Ahhh. Summer is in full bloom. The kids are done with school. The trees are finally getting their leaves. The lilac bushes are perfuming the air. And the moving trucks are, well, on the move. In my neighborhood, we have 2 homes right across the street for sale and at least two more within a block in any direction. (I promise – It really is a nice neighborhood!)
Let’s be honest. While there are homes available all year long, there are reasons that home buying is so seasonal here in the upper Midwest. Chief among those probably include cold, snow, and ice. But now we are ready to be out and about and shopping for a new home.
My advice? Don’t let the weather be your only factor in finding the right home.
As we wrap up our Homebuyer Express classes, one of the most common reactions we get is “I wish I would have known this earlier.” Many of the participants are very near to closing on a new home and are in class to get their certificate that may qualify them for benefits beyond invaluable knowledge. Upon completion, they realize how many different factors can play into finding the right home for you.
While I can’t cover all of the class material in a single blog post (it would take months of blogs), I want to give some basic yet crucial recommendations for those looking to purchase.
1. Get educated – Do you know what it costs to own a home? Do you know how the process works? Do you know how much of a mortgage you qualify for?
Looking just at loan pre-approval, a mere $20,000 in purchase price difference can have a considerable impact on what you are able to purchase. It is a difference in principle and interest payments of approximately $100 per month. Looking at homes in Sioux Falls that are currently on the market, jumping from $100,000 to $120,000 in listing price means an average of an additional 550 square feet of finished space. That is a room approximately 23 feet long by 23 feet wide. That’s a big difference and one that is hard to un-see after you find out you can only afford up to $100,000.
Having formerly been in the real estate business, I can tell you that Realtors and lenders are a dime a dozen in the area. Like any mix of humans, some are excellent for you and some are not. How do you find those that will do well for you? Ask around. Realtors and lenders are sales people and can have a great sales pitch. But the truth usually comes out when someone has been through a complete transaction with them. Your friends know you, your personality, and how those professionals that they have worked with will fit with you. After getting recommendations, have the professionals audition for you. Have the Realtor show you a home. Go through the loan application process. Neither action, by itself, obligates you to work with that individual but will give you a better understanding of them.
3. You make the rules – While the professionals may be able to get the deal done, you are the one who has to live with the results. Make sure they are the results you want.
When my wife and I applied for our first mortgage, we were never even told how much of a loan we qualified for. The lender simply asked how much we wanted to spend per month and responded with “No problem”. Know your priorities, expenses, and comfort level. Also, know what you need and want in a home. Many people may love a built-in hot tub. But you may not want to deal with the safety of your toddler around water and chemicals. Tight schedules in the morning? You may want to make sure you have the extra bathroom so you don’t start your day with a rumble over mirror time.
To sum it all up with my biggest piece of advice – HAVE AN INTENTIONAL PLAN. A home is the largest single purchase most of us will make. Don’t take it lightly. The more you know ahead of time, the more you will be free of regret and free to enjoy your new home after the purchase.
Not sure where to even start? That’s ok; it’s a lot to process. Center for Financial Resources can help you get started. We aren’t here to talk you into or out of buying a home. We simply want to guide so that you can make the best informed decision possible. Our Homebuyer Express classes are free for those that wish to attend. You can find out more about the class and even register at this link.
Enjoy the summer. Stop and smell the lilacs. Look around and maybe that moving truck will be pulling up to your new home.
written by Breck Miller
photos courtesy of freedigitalphotos.net