Get clarity on your budget
While it’s tempting to peruse home photos, visit open houses and fantasize about that dream home, it’s best to be realistic before you seriously shop. Many buyers, especially in rising housing markets, get caught up in the whirlwind and end up getting pushed above their preferred price to expand their options. Buyers who have already experienced losing a bidding war are even more likely to raise their price range. While bumping up your budget may help you compete in the spring housing market, you also need to be careful, because this spring many economists are predicting a rising interest-rate market, as well.
Buying a house, typically the biggest investment people make, requires a deep dive into your finances. You need to know how much you spend now and how that spending could change when you become a homeowner. A lender can provide a loan preapproval — not a prequalification. A preapproval will set a maximum amount you can borrow, but you should also establish your own range for a comfortable housing payment.
In a tight market such as Washington, when homes sell fast, you also need to be ready with your down payment funds in an accessible place and your loan documentation complete.
Buyers start their home searches and their research about the homebuying process online, but once you’re serious about purchasing a home, it’s time to consult professionals who are full-time real estate experts. Interview a few lenders to compare their services and their loans. Consult a bank, a credit union and a direct lender to give you a broader understanding of your loan options. Find a lender who can counsel you on loan options and develop several scenarios for your financing, but watch out for online lenders who may not be familiar with the local market.
You also may want to investigate home-buyer assistance programs in your state or locality to see whether you qualify. The earlier you do this, the better because many require you to take a homeownership class. Your mortgage lender can guide you in the right direction here.
Interview several real estate agents to find someone with whom you feel comfortable and has the expertise you need and trust. A good real estate professional can guide you through the entire process and help you find the right home to suit your needs. Real estate professionals know about new listings coming soon to the multiple-listing service (MLS) that are not visible to the public on the national portals and can set up alerts to keep you up to date in a fast-moving market.
You really need to be ready to make an offer when you find the right property in this fast-paced market. That requires research on your part. You need to make written lists of your priorities for the size, features and finishes of your property. Decide where you might be willing to compromise and then begin searching online to see what you can find that fits your price range and your wish list. Visiting available homes can help you identify your preferences and begin to see the value in various properties.
Know where you want to go
Narrowing down your preferences also includes deciding on a neighborhood or a school district. If you are open to multiple areas, let your agent know. Keep transportation and future development in mind as you decide.
If living in a specific place is a high priority, you can set alerts about listings in a defined area. In neighborhoods with lots of competition, you may need to be open to a smaller property or one in less-than-perfect condition. The more you know about your preferences and your budget, the easier it will be to move fast when something that is perfect for you comes on the market.
It’s never too soon to prepare to buy a house. The more time you have, the better your chances of lining up your money and your market knowledge for a better buying experience.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS) and president of Champion Realty in Annapolis, writes the occasional commentary on the Washington area housing market.