Over the past several years, the cost of housing has caused many to raise their eyebrows in disbelief. Even though housing prices are slowly starting to come down, there are still too few reasonably-priced houses to meet demand. Anytime a house is priced to sell quickly, it tends to get snatched up in the blink of an eye.
Whether you’re looking for a house to rent or buy, it’s essential to be both swift and prudent. Otherwise, you’re likely to miss out on some of the best housing deals or get locked into a mortgage you can’t afford. Here are five tips for finding a place to live in today’s highly competitive housing market.
1. Get Prequalified for a Mortgage
Once you see a great deal on a home you want, you need to be positioned to move faster than other buyers. Otherwise, you may consistently miss out on prime purchasing opportunities. This is a common problem bemoaned by many would-be home buyers who weren’t quite fast enough. Many house hunters think they’re positioned to act quickly, but later discover the mortgage approval process takes longer than expected.
Becoming prequalified for a loan will give you more freedom to act quickly when you find a home you want. As part of the prequalification process, you’ll need to show verification of income and a record of debts and assets. Ask your lender if any additional documentation is required to prequalify for a mortgage. Once you’re prequalified, you’ll have an advantage over buyers who are not.
2. Determine the Amount of Your Highest Competitive Bid
Knowing your financial limit is important when it comes to buying a house — especially if you’re a naturally competitive person. To purchase a house in today’s cutthroat real estate market, many buyers are getting into bidding wars. If you haven’t already figured out how much you can afford to bid, you might end up bidding too much. That’s why it’s so important to firmly establish the maximum amount you’re willing and able to bid beforehand.
Determining your maximum bid amount will reduce a lot of the pressure that comes with a bidding war. It will also help guide your real estate agent’s search and improve their ability to serve you better. When your agent knows the maximum amount you’re willing to pay, they’ll know which listings to pounce or pass on. This knowledge will increase your agent’s ability to respond quickly when the right house goes up for sale.
3. Separate Your Needs From Your Wants
Did your parents ever tell you as a child to separate your wants and needs on your Christmas list? This is a pretty common way to guide purchasing decisions when you’re working with a predetermined budget. As a homebuyer, it’s fun to write down everything you want in a home, including size, location, and special features. But you should also realize you may not be able to find or afford a home that perfectly matches your list.
To guide your home search, be sure to separate your needs from your wants. For example, you may need a larger home to accommodate your growing family, but you may not need a pool. Ideally, you’ll be able to locate a reasonably-priced home that satisfies both your needs and wants. But if you can’t, you’ll be able to give precedence to homes that meet your most basic requirements.
4. Reevaluate Your Hunting Grounds
Armed with a loan prequalification and a firm maximum spending amount, you’re ready to begin the hunt for a house. But you may quickly find that you’re completely priced out of particular areas or neighborhoods. If that’s the case, it’s time to reevaluate your hunting grounds and prepare to broaden them.
Your search for affordable homes may take you into a neighboring city or even a different state altogether. Rely heavily on your realtor to help you identify safe neighborhoods that fit your budget and lifestyle parameters nicely. Alternatively, you may be able to find a fixer-upper in your desired neighborhood. You’ll just need to make sure you have the budget and time to renovate it before you move in.
5. Inquire About Special Mortgage Programs
If you’re a first-time home buyer or you have challenging financial circumstances, you may qualify for a special mortgage program. These programs include low-down-payment mortgages, government-backed home loans, and programs that offer closing cost assistance. There are also special loan programs for eligible veterans and their surviving spouses.
If you think you may qualify for such a program, contact your mortgage lender or a local housing counselor. You may need to fill out an application or provide additional information to determine whether you qualify. Keep in mind that mortgage insurance is a requirement for many state and local special mortgage programs too.
Finding a place to live in today’s over-priced economy may be difficult, but it’s not impossible. To increase your likelihood of success, you need to be ready to move swiftly when the time comes. The above tips can help position you to act fast when you see a home listing you want.