What if we told you it’s entirely possible to secure your dream home AND get a great deal on it? It’ll take some effort, but you can make the process easier by following these crucial pointers.
1. Define what constitutes a “great deal”
This could be a matter of perspective. For instance, a great deal for you might be securing a home at below appraisal value, thus saving you money in the long run. But a great deal could also mean a quicker process with fewer headaches.
Knowing what a great deal looks like will influence your actions during this process.
2. Start with securing your finances
In this economy, most sellers want to have confidence that you’ll be able to purchase the house if they commit to you. That’s where securing financing comes in.
Generally, this will require providing a lender with pay stubs, W2s, tax returns, and more to show proof of income. You’ll also need to pull your credit reports to determine your financing options and loan terms. This can be a complicated process, so you may want to consider working with a financial advisor or mortgage broker to help you through the details.
3. Know your mortgage options
There are different kinds of mortgages, including FHA and VA loans, USDA loans, and more. Do your research to determine what kind of mortgage will best suit your needs and capabilities. You’ll also want to think about fixed-rate vs. adjustable-rate mortgages and whether you’re going for a 15-year or 30-year loan.
And be sure to explore options for mortgage lenders, as one lender may offer more favorable terms than another.
4. Don’t neglect homeowners insurance
While it’s not technically a part of your mortgage, it’s crucial to budgeting for homeownership. This is an expense that many new homeowners overlook, so be prepared to shop around for the best rates. Homeowners insurance can cover everything from theft and fires to lawsuits.
5. Make a winning offer
You’ll want to do some due diligence about the market value of the homes in the area where you’re hoping to buy so that you can make a compelling offer. Start with checking listing prices for comparable homes in the area (aka “comps”). The more you know, the better equipped you’ll be to make a strong offer that’s likely to be accepted OR to negotiate if you find problems during the inspection.
6. Don’t skip the home inspection
It may seem like an added, unnecessary expense, but you’ll want to know what you’re getting into BEFORE you commit to buying a particular house. Be sure to ask questions during the inspection and request repairs if they’re feasible and applicable. This is where a real estate agent can help you navigate the process and provide guidance.
7. Be wary of bidding wars
They’re popular right now in this hyper-competitive market, but you could end up paying more than the house is worth. And if the bidding war is cutthroat, you might ultimately be denying yourself a chance to have a proper inspection done. It could be a costly mistake in the long run.
8. Look for incentives
Think: repairs that the seller is willing to cover OR a credit toward closing costs. These perks can save you money or alleviate some of the transaction costs, ultimately giving you a better deal. Neither of these is particularly common RIGHT NOW given the hot market, but it doesn’t hurt to ask.
9. Consider a larger downpayment
This can reduce your overall borrowing costs and eliminate the need for private mortgage insurance (PMI). This is typically required if you put less than 20% down on a home purchase. PMI can be a substantial long-term cost, so putting more down upfront can save you money every month.
10. Time your house hunt carefully
Yes, this can make a difference! It’s typically most advantageous to buy toward the end of the year, in late fall, as there’s less competition, AND you can often get sellers to lower their prices.
11. Be flexible on closing
Sellers may be incentivized to sell quickly for various reasons, which could work to your advantage. For instance, if a seller is eager for a quick closing, you may be able to secure a discount if you’re able to oblige. On the other hand, if you need some time to pack and prepare for your move, you may be able to get the seller to agree to finance some of your closing costs.
12. Be a well-informed buyer
Educate yourself on the market so you can spot a good deal when you see it. And don’t be afraid to ask why the seller is moving, so you can determine their motivations and possibly negotiate a better deal. Just keep in mind that there are some questions you can’t ask and some topics are taboo during negotiations.
13. Work with the right real estate agent
The right agent will have market expertise and can advise you on negotiations. They can also provide guidance on securing the best loan terms for your circumstances and flag any red flags with a potential property. This is why it’s so crucial to have a seasoned real estate agent on your team.
14. Keep your eyes on the big picture
Yes, buying a house is a complicated and often stressful process. But keep your eye on the prize: a beautiful new home for you and your family. Remember that this isn’t a race but a process, so you’ll want to take the time to make careful decisions so that you can be happy with your new home for years to come!
If you abide by these tips, you’ll be well on your way to scoring a fantastic deal on the house of your dreams!
