Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].
Question. Pamela from Verona, WI asks: Brian, I’m a single mother of two and I’m absolutely thrilled at the prospect of being able to buy a home for us in the next couple of months. I’m pre-approved at $288,000. But I have to admit that I’m a little frightened along with being excited. Buying a house is a huge commitment for me and I’m sure it will stretch my budget. What should I expect and look for as the snow begins thawing?
Answer. Hi Pamela. I’ve heard from several people trying to figure out what to do this spring when it comes to buying a first home. Each one has their personal story and circumstances but mostly this spring looks like a good opportunity to hit the buyer’s market at a fast pace. The two big positives going into the spring are that mortgage rates are even slightly lower than they were in the fall and home prices haven’t increased dramatically. Both of these favor buyers but there is no certainty they will continue favoring buyers into the summer. Also, all indications are that the real estate market will remain solid despite concern about it entering a down cycle.
The less than positive aspect for buyers is that the spring market is almost certainly going to be tight in most parts of the country. Especially for time first-time buyers. But Pamela, in your particular neck of the woods, the market is slightly leaning towards a buyer’s market rather than a seller’s market. Good for you. That means all of the important indicators are in your favor. Since your personal circumstances are also in order, this spring is your time to buy a home!
So, Pamela you’re about to buy a home! It’s a big deal! Purchasing a house is both exciting and challenging. Enjoy the anticipation of making memories in your new home but approach the process rationally. You might not be able to find or afford your dream home right out of the gate. You’re pre-approved for a price below the median value in your area but there are still plenty of homes that you’ll qualify for. My suggestion is that you be aggressive about finding a house early this spring before prices go up more. Although price increases are slowing, they are still going up. When the crowds hit the market later this spring, you can expect the biggest price jumps along with more competition from other buyers.
Still, remain within the budget amount that you are comfortable with. That doesn’t mean you have to spend the maximum that you are approved for. Getting into the market early this spring will help you stay in control of your budget no matter how much pressure you feel when other buyers pluck good homes off the market. If you don’t find something early this spring, you’ll already have the experience that builds your knowledge as more homes come on the market later. You don’t have to screw up your finances!
Here are some tips to help you while you patiently look for the home you’ll buy:
Pamela, buying a home can be stressful. If you don’t already have one, find a realtor that you are comfortable working with and have good communication with. If the one you already have doesn’t meet those basic qualifications, talk to another. If you look at houses in different areas, be sure the realtor knows the area very well. Also, have her or him walk you through the entire buying process from financing to closing. Make sure you know about all of the first-time buyer programs that are available. Just because one lender pre-approved you doesn’t mean you have to go with only that lender. Also, learn about each step of the process like the home inspection and the appraisal. When you do make an offer to purchase and apply for a loan, you’ll receive a formal Loan Estimate. It’s a three-page form from the lender. Study it carefully. The form provides you with important information, including the estimated interest rate, monthly payment, and total closing costs (including details). This information is key to understanding what your budget requirements will be once you own your home.
What tips can you add for buying going into the spring season? Please leave your comments.
Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].