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4 Things You Need to Do Before House-Hunting
So you want to buy a home? Before you start pouring over home listings and visiting open houses, there are a few things you need to do to prepare for such a big investment.
To help, Code of the West Real Estate outlines four steps buyers and sellers should take before they start house hunting.
SETTING A HOME-BUYING BUDGETHow much do you want to spend on a new home? How much mortgage can you get approved for? These two numbers don’t always line up, so it’s important to decide how much you’re comfortable spending before talking to a lender. Sit down and look over your household finances including credit scores, income, debts and monthly budgets to determine how much you can afford to spend on housing each month. Take the time to also get a clear understanding of federal reserve mortgage interest rates and how the fluctuations can affect your mortgage payment. Right now, interest rates remain at historic lows; however, a rate hike is an eventuality. The sooner you’re able to take advantage of current rates, the better.
Usually, the rule of thumb is to spend no more than 30 percent of your take-home pay on housing, including mortgage payments, property taxes, homeowners insurance, utilities, maintenance and other homeownership expenses. Specialized loans, like a VA loan, can save you money upfront, but bear in mind that they also come with drawbacks; some sellers perceive a VA loan as more complicated than other loan types, and there is a VA funding fee involved.
It’s helpful to get pre-qualified for a mortgage before talking to an agent. Pre-qualification estimates the mortgage amount you qualify for. It’s not a commitment to work with a specific lender or a guarantee of mortgage approval. Unlike pre-qualification, pre-approval is a conditional commitment from a lender, and the process requires financial documents including proof of work history (typically two years worth of W2s, one to three months of pay stubs, and two years of tax returns), debts, downpayment savings, investments and assets and residence history.
RESEARCHING THE HOUSING MARKETOnce you’ve set your home-buying budget, start looking at desirable areas. Use online real estate listings to learn what types of homes your budget will afford. If your budget doesn’t go as far as you’d like, you might need to change your search parameters. Buying a home that’s older or that needs some fixing up is one way to save money without compromising on important factors such as neighborhood and school district.
Once you know what’s available within your budget, make a list of what you want in your new home. Prioritize permanent features including neighborhood, square footage and HOA membership over changeable features like interior design. If buying with a spouse, make sure you’re both on the same page about your future home.
GETTING YOUR HOME IN SHOW-READY CONDITIONWith the exception of first-time homebuyers, most buyers are also selling a home while searching for a new abode. To get the best price for your home, it needs to be in good condition before listing. Take care of known issues around the house such as rotting wood and windows that won’t open. Talk to a realtor before investing in major renovations as not all home improvements offer a good return on investment.
Once everything is in good repair, clean and stage your home to impress interested buyers. If you find yourself short on time, opt to hire a professional cleaning service who can come in and deep clean your home. Staging helps homes sell faster, which leads to higher offers. According to Consumer Affairs, decluttering, deep cleaning, depersonalizing and removing pets are the most important staging tasks. Sellers should also reduce and rearrange furniture so that rooms appear larger and visitors can easily navigate the house.
FINDING A GREAT REALTORAfter completing the above tasks, it’s time to hire a realtor. But how do you find a realtor you can trust to work in your best interest? By connecting with a professional, knowledgeable and experienced agency like Code of the West Real Estate, you avoid the trap of working with an agent who prioritizes the seller’s needs rather than your own.
Before you start shopping around for homes, make sure you’re ready for the buying and selling process. By getting your finances in order, preparing your home to sell, and doing some research before you hire an agent, you’ll be ready to dive head-first into house hunting with a trusted pro by your side. To schedule an appointment with the experts at Code of the West Real Estate and start looking at Colorado mountain homes for sale, contact us today!