Shopping For A Home (With Strategy)
Shopping For A Home (With Strategy)
House hunting before getting a preapproval is like going to the grocery store when you're hungry - you'll end up with things you don't need or can't afford.
It's no secret that the fun part of buying a home is looking for "the one." I see this in my business all the time. Nobody wants to talk to a lender and deal with all the numbers. They want to find the house that gives them the space they need, puts them in the neighborhood they love, reduces their commute, or gets them closer to the best schools for their children. That's what people want to do.
However, I can say with confidence that the homeowners who know their budget ahead of time, know what price gets them to their comfort level, and have gotten any lending hurdles handled ahead of time, will ALWAYS have a more successful buying experience. I can't tell you how many times I've spoken to someone who wants to buy a certain house and fell in love with it, only to find out they aren't even close to being able to qualify for the mortgage. That's the worst!
Know Your True Budget, Not Just Your Preapproval Limit
Each home you look at may have a different monthly payment even if it's at the same price point. How, you may ask? Well, because some homes are in a HOA, and some have higher taxes, and others may have more expensive insurance, the amount of your monthly payment can vary greatly.
When discussing your preapproval, this is something I go into. I talk about the base mortgage payment, and then discuss where you'll need the taxes, insurance, and HOA to fall if you want to keep the payment within your budget.
The amount you can be preapproved for is typically greater than your comfort level. This makes sense because most loan programs will let you go to a 50% debt-to-income ratio based off your gross monthly income. If you think about it, you still have to pay income taxes, health insurance, and ALL of your living expenses out of the remaining 50%. That will typically leave little to no breathing room for life's inevitable curveballs. Plus, being a homeowner is full of unexpected expenses from repairs - to improvements - to furniture. The term "house poor" is a real thing.
Making Strategic Offers In A Shifting Market
Depending where you are in the United States, most markets are now very buyer friendly. This means you can typically get price reductions, seller concessions to pay closing costs, repairs, and interest rate buy-downs from the seller. These REALLY move the needle for affordability. When discussing your preapproval, this is something I will go into detail on. You may be able to increase the price range of homes you are looking at with a strategy of asking for an interest rate buydown from the seller in your initial offer.
I recently closed a purchase where the buyer got nearly $20,000 to pay their closing costs and buy down their interest rate, PLUS got the seller to put on a brand new roof! This is also where a good buyer's agent, who has a relationship with a great lender can make all the difference in your buying experience.
Mindset Is Everything
The right home is worth the wait. Buying a home is a long term commitment. You can't just move in a year when your lease is up like an apartment. It's always best to take your time and find the right home that checks the boxes in your plan.
If you'd like to get a free copy of my Home Shopping Checklist, please email me at [email protected]
Ready to get preapproved? Click here to get started.
Prefer to schedule a call to discuss your specific situation in more detail? Click here to get on my calendar.
Peter Seroter NMLS 997692
This blog was written solely by me- not AI.
