We know it better than anyone: Buying a home is a complicated process, especially if you’re doing it for the first time. Fortunately, your DRU Advisor is here to help simplify the process. To help you avoid common mistakes — e.g., buying the wrong home, or making a poor investment — we’ve polled our team and assembled five crucial pieces of advice.
Tip #1: Get Pre-Approved for a Mortgage
If you’ve never gone through the home buying process before, you may not even know about pre-approval, but it’s an essential step in making your purchase smooth. Basically, pre-approval means that a bank has gone over your financial situation, and approved you for a range of mortgages.
This process gives you a clear sense of what you can afford, and it demonstrates that you’ve done your due diligence — that you’re not going in blind. It is important to compare the financial data from the pre-approval to your greater financial plan and goals. Banks may approve you for more than you want to spend. Don’t overextend yourself. Get to know your means, and stay within them.
Almost every listing agent will require you to submit this pre-approval with your offer. With how fast homes sell these days, don’t miss out on one you want by not having this ready ahead of time.
Tip #2. Talk to Professionals
To facilitate Tip #1, make sure to reach out to your trusted network and find a good real estate broker who can advise you on every step of the process. In a competitive buyer’s market, it is important for your broker and lender to work together to get you the best terms and get your offer accepted. Our DRU Advisors have done lots of deals like yours, and so they will be able to help you determine what works best for your situation and refer a good lender. Just as you would for any major purchase, this will increase your ability to shop around successfully — and much less stressfully than if you did it alone.
Tip #3: Keep Your Emotions Balanced
This isn’t an easy one. Home buying is an inherently emotional process, and you’re going to have to negotiate with your feelings just about every step of the way. That’s natural and necessary — but what isn’t necessary is falling so in love with a home that you spend more than you need to on it.
That can go the other way, too; people will cancel home sales for the simplest inconsistencies, which make it feel like the home isn’t in good shape. Again, professionals will help simplify your decisions, show you what you do, and don’t need to worry about and keep your emotions in check.
Tip #4: Don’t Be Deceived By a New Coat of Paint
Appealing visual features — a new coat of paint, updated decorations, fancy detailing — can make a home seem much nicer than it is, and consequently, cost much more than it should. Surface-level embellishments can also make prospective buyers overlook much more important features, like the size of the yard, the location, or the proximity to noisy highways.
Conversely, the need for a new coat of paint can make a house seem much less appealing than it really is. In general: Train yourself to separate out superficial, cosmetic features from meaningful, deep features of a home. A new coat of paint is an easy fix — moving your house away from a main road isn’t.
Tip #5: Be Smart, Smart, Smart with Your Money
It goes without saying, but we’ll say it anyway: Buying a home is a major investment, don’t go shopping for a car, or start shopping for new furniture until you’ve closed the deal. Most of all, don’t open any new lines of credit until your closing is complete — this can hurt your overall credit score, which may impact your pre-approval, or worse, your mortgage approval. When in doubt check with your DRU Advisor or mortgage professional before taking any action.
Once you’ve decided to make an offer, be sure it’s informed. Again, professionals will help you with this. Make an offer only if you’re completely serious about buying, and base your offer not on your love of the house, but on comparable sales. Negotiate smartly — learn what your ideal number is, and be practical about getting there. Ask your agent for a Comparative Market Analysis (CMA) on the value of the home, review the inspection report(s) and get bids for any necessary repairs. One of the most vital roles for your agent to fill in the transaction is to negotiate the deal in your favor.
Buying a home can be very intimidating, but with a good roadmap, you can avoid taking wrong turns along the way. We hope these tips come in handy. If you’d like to discuss anything in greater depth, please don’t hesitate to reach out.