Robin Spangenberg's Blog
You’ve never owned your own home and your thinking about buying. Transitioning mentally from renter to owner can be confusing at times. As a renter, you haven't had to deal with the ins and outs of owning your own home, and as you examine the reality of ownership, it can seem like it involves more cons than pros. You have to take care of all maintenance, repairs, insurance, upgrades and more. With all the added work to maintain only to one day resell your home, it might not seem worth it. So why is buying a good idea? Here’s why!
Consistent monthly payments
As a renter, you constantly are subject to rent increases. Depending on your city or neighborhood, this might be a small percentage annually (if your rental unit is under rent control), or an annual increase determined in your rental agreement. In many cases, your rent is subject to your landlord’s discretion at the end of each term of your lease, and if the property value and quality of living go up in your neighborhood (as you hope it does), it could price you out of your favorite living space. When you choose to purchase a home, you make a longer commitment, but your monthly payments are guaranteed to be the same throughout the repayment of your fixed-rate mortgage. Living with no surprise changes allows you to set budgetary and lifestyle goals further into the future, and the certainty to achieve them.
Equity and future cash flow
Yes, you will likely need to take out a loan to purchase your own home. The upside to ownership is that every mortgage payment you make increases the percentage of equity you have in your home. When you rent, you are only paying toward the term of your lease and the owner of the rental property gains all the equity. Investing in your own property helps your financial stability for the future. The more equity you have, the better your net worth and the more you can invest in other properties or goods. The more stake you have in your home, the more valuable it becomes to you when you want to sell your property in the future—to create cash flow, or to invest in a new home, other property, or your retirement lifestyle.
Apart from the personal value of owning your own home—taking care of it, raising a family there, or starting a new life in your place—the investment can add even more value to your life. If you’re considering your first home purchase and aren’t sure about the commitment or investment value, speak with your local real estate agent for the best advice for you. Review your current means, your interests and abilities, and your life goals and let them help you make the right decision.
Are you an experienced homebuyer? If so, you may be better equipped than others to enjoy a quick, worry-free homebuying experience.
Ultimately, a veteran homebuyer can learn a lot from his or her past experiences, including:
1. How to Avoid Paying Too Much for a House
The housing market offers many opportunities for veteran and first-time homebuyers alike. However, a first-time homebuyer may struggle to pounce at an opportunity to acquire a top-notch house at a budget-friendly price. On the other hand, an experienced homebuyer likely knows what it takes to acquire a house at a price that matches or surpasses his or her expectations.
As an experienced homebuyer, it generally helps to think about how you narrowed your price range when you most recently searched for a home. This experience may guide you as you look to establish a price range for an upcoming house search.
Furthermore, a veteran homebuyer may know exactly what types of housing market data to examine before entering the real estate market. By evaluating the prices of recently sold houses and available residences in cities and towns where you'd like to live, you can use assorted real estate market data to accelerate your home search.
2. How to Get Home Financing
If you struggled to get a mortgage for your first home, there is no need to deal with home financing problems once again. Instead, a veteran homebuyer can allocate the necessary time and resources to get pre-approved for a mortgage and enter the housing market with a budget in hand.
To receive pre-approval for a mortgage, it usually is a good idea to meet with various banks and credit unions. These financial institutions can educate you about myriad mortgage options and help you select the ideal mortgage based on your homebuying needs.
3. How to Differentiate a Buyer's Market from a Seller's Market
Regardless of whether you previously bought a house in a buyer's or seller's market, you can use your past homebuying experience to help you assess the current state of the housing sector. Then, you can map out your homebuying journey accordingly.
If you notice houses are selling quickly at prices above their initial asking figures, you may be preparing to enter a seller's market. In this scenario, you may need to act quickly to acquire a great house.
Comparatively, if you find that homes are lingering on the housing market for many weeks or months, a buyer's market may be in place. In a buyer's market, you may be able to purchase a stellar house at a discounted price due to the sheer volume of houses that are available.
Before you launch a home search, it is important to note that even a veteran homebuyer may need help at times. If you hire a real estate agent, you can receive expert support throughout the homebuying journey. In fact, this housing market professional will make it easy for you to discover a superb house in no time at all.
In today’s world, everything is online. You probably have started your home search online as well. It’s plain fun to look at real estate. You can dream of living in a place you can’t afford. You might never see any of those listings that you’re browsing in person. Should you?
No matter when your home search may become a reality, there are a few benefits to seeing houses in person.
You’ll See What Your Money Can Get You
What you want and what you can afford may be far apart. You won’t understand the reality of the housing market unless you see it firsthand. By looking at what’s available on the market at a given time, you will be able to see how much house your dollars will buy you. Knowing what you can afford will help you to keep your expectations in check when you do head out to search for a home. Looking at what homes are on the market can actually help you to help your real estate agent find you something that will suit your needs. There’s nothing worse than telling your agent that you want a home that’s impossible to find.
You’ll Meet Real Estate Agents
By going to open houses, you’ll be able to meet different real estate agents. Through this process, you could very well meet the agent who will help you to find your dream home. If you like the way an agent is helping to sell a home, you’ll very likely get along with them as a buyer.
