6 Tips for Savvy Homebuyers
July 11, 2022 by Chevron Federal Credit Union
Whether you’re a first-time buyer, helping your adult children purchase or searching for a retirement or vacation abode, buying a home these days is no walk in the park. Navigating the uber-competitive market of the last few years brought new challenges as the work-from-home movement, plus years of low interest rates, drove a spike in demand for homes that few buyers were expecting.
The good news is rising interest rates and record price growth have slowed demand in many parts of the country, according to the latest sales numbers from the National Association of Realtors (NAR). Sellers continue to have the upper hand, though, as inventory still remains tight. The upshot? Scoring the home of your dreams in this market takes preparation and strategy. Follow these six tips to position yourself for home-buying success.
Know what you can afford
Not exactly sure what you want in a house or even which neighborhood you prefer? Do some pre-shopping around to target what’s available in your price range. Use our new house calculator to determine how much of a mortgage you may be able to obtain. That way, you’ll readily know when you find the right price-range matches for you.
Prioritize your must-haves
To narrow your search, create a short list of absolutes and deal breakers. These factors are necessary features, like a home office, and major hurdles that you can’t accept, like a fixer-upper that needs substantial remodeling.
Homes are typically going off the market in about two weeks, according to the NAR’s latest data. In some areas, they’re being snapped up in a few days. The takeaway? Reserve ample time most weekends for viewings, and aim to have at least one family member available immediately to see new inventory.
Estimate added costs upfront
While touring homes, you may assume it’s straightforward to, say, upgrade a bathroom, enlarge a kitchen or create a master suite. Don’t just make assumptions; confirm them. Ask a trusted contractor or architect to walk through the house with you for a sense of realistic projects and ballpark prices. These professionals often provide this service for an hourly fee or even free.
Make a clean offer without the risk
Given the stratospheric demand, buyers have felt pressure to make their offers as attractive as possible by bidding more than the list price or waiving certain contingencies. But you should sweeten your offer only as much as you’re comfortable with — and limit your financial exposure. For example, you can be flexible on your close date to accommodate the seller’s schedule, rather than waive your inspection contingency, which leaves you at risk for costly problems uncovered after the sale.
Get pre-approved for a mortgage
In today’s market, you’ll want to show sellers that you can get financing to close a deal. That means getting pre-approved for a mortgage, which signals to sellers that your finances have been verified by a lender. Contact a member of our home loan team, who can review your income and debt documents and supply a letter (usually good for 90 days) indicating how much we’re willing to lend. You submit this letter with your offer on a house, so the seller feels confident you have financing in hand. Note: Pre-approval carries more weight than being pre-qualified, in which a lender runs some quick estimates of how much you’d likely be able to borrow based on general information you report.
Leveling up your home-buying game
Buying a home is stressful enough in today’s market. Your mortgage rate shouldn’t be one more line item on your worry list. Reach out to our home loan team today to learn about your home loan choices so you’re ready to go when you find that just-right property.