Whether you’re a first-time home buyer or you’ve gone through it all before, house hunting can be an exhausting, complicated, and frustrating process. Starting to prepare before you’re ready to actually buy a house can help make your search more organized and successful. We find that the more prepared you are before you start house hunting, the more satisfied you will be with the house you ultimately choose. Here are 5 things you should think about as you prepare to start your search.
1. Establish a budget
Months before you think you’re ready to actually start house hunting, begin keeping careful track of your monthly spending. Knowing exactly how much wiggle room you have after groceries, bills, debts, and other payments will help you figure out how much you can afford to spend on a monthly mortgage payment. You don’t want to overestimate your budget and find yourself “house poor”—that is, owner of a beautiful house but unable to afford furnishings, touchups, and other settling in expenses.
The general rule is that you should avoid spending more than 25-30% of your monthly take-home pay on your mortgage, including taxes and insurance. When planning your budget, don’t forget to factor in that you will have to put down at least 10% of the purchase price for a down payment and put another 5% toward closing costs.
2. Get to know the market
Once you have an idea of what you can afford to spend on a new home, spend some time getting to know the market. Browse listings on Zillow or Trulia to get a sense for what’s available in your price range. Go to open houses and familiarize yourself with different neighborhoods in the area. Talk to friends or coworkers about where they live and what their experiences have been. Learning what they love or hate about their neighborhoods can provide valuable insight that would be hard to glean from a drive-by.
Finding out what’s available on the market will help set your expectations as you embark on your house search. You may even discover preferences you didn’t know you had!
3. Create a wish-list
It’s rare that someone winds up buying exactly the kind of house they envisioned. During the house hunting process, it’s common to come across surprises that cause you to fall in love with a house that doesn’t meet every one of your criteria. But creating a wish list can help to focus and narrow your search, especially when you’re first starting out. It’s better to have a smaller pool of strong contenders than to cast an overly wide net and be overwhelmed by options.
Your list doesn’t have to be locked in stone—nor should it be! As you begin to visit homes and form opinions, periodically sit down to review and revise your wish list. You may discover that certain features aren’t as important to you as you thought, or you may encounter something you hadn’t thought of that would be nice to have in your home. Reflecting and adjusting your expectations as you go will help you eventually narrow down your options to one finalist you’re truly satisfied with.
4. Find a good real estate agent
Your realtor is an important ally when you’re looking to buy a home. They’re your advocate, your insider, and your personal expert. Like any successful working partnership, your relationship with your realtor has to be founded on trust and an ability to work well together. Interview several agents before making a decision in order to find one that’s the best fit. If you’re not sure how to get started finding an agent, ask around. Word of mouth is often the best way to find good realtor, since a realtor’s greatest asset is their reputation.
5. Plan for your current housing situation
Are you currently renting? You’ll need to time your house search according to when your lease ends in order to avoid paying a penalty. Otherwise, you can communicate with your landlord to set up a subleasing arrangement if that’s something they permit.
If you currently own a home, you’ll have to decide whether or not you’re comfortable making an offer on a new home before selling your current house. On the flip side, selling your current home before you’ve found a new house might mean you need to make arrangements for temporary housing and storage facilities until you find “the one.”
There’s no right way or wrong way to go about it, but you should figure out what you’re comfortable doing and time your house hunting process accordingly.