Hoping to become a homeowner soon? Here’s what you need to know.
- We could see an uptick in property listings this spring.
- If you’re hoping to buy within the next few months, set a budget, get pre-approved, and be open to compromise.
Homebuyers have faced their share of challenges over the past year and change. There’s been an extreme shortage of available homes on the real estate market, forcing buyers to duke it out over the same homes and sending home prices higher on a national level.
But things could take a turn for the better-come spring. Most years, the spring season is when we see the most substantial increase in property listings. While spring inventory was sluggish last year due to pandemic-related and economic concerns, that could change this year.
If you’re hoping to buy a home this spring, there are steps you can take to make the process go smoothly. Here are three key moves to make.
1. Set a budget
Even though housing inventory could pick up this spring, you should expect home prices to remain high. You’ll need to establish a price range that works for your budget so you don’t end up taking on too large a mortgage.
Spend some time crunching mortgage numbers to see how much house you can afford, keeping in mind your existing debts and obligations. As a general rule, you should aim to keep your housing costs to 30% or less of your take-home pay. If you’re buying a home, that 30% should include not just your mortgage payment, but also your predictable associated costs, like property taxes, homeowners insurance, and HOA fees, if those apply to you.
2. Get pre-approved for a mortgage
You could end up facing some competition if you aim to buy a home this spring. But going in with a mortgage pre-approval letter could give you an advantage over other buyers.
One risk sellers take on is having a deal fall through because the buyer can’t secure financing. But if you come in with a pre-approval letter, any seller you make an offer to will know your finances have already been vetted by a mortgage lender, and financing is less likely to be an issue for you.
Plus, having a pre-approval letter will give you a sense of how much you’ll be able to borrow for home buying purposes. And that could help you embark on a more focused search.
3. Aim to be flexible
While we can hope that housing inventory will increase this spring, that’s not guaranteed to happen. If inventory stays sluggish, you may end up needing to make some compromises, like purchasing a home that’s less updated than what you’d like.
Do your best to be open-minded, especially if you don’t have the highest home-buying budget. As long as you find a home that meets your core needs, you can always upgrade kitchen countertops or redo bathroom tile down the line, as time and money allow for.
Spring tends to be a popular time to list a home, and hopefully, that will hold true this year. If you’re hoping to become a homeowner soon, employ these tips for a successful search.
A historic opportunity to potentially save thousands on your mortgage
Chances are, interest rates won’t stay put at multi-decade lows for much longer. That’s why taking action today is crucial, whether you’re wanting to refinance and cut your mortgage payment or you’re ready to pull the trigger on a new home purchase.