Buying a home can be a stressful but rewarding experience, but it is much simpler when done right. It would be best if you considered so many things before buying a property, but it can be overwhelming to know where to start.
Having the best realtor, lender, and home inspector will ensure your new house gets found, financed, and built properly. So, what do you need to know as an investor before buying a home at the best price?
1. Know the Market.
This might seem like a no-brainer, but with the real estate market turning around so quickly, it’s harder to get an accurate picture of what your local market looks like.
If you’re looking to buy a home in 2022, it’s important to consider the current state of the market and how that could impact the price and availability of homes for purchase.
While it may be tempting to jump right into the process of finding an agent and looking at listings, you should take some time to learn about the market in which you’re considering buying a house. After all, if you don’t know how many homes are selling in a certain area or what kinds of homes are available, it can be challenging to make an informed decision.
Fortunately, you can use online interactive tools that allow you to find out what will be going on in your neighborhood and local real estate market based on the last 12 months of data.
2. Having Good Credit.
Good credit is still important to home buyers in 2022, but the landscape has changed a bit. It may be easier than ever to get a mortgage, but you’ll want to do some serious research before you apply for a loan.
Credit is made up of different factors, but the most important is your payment history and the amount of money you owe. The higher your score, the better because it means you pay your bills and don’t have a ton of debt.
Ideally, it would be great if your credit score were above 700, but anything over 650 will do. If your credit score is lower than 650, don’t worry! It’s still possible for you to buy a home, but it may not be easy.
This matters because when it comes time to finance a home, banks will look at that credit score to decide whether or not they’ll lend you money. This means if you don’t have good credit, they might not lend you very much or possibly any money at all. Even if they do lend to you, having bad credit could mean you’ll pay more for the home than someone with good credit would.
3. Having a 20% Down Payment Vs. PMI.
If you are planning to buy a house in 2022, it is important to understand the costs of buying a home and how much you should save before making it. An essential part of this process is the down payment. The down payment is usually 20% of the home’s total cost.
If you do not have enough money for a 20% down payment, you will be required to pay mortgage insurance (PMI) until your loan-to-value ratio drops below 80%. PMI can cost as much as 2% of your loan amount each year in some cases. This can be very expensive and make it difficult for new homeowners to make timely payments.
Many new homeowners consider paying less than 20% as a down payment to avoid PMI when buying their first home.
4. Hiring a Good Realtor.
Hiring a realtor is the best way to get the inside scoop on new listings that haven’t hit the market yet. Many homes sell before an agent even lists them. That’s because realtors are notified as soon as sellers decide to put their homes on the market, giving them time to target home buyers they know will be interested in each property.
A good realtor can also help you negotiate a great price and develop creative strategies for getting sellers to accept your offer when there are multiple offers on a listing. They’ll also be there for you if you encounter any issues during the escrow process, and they’ll help you find qualified professionals for any inspections or repairs that may need to be done before closing.
You might think that hiring a realtor will be more expensive, but the truth is those good realtors often get paid by sellers’ agents, and even if they don’t, they can save you money and hassle in hidden fees and costs over time. A good realtor will also be able to help you find the best neighborhoods to meet your needs while also helping you keep an eye out for red flags that may indicate future repairs or other problems.
A good rule of thumb to follow is: the tougher the market, the more experienced the agent should be. As an example, Scottsdale, Arizona real estate has been incredibly popular, and an experienced Scottsdale Realtor can make a major difference in your investment experience.
5. Have an Inspection Done.
The housing market is booming, which means that the homes you’re looking at might have undergone some serious renovations and improvements. Unfortunately, you likely have no idea what has been done to the home and if it was done well.
This is where home inspections come in. Home inspections are highly recommended before you buy a house, especially in a year like 2022, where the market is booming and there’s a lot of competition for homes. Inspections can help you avoid purchasing a home with major defects or even small issues that will turn into major ones if you don’t catch them now.
A good home inspector will review every aspect of your new home, giving you peace of mind about your purchase as well as information about what to do next.
6. Stick to a Realistic Budget.
Buying a home is a big financial decision and can be one of the most exciting moments in your life. However, with low-interest rates and the ever-increasing expense of renting, it’s tempting to blow your budget and get yourself into more houses than you need. But sticking to a realistic budget is ideal, and here are the reasons why:
- You’ll have more money for expenses, repairs, renovations, and other costs that come with owning a property.
- You’ll prevent yourself from getting stuck with an amount of debt that you can’t afford or manage on your own.
- You’ll avoid having to sell the house if you find yourself unable to pay for it down the road.
Many moving pieces go into buying a home, but thinking through the process ahead of time will help you save money and get exactly what you want from the experience.