Want to buy a home in 2018? Get started with these 5 to-dos
November 22, 2017
You’ve probably already picked up on the fact that the housing market has been pretty tight in most places nationwide. And the prediction for 2018 is more of the same: too many hopeful buyers, not enough houses. And definitely not enough of the more affordable “starter” homes that first-time homebuyers are usually looking for.
It’s always smart to lay the groundwork early for buying a home, and it’s especially important in today’s competitive market. So if buying a home is your big goal for 2018, now is the time to start getting ready.
Fortunately, there are some pretty simple steps you can take to get into the game on strong footing. Here are our top five things to do sooner rather than later. (You’re going to love number five.)
1. Educate yourself
Educating yourself about the homebuying process is smart no matter what’s happening in the market. But there are at least two ways that it can help you get ready to buy a home in a competitive environment.
First, confident decision making. Things can move fast in a tight market, and homebuyers often have to make quick decisions. If you do your homework and understand each step of the mortgage process, you’ll have the confidence you need to make the best decisions for you no matter what.
Second, access to first-time homebuyer programs. Homebuyer education can qualify you for programs that make it easier for first-time buyers to afford a home. For example, Fannie Mae’s HomeReady mortgage lets you put down as little as 3 percent, as long as you take homebuyer education (Fannie Mae has partnered with Framework for that).
2. Figure out how much you can (really) afford
When you’re getting ready to buy your first home, it’s essential to hone in on how much money you’re actually working with. Your bottom line is more about what you’re truly comfortable with than what a lender will give you. Sometimes, those two numbers can be surprisingly different.
And why is this extra important in a tight market? Because when there’s a lot of competition, with multiple offers and even bidding wars, it can be tempting to spend more than you really should. If you’ve taken a hard look at your numbers, you’re less likely to get carried away — or get in over your head.
3. Get a handle on your credit score
Without a healthy credit score, it’s hard to qualify for most mortgage loans. A good, high score can earn you a lower interest rate, which, besides saving you thousands of dollars over the life of the loan, helps you qualify for a larger loan now. A little extra can come in handy in a tight market.
Learn more about what exactly a credit score is and what it means for your mortgage. Then order up your credit reports and review them for mistakes. Errors are fairly common, and they can drag down your score.
4. Research down payment assistance
Most buyers could use some help with their down payment and closing costs. The good news is, there’s quite a bit of help out there. And income caps are higher than they used to be, so don't assume you’re going to come up dry.
5. Window-shop at open houses
Finally, something fun! By and large, open houses aren’t the best for serious shopping (although in hot markets, an open house is sometimes your only chance to see a property). But they’re great for looking.
What’s available out there? What exactly can you get on your budget? The reality check can be a bummer, we admit, but when you’ve “tried on” enough homes, you’ll recognize a solid, well-priced property when you see one.
That’s another tight-market-plus: once you do go into buying mode, you can act fast with confidence knowing that you’re getting the right house at the right price.
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Ready for next steps? It’s great to develop a relationship with a real estate agent well before you start house hunting. Check out “How to Find a Realtor You Can Trust: 10 Lessons from Online Dating.”
Ready to take the next step in your homebuying journey with all the confidence of a smart and savvy homebuyer? Our comprehensive online homebuyer course is simple and easy to access on your computer, tablet, and mobile device. It's all the information you need, all in one place. Go ahead and get started today.
Filed Under: For Homebuyers