Throughout 2018, 28-31% of non-owners…… said an improvement in their financial situation would be the top reason that would encourage them to buy a home in the future. 26-30% of non-owners said a change in lifestyle-such as getting married, starting a family or retiring-would be the primary reason they would make a future home purchase. NAR’s 2018 Housing Opportunities and Market Experience (HOME) survey
TOP STORY: Countdown to Homeownership:
Buying a home can be intimidating, confusing, overwhelming, and yes, very exciting. One thing it is not is an impulse purchase. Homeownership is a big responsibility, a huge financial commitment, and often represents a major lifestyle change. Anyone who is about to do it, or is even thinking about doing it needs a plan. Not just any plan, but a tic tock, a countdown that will guide the way from “gee, I’m sick of paying rent,” to “which key opens the front door?”
Let’s start with a tiny germ of an idea; “Maybe it’s a good idea to kinda think about maybe looking at houses. I’m not saying I’m going to buy one, but would it hurt to look?”
That is the moment to begin the countdown.
Ten: Educate Yourself
The more you know before you begin the hunt, the easier the process will be and the smarter the decisions you will make. Start with an honest and thorough personal inventory. Are you financially ready? How much cash can you pull together for a down payment and closing costs? What are your current fixed monthly expenses, and how much of that goes to paying debt? How is your credit? You can pull one free credit report from each of the three major credit bureaus each year, and many credit card companies now provide free credit scores to their customers. Do these indicate that buying a home right now is realistic? If not, draw up a plan to increase your savings, pay down debt, and/or improve your score.
Understand that you can also degrade your financial portrait. Keep all payments current and hold off on any major purchases on credit until after you close on a house.
Are you otherwise ready for homeownership? Why do you want to buy? Do you expect it to change your lifestyle and, if so, are you ready for any changes that might not be positive? Do you have the knowledge, skills, and/or time to maintain a home? Will a move mean more time or effort to commute to work or see family or friends?
Make lists of your questions and concerns, both about homebuying and getting a mortgage, even if they seem trivial, and talk with a real estate professional and a loan officer. Odds are good you will find yourself to be a much better candidate for a mortgage and the whole process much less scary that you thought. Be upfront about your finances with the loan officer and get prequalified. You aren’t, with either discussion, making a commitment to buy, nor does it obligate you to work with either one. It will however give you a firm idea of your price range and timing, and make it easier to target your search by price, and probably geographically as well.
“Talk” incidentally, is a broad term. An on-line chat or telephone conversation will work fine if you can’t arrange to meet a lender or Realtor face-to-face.
Consider a homebuying course. They are widely available through adult education programs and from certified housing counselors. Not only will you learn a lot, but completing one might qualify you for special mortgage programs.
Nine: Test the Waters
Do some preliminary narrowing of the field. Start out on-line, looking for towns/neighborhoods that fit your price range and have the housing types, styles, sizes, and amenities you are looking for. Check distances to work and to important services. Calculate transportation costs, in both time and money.
Get a feeling about the style of housing, floor plans, and square footage that will meet your needs. Make a list of must- have features for your new home and then prioritize them. Which is more important, a big yard or a formal dining room? An eat-in kitchen or a master bath?
Decide on a time-line that will accommodate your lease terms, job demands and kids’ school schedules.
Eight: Explore the Territory
If an area or neighborhood looks interesting, you will find a ton of specific information online, right down to the street level. You can check out tax rates, local services, and types of government, not to mention details about local schools (classroom, sizes, test scores, subject offerings), even neighborhood crime stats.
Visit those areas with the most potential. Get out of the car and walk around. Watch for signs that an area is stable or on the upswing; houses neatly tended, freshly painted, well maintained, or headed in the opposite direction. Be alert for some of the pluses and minuses that won’t show up in a house listing; a major highway or heavily trafficked flight path cutting through a neighborhood; intrusive noises or odors, or conversely, a nifty playground; shopping opportunities, walkability, a “feeling” you love.
Think of open houses as 3-D listing flyers. They can fill in gaps in your housing knowledge; (a split level and a multi-level are quite different, a ranch and a raised ranch even more so) and give you a feeling for the square footage and traffic flow that might suit your needs. A few open houses might help reevaluate your priority list; some things are better when imagined than seen up close. Calculating the price per square foot of every house you visit will give you a somewhat objective yardstick for evaluating listing prices.
Seven: Take a Deep Breath
Not a long one, but a deep one, and relish the advantages of starting out slow and easy. Even if the countdown so far has taken only a few weeks, it has probably allowed you to test drive and maybe to reevaluate your priorities, and to discover how much house your price range is going to buy you.
Then…..if all systems are go…
Growing demand has made urban living space both scarce and increasingly expensive. To make the most of that space, Boston-based Ori has applied MIT tech knowledge, developing robotic, shape-shifting furniture with the aim of transforming studio apartment living into at least feeling like a one-bedroom apartment.
