If you’re hoping to buy your first home this year, the real estate frenzy of 2020 may have you feeling dizzy. But don’t worry about it. While the market will remain very competitive, you can land the home you want with the right knowledge, good preparation, some flexibility, and a good agent.
With housing inventory at extremely low levels, 2021 will continue to be a sellers’ market. However, continuing low mortgage rates will keep affordability within reach and still make it a great time to buy despite rising home prices.
In this competitive market buyers need to be prepared, and that means putting finances first. Check your credit report and clear up any mistakes before you apply for a mortgage. Get pre-approved by a mortgage lender. Knowing the amount you’re qualified to borrow will help determine your housing budget. It will also show real estate agents and sellers that you’re a serious buyer and will allow you to move quickly when you find a place you love. After you’re pre-approved, set a realistic budget. Just because a lender pre-approves you for a certain amount doesn’t mean you should borrow the max amount.
A mortgage preapproval is an offer by a lender to loan you up to a certain amount of money to purchase a home. It’s not a guarantee for a final loan approval, but if there are no big changes in your credit score or employment, you should be able to close and purchase your dream home. So put away the credit cards and leave the furniture buying until after closing. Lots of spending can ding your credit score making you ineligible for your home loan. Additionally, pumping the brakes on spending might give you a nice buffer for closing costs, down payment funds, the home inspection, moving costs, renovation expenses and more.
Additionally, you will want to work with a good real estate agent. Your agent can even refer you to local lenders if needed. After you are preapproved, your agent can watch for homes coming on to the market that are in your price range and preferred area. With many listings going under contract within days of being listed for sale, it’s important to have an agent who is working to alert you to homes coming available and is able to get you a showing as soon as possible.
It’s important to be realistic during your house hunt. No house is going to be perfect, and it’s important to be flexible. Just be sure you can live with the compromises you are making. Buying a home is a big investment and you want to be happy in your new home. Additionally, it’s easier and usually less expensive to change cosmetic issues than it is to move a wall or add on to a house!
When house hunting, look only at homes you can afford. You don’t want to fall in love with a house you can’t afford or have unrealistic expectations for your price range.
With low inventory, be prepared for your house hunt to take months, not weeks. But once you find the home you want, be ready to move quickly! If you find a reasonably priced house in good condition, chances are you won’t be the only one making an offer. Properties are moving fast. If you see a place you love, make an offer quickly; with so much competition; if you sleep on it, you may never sleep in it! Your agent can help you come up with a winning strategy or help you navigate a bidding war if you find yourself in this situation.
While 2021 will be another challenging year for first-time home buyers, with the right preparation and a good agent, the process can be less stressful and hopefully fun. Happy house hunting!
By Bonnie Marlow, Broker/Owner, Cisco Realty
Bonnie Marlow, Realtor 