees. If you want to plan this into your budget, which I highly recommend, then you can use a mortgage calculator to see what your planned down payment will mean for your monthly mortgage payment. This can help you determine if some houses are just out of your price range. Below you can take a look at today’s mortgage rates:
How to Find a House: Step by Step
Finding the perfect house to make your home can be difficult. There is no easy or best way to buy a house, but it will be a little less difficult if you follow these ten steps.
1. Inform yourself on the basics of real estate
Acquaint yourself with common real estate finance terms and definitions, as well as basic information on the different types of mortgages and the difference between interest and Private Mortgage Insurance (PMI).
2. Check your credit score
Before applying for a mortgage loan, it is a good idea to check your credit score. Lenders like to see how healthy of a relationship you have with credit, so that they know they can trust you to pay back your loans. If you check your credit score before the lender does, you have a chance to try to improve your credit score if need be. It can also give you a more realistic expectation of what interest rate to expect.If you want to go to one place to get all of this information fast and easy, go here for your credit scores and credit reports from all three bureaus -- Equifax, TransUnion, and Experian.
3. Budget
In the preparation phase, you were supposed to make a budget if you did not already have one. Now that you have a budget, it is time to use it. After you have checked your credit score and know what kind of mortgage loan rate to expect, you can better determine how much you can really afford to spend on a house and how big of a monthly mortgage you can afford.
4. Apply for mortgage pre-approval
If you get mortgage pre-approval, then you will not be promised a mortgage loan, but you will have a better chance of closing the deal on the house faster. This is because a pre-approval letter put in with your offer shows the seller how serious you are about really buying the house.
5. Get a real estate agent
Getting a real estate agent ensures increased ease during the entire house hunting and house buying process. Plus, real estate agents have connections and a multiple listing service (MLS), so they may hear about different houses available. They may even be able to get you special deals and offers.
6. Find a house
With the assistance of your real estate agent, you will (hopefully) find the right house for you. You should also do some online research yourself. Sometimes this process takes longer and sometimes it is quicker. It depends on a lot of things, such as:
how specific you are in what you want and need: If you have too many "needs" on your checklist, then it may take longer to find a home that ticks each box.
location: A home in a nicer neighborhood or big city may be harder to find and get your hands on.
your price and budget: If you are low-balling too much, then you may not find a home in your proposed budget.
7. Make an offer
Once you have found the right house for you and your family, it is time to make an offer.
8. Schedule an inspection
It is better to find out in advance if there are any large problems with the house, including things that need fixing or even structural damage. You never know if the seller was not being completely honest about necessary improvements when trying to sell the property. Or, to give them the benefit of the doubt, they may just not be aware of certain issues. Getting an inspection can allow you to possibly renegotiate if something negative comes up in the inspection, so that you won't lose out on as much money spent on renovations fixing things that should have already been okay.
9. Secure financing
During this time, it may also be a good idea to get an appraisal. The lender will oftentimes hire the appraiser themselves, so you will not have to do much in this respect. Once the appraisal is completed and you are sure that you are paying a fair price for the house, you will need to secure the financing for the house, which may include getting a mortgage loan. Don't worry, getting a personal loan is easy and can be done in 3 simple steps.
10. Close the deal
At this point, all you have to do is dot the i's and cross the t's. You will probably have to provide proof of homeowner's insurance before closing the deal, so make sure that you do this before signing. Sign all of the paperwork, hand over the money, receive the deed, and move in!
Dos and Don'ts of House Hunting
Don’t Give Up
If you are having trouble finding a house in your price range, don't just give in. Keep searching for a house that fits in your budget. Sometimes it may take a while to find an affordable house, but that doesn't mean that it isn't out there.
Things to think about:
Price -- Remember everything we talked about before about budgeting. Always keep the price in mind when house hunting.
Location -- If you don't want to have a 30+-minute commute to work every morning, then don't choose a house that far away. Choose a house in a location that you like, or at the very least a location you can endure.
Home Value Growth -- While you definitely want to choose a home you are comfortable with and love, it is also a good idea to try to choose a house that will grow in value over time.
Ask questions!
A house is a big purchase. It's a way bigger purchase than an expensive purse or even than a new computer. Because of this, it is important to be absolutely sure that you are making the right choice before making the purchase. So don't be afraid to ask as many questions as you need to. If you need some help preparing, here is a list of 15 questions to ask when buying a house.
Offering too much
If you find your dream home, you may be tempted to get into a bidding war. Don't go past your budget though, no matter how much you love a house.
Not getting a real estate agent
Most house buyers in the last year did so with a real estate agent. That's because they know what they're doing and can provide support.
Skipping the home inspection
Do NOT skip the inspection. Make sure to get a list of the necessary repairs, along with estimates, and then check with the seller to see if you can negotiate a lower price, if they are not willing to take care of the repairs.
Going too slow or too fast
While you risk losing the house if you drag your feet, you also don't want to rush into putting in an offer before putting all your ducks in a row and inspecting everything.
Apps and Websites for House Hunting
While getting a real estate agent will help you find houses and deals that you would otherwise not have available to you, it is still important to do some house hunting research on your own. There are a variety of apps and websites -- some of which you may have already heard of or already use -- that can help you keep yourself updated on different houses and opportunities. Here are just some of the many house buying websites and apps available to house hunters like you:
Not only is Zillow one of the most well-known sites to use for house hunting, but it is also one of the most loved. The interface is very easy to use, and they offer helpful information on home value estimates. Their filters and features allow for easy searching, even on the go. If you want to utilize apps and websites during your house hunting process, then you should try Zillow, since it seems to be a top pick of consumers.
Realtor.com is a great resource in addition to your own realtor. That is because this app/site is the official search portal for the National Association of Realtors (NAR). This means that they have more up-to-date information from the multiple listing service (MLS) mentioned above. Because of this, you will have access to a wider array of properties, which you may otherwise not have access to.
Trulia is actually owned by Zillow, so they share a lot of the same data. Trulia is better for active house hunters though, while Zillow is better for homeowners interested in their home's current value. Trulia also has an interface that is especially easy to navigate. You can even filter based off of specific home features, such as "pool" or "hardwood floors". This will allow you to find the home you want, with the features you want.
If you are considering renting, Homes.com could be a great resource for you. They offer information on homes for rent and homes for sale, so you can increase your search criteria and decide which option is really better for you and your situation. They also make it very clear if a listing is new. This gives you the opportunity to jump on new offers, before others have a chance to contact the seller.
Redfin Real Estate allows you to search for houses that are for sale, but they are also a brokerage firm. Redfin is a very convenient tool for scheduling tour appointments with Redfin agents, even showing upcoming tour times. They even make it easy to "dislike" certain homes, so that you do not have to keep seeing the same houses you don't like in your feed.
Century 21 Local is also a brokerage firm. They have information on current offers from the multiple listing services. One of the great things about their app is the notes section they provide on each listing, for you to keep track of your notes and impressions as you go. Century 21 Local also provides information about local Century 21 Local agents in whichever city you are searching in, so that you can look for houses in multiple cities and still have the opportunity to use their agents.
Conclusion
Buying a new house can be stressful, but it will be worth it in the end, when you finally get to move into your new home. While there is no way to take out all the stress involved in house hunting, being prepared can give you the confidence you need to be successful. Follow our step by step guide above, and heed our warnings about the mistakes that some buyers make when house hunting. Remember, like in most situations, preparation is key. Happy house hunting!