You Will Know How Much Competition You Have
If you’re attending open houses and find that there are many other people there the same time as you, it could be a sign that the market has tight competition. A lot of open house attendees means that prices are higher because the competition is fierce. You may have to offer above asking price in order to secure a deal on a home.
You’ll Learn Different Areas
Open houses can bring you to places you may have never thought of living before. You’ll get a sense of what different neighborhoods are like if you spend some time exploring through attending open houses.
You’ll Learn What You Can Live With
It’s easy to have a concrete picture in your mind of what you want in a home and what you can deal with. When you see houses firsthand, you may be able to open your mind a bit as to the type of home you’re seeking.
Buying a house should be a fast, simple process. However, problems sometimes can arise that prevent a homebuyer from discovering his or her dream residence.
Ultimately, there are many factors to consider before you purchase a house to ensure you can avoid myriad homebuying hurdles, and these factors include:
1. Your Home Needs
No two houses are identical, and much in the same vein, no two homebuyers have the same definition of the perfect residence. As such, a homebuyer should consider his or her dream home demands prior to kicking off a home search.
Making a checklist of home "must-haves" and "wants" is paramount. With this checklist in hand, a homebuyer will be able to refine his or her home search and map out the property buying journey accordingly.
It may be helpful to consider your day-to-day activities as you evaluate where you want to live too.
For example, if you work in the city, you may want to find a house that is located near public transportation. Comparatively, if you have kids, you may want to consider houses that are located close to top schools.
2. Your Budget
You know that you want to buy a house. On the other hand, you still have no idea how much money is available to ensure you can make your homeownership dreams come true.
When it comes to buying a house, it pays to meet with banks and credit unions. With pre-approval for a mortgage, you'll know precisely how much you can spend on a house.
To get pre-approved for a mortgage, set up consultations with several potential lenders. Then, you can learn about all of your mortgage options and select a mortgage lender that matches or surpasses your expectations.
3. Your Homebuying Timeline
Are you looking to buy a home as soon as possible? Or, can you afford to take a wait-and-see approach throughout the homebuying journey?
Examine your homebuying timeline and plan ahead as much as possible. By doing so, you can boost your chances of finding a terrific house and minimize stress as you browse the real estate market.
Regardless of your homebuying timeline, it always helps to work with a real estate agent. This housing market professional can take the guesswork out of searching for a residence and ensure you can discover a stellar house at a budget-friendly price.
Typically, a real estate agent will keep you up to date about new residences as they become available. He or she also will provide honest, unbiased homebuying recommendations and respond to any homebuying concerns and questions.
Let's not forget about the support that a real estate agent can provide during homebuying negotiations, either.
A real estate agent is happy to negotiate with a home seller on your behalf. That way, he or she can help you secure a great house without having to worry about paying too much.
Streamline the process of acquiring your ideal residence. Consider the aforementioned factors, and you can keep things simple as you proceed along the homebuying journey.
Although you might have entered the housing market with a strategy to help you streamline your search for your dream home, it is important to remember that even the best-laid plan may need to be changed. And if you fail to discover your ideal residence after a comprehensive search, now may be a great time to revise your homebuying strategy.
Let's take a look at three tips to help you revamp your homebuying plan.
1. Consider Your Home Must-Haves and Wants
Creating a list of home must-haves and wants may be done at the start of a house search. Over time, however, this list may evolve. And if you update your list, you may be better equipped than ever before to reenter the real estate market with a fresh perspective.
Think about where you want to live in the foreseeable future too. Then, you can narrow your home search to specific cities and towns and accelerate the homebuying journey.
2. Review Your Budget
If you recently paid off your student loans or eliminated your credit cards, you may want to reassess your homebuying budget. That way, you can hone your house search and explore residences that fall within your up-to-date price range.
Of course, if you have yet to get pre-approved for a mortgage, you can still do so. Meet with banks and credit unions to learn about all of the mortgage options that are available. This will enable you to gain the insights you need to select a mortgage that matches your finances.
3. Learn About the Housing Market
The housing market may favor buyers or sellers. And if you have been searching for your dream home for several weeks or months, the market may have changed.
It does not take long for a buyer's market to become a seller's market, or vice-versa. As you consider your homebuying options, you should study the local real estate sector closely to determine whether the current housing market favors buyers or sellers.
Evaluating the prices of recently sold houses in a particular city or town usually is a good idea. This housing market data will enable you to find out whether sellers are receiving offers at or near their initial home asking prices.
You also should find out how long current residences in a particular city or town have been listed. If houses linger on the real estate market for an extended period of time, you may be operating in a market that favors buyers. Or, if homes are selling quickly, you may be operating in a seller's market.
Lastly, hiring a real estate agent often is helpful, particularly for homebuyers who are struggling to identify the perfect residence. A real estate agent can offer lots of tips as you conduct your search for your dream residence. Plus, if you need to revamp your homebuying strategy, a real estate agent will make it easy for you to do just that.