Published: May 15, 2021
When the stock market crashed in 2008, the United States suffered through a financial crisis that wreaked havoc on the housing market. CNN Money reported that 3.1 million Americans filed for foreclosure - meaning 1 in every 54 households received a formal notice in the mail.
However, thirteen years later, the real estate market is stronger than ever. Buyers today are searching for their perfect forever home! Just as fast as sellers list their homes, buyers are placing bids on them.
Thinking about buying a home in today’s fast-paced real estate market, but don’t know where to start? Don’t worry, we got you covered! We’ve created this informational guide with easy tips you should follow as you find and purchase your dream home. We wish you nothing but happy house hunting!
Know exactly what you want in your home:
Before you start your search journey, create a “must-have” list of everything you want in your home. Whether that’s a large fenced-off backyard for your dogs or a finished basement you’ll turn into an at-home movie theater, knowing what you want in advance will help you make quick decisions when it’s time to close on a deal. You’ll be able to easily filter out homes that didn’t fit what you’re looking for.
Hire an experienced real estate agent:
Of course, buying a new home is a rewarding experience, but the whole process can be stressful as well. Between finding the home of your dreams, getting your finances together before you determine an offer price, and handling the mounts of paperwork, your stress level will shoot through the roof. Well, when you hire an experienced real estate agent, they will act in your best interest from the first initial contact you have with them until the very moment you close the deal on your home.
If you decide to hire a real estate agent, do some research to find the best one in your area. Scan through their social media accounts to see how they promote their listings. Read some reviews about them. You can even ask family and friends to recommend real estate agents they had pleasant experiences with. Once you find a few promising candidates, interview them to see which one you’ll work well with.
Get pre-approved for a home loan:
Knowing you’re pre-approved for a mortgage loan before you start house hunting is a satisfying feeling! Once you find your dream home - with your pre-approved letter in hand - the seller will see that you’re serious about purchasing the home and can afford the price.
This process can be challenging since it involves a lot of paperwork. Your real estate agent can help you gather everything you need and keep it all organized. You’ll need most of these documents before you can start the process to become pre-approved for a home loan:
Know your financial limits:
Before you start looking at homes, you should have clear financial limits you’d want to stay within. Not only will having a set budget prevent you from buying more house than you can afford, you’re also reducing the possibility of facing detrimental financial hardships in the future.
Have you ever heard of the 28/36 rule? Some homeowners use this rule to calculate how much they should spend on housing expenses and other debts. With this rule, you shouldn’t spend any more than 28% of your gross monthly income on your mortgage. To cover your other debts - anything from credit cards to child support to student loans - only 36% of your gross monthly income should be used to pay them back.
Just a quick disclaimer - the 28/36 rule doesn’t work well for everyone. Due to this, you should sit down and devote some time to determine the budget you’ll set aside for your home. Depending on your financial situation, you could spend more than expected on your mortgage and other debts.
You should never be too busy while you’re closing the deal on your home! One thing about buying a home - the entire process is unpredictable! Your real estate agent will contact you whenever they need to ask you questions or discuss any issues that may arise. Keep your phone charged at all times as you should always be easy to reach through email, phone calls, and text messages.
Les Christie, CNN Money, “Foreclosures up a record 81% in 2008.”