The system eliminates the need for traditional furniture and excessive walls. Linked to Alexa-like devices, a bed will disappear into a module, and a walk-in closet emerges. A voice command reconfigures it again to provide a table and chairs for breakfast dining. Much of the furniture is currently available at Oriliving.com. Leah Demirian, Builder
Six: Start Your Engines
Ask your loan officer to provide the highest level of preliminary approval possible. Often you can get what amounts to an actual commitment with conditions such as verification of certain assets, or pending only an acceptable appraisal once you have found a house and have a signed contract in hand. Your loan officer will be the guide to making you the strongest possible buyer.
This is also the time to commit to a real estate agent. If you haven’t done this previously, discuss your price range, geographic preferences, and priority list, and be prepared for a reality check. The features you want may not exist in the area where you want to live (i.e. a double car garage in a neighborhood of Victorian era homes) or, more likely, in your price range.
You want an agent that understands your requirements and is quick to update you with new listings. But remember that loyalty goes both ways. Protect your agent. Make sure you understand how to avoid conflicts when visiting open houses and especially new home developments. “Don’t think of stepping foot in a new home subdivision without your agent or you can’t use him or her,” writes author Elizabeth Weintraub. Otherwise, the builder will not recognize the real estate professional as your agent and will not negotiate with him or her.
Five: Get and Stay Organized
It is easy to get overwhelmed. (Was that the ranch with the chartreuse master bath or the one with a built-in dog house in the kitchen?) Ask your agent for shopping tips or use some of ours.
An old school suggestion is to get a three-ring binder for the “listing flyers” you get at each home you visit. Make copious notes on what you liked and disliked about each property. It is easier to organize sheets into possibilities and non-starters, arrange by price, location, or home size, or to flip through and refresh your memory than to review listings on-line. It also makes it easy to check new ads against listings you have already seen.
The digital age equivalent (but only after checking with your agent to make sure the homeowner won’t object) is to film your tour of the house, recording comments as you go.
Keep your schedule as flexible as possible so you can respond and see new listings quickly. Good ones go fast in this market.
Continue to track homes you have seen, even if you are not interested in them. Update with price changes and, when it goes under contract, with any information your agent might have. Were there multiple offers? Intervening price changes? Any clues about the contract price? Information is often sparse, but any you can glean will help you assess the temperature of the market.
And speaking of that temperature, stay in touch with your loan officer. Fie or she will have a sense of where interest rates are headed and will certainly have information on any new loan programs that might add to your buying power.
What looks like across between an A-Frame and a kid’s pop-up book is the latest in sustainable and affordable housing. Designed by Italian architect Renato Vidal, this prefabricated foldable house is suitable for both temporary (fold it up and store it away) and permanent housing. M.A.Di homes range from 290 SF to 904 SF and can be expanded with additional modules. The home is designed to withstand earthquakes and, once prefabricated, is folded flat, and transported to its destination. There it takes three workers about 7 hours to complete. The module comes equipped with electrical, plumbing, HVAC, and sanitary water systems and costs $25,195 to $73,385. Bridget Borgobello, New Atlas
Four: Landing Site Identified
When you find The House, it is time to step up your game. This market is truly one where he or she who hesitates….
Talk bidding strategies with your Realtor and timing with your loan officer.
Make sure your cash for deposit and closing costs will be available when needed.
Get an up-to-date approval letter.
Stay available so your agent can reach you during any negotiation.
Let your loan officer know as soon as your offer is accepted and round up any outstanding documents or information needed.
Find out which housekeeping chores leading to closing will be handled by your agent, by your lender, and which are your responsibility.
Contact your insurance agent and get the required policies in place. Open appropriate utility accounts for the new house and cancel those you are leaving behind. Hire movers – or get your friends psyched up for a moving party.
Notify magazines, creditors, friends and family about your change of address.
Set aside some time to review the Closing Documents (possibly with an attorney) that your loan officer will forward to you at least three days before closing.
Make sure your share of the purchase price will be delivered – whether by wire transfer or a certified check – to the closing.
And one more thing. As you pack for the move, put everything you will need for the first night in one box and hand carry it to your new home. Sure, you think this is a silly tip, but just wait until 10 p.m. when your pillow, toothbrush, and the little one’s teddy bear are the only items from the old place that you are able to find.
SHORTEN THE DEAL
Realtor Magazine News offers some tips for shortening the homebuying time frame. We pass on two:
Get pre-approved, not just pre-qualified. A pre-qualification is just a quick conversation with a lender who may glance at the borrower’s credit score. A pre-approval is a more thorough review of the credit history. It makes an offer look stronger and can minimize any surprises that may delay or force a cancelation during escrow. Don’t make lowball offers. A strong offer doesn’t have to meet the full list price – but it may mean vowing to make a larger down payment, offering up more earnest money, or accepting an early closing date. Sellers who sense commitment from a buyer may be more likely to accept an offer.
Two: Finally…The Closing
The combination of new lending regulations and the increasing use of technology might make this the easiest part of the whole process. You have seen and reviewed the loan documents and had the time and opportunity to clarify any concerns with your loan officer. The money is on the table, both yours and the bank’s and the closing itself is in the capable hands of escrow agents who might handle a dozen of them each day.
Sit back, make sure your pen is filled with ink, and enjoy the moment.
One: Pick up the Papers, Collect the Keys at Last!
…And Welcome Home!