Maggie Gunther

Whether you’re sick of rising rent prices, are looking for more stability or want to start building equity, buying the right home has a lot of advantages. Even if you are not quite ready now, it’s always a good time to start preparing for your home purchase. Here’s what you need to do. 

Wants and Needs  

Think about what you need, what you want and which types of homes meet those needs and wants. Need great public schools? Want to be close to a particular private school? Do you or your significant other work from home and need an office? What about accessibility features? Do you want a yard? Do you want a pool or room to put one in later? If you’re purchasing with a partner, it’s key to get on the same page before you begin the buying process to save heartache later.

Assess Your Housing Budget

A good real estate agent will NOT advise you to buy the most expensive home you can qualify for, which is why I recommend you do the next quick step before even getting prequalified to borrow. Determine what you’re willing to comfortably spend on housing. A good rule of thumb is not more than a third of your gross income. Here in South Florida, prices can be high, so you may have to spend a little more for the home you want, depending on yours and your partner’s income (or if you’re single, your own income). Remember the additional monthly costs you aren’t paying at a rental, like water, cable/internet or electricity. There could be other monthly costs you may choose to take on when you own a home, like a cleaner, landscaper or pool service.

Think About Other Costs

You must be aware of other, sometimes hidden costs to home ownership. You might need to replace a roof in the not-so-distant future. You may live in a community with a homeowners association (HOA) that could impose a special assessment you suddenly have to pay. Other costs of purchasing include moving costs, closing costs – typically three to five percent of the purchase price, and whatever you choose to spend to repair, refresh and buy necessities for the new home, such as hiring a painter, buying furniture or putting in new appliances. Even if you do a lot of the work yourself and are thrifty about how you acquire what you need, there are always costs associated with a home purchase that you’ll want to prepare for before you buy.

Work on Your Down Payment

Hopefully you have a nice chunk of change saved for your home purchase. If not, now’s the time to make that happen. Some wrongly think they can never buy a home because they have been told they must put down 20 percent of the purchase price. While this is true for some types of homes and in some transactions, in many cases you can purchase with as little as three or five percent down. If you put down less than 20 percent, though, you will have to initially pay for PMI – private mortgage insurance – which can be removed once you have a little over 20 percent equity in your home. This can be achieved by paying down your mortgage principal over time, or an increase in the value of your property, or a combination of both. With how fast home values have been increasing lately, it might not take very long to be free of PMI.

Assemble Your Team

Armed with the basic financial considerations above, it’s time to start assembling your team, if you haven’t already. 

• Realtor – A great Realtor has your best interests at heart and helps you understand the process of buying. They will walk you through everything so that you know what to expect, and represent you throughout the entire transaction. Another lesser-known skill of a great Realtor is being your Emotional Support Agent (not unlike an Emotional Support Animal) who keeps you calm throughout what might be the biggest transaction of your life to date. 
• Mortgage Broker/Banker – Unless you’re rolling up with a suitcase full of cash, you’ll need to finance your purchase, and a mortgage broker or banker is a very important member of your team you should speak to early in your buying process. They will help you understand your options regarding types of financing. The Broker/Banker can get you prequalified so you know what price range of homes you can afford, and help you make a strong offer when you are ready to buy. A crucial member of the team, you need someone who is very responsive and is on top of the current market conditions, like the increasing interest rates we are experiencing now.
• Inspector – Skipping ahead, once you make an offer and it’s accepted, you’ll want to get an inspector in to look at the property ASAP. This can mean the difference between buying a home or walking away. You may hear about people waiving inspections in the current and recent market, but I would never advise that, unless you already intimately know the home, and even then, it could be a risky move.
• Insurance Agent – The home must be insured in order to secure financing, so it’s key to have a very responsive insurance agent who will quickly get you the information you need. The cost of insurance also factors into your monthly payment unless you pay it separately from your mortgage, so keep that in mind as you determine what kind of home you can comfortably afford.

I could write pages and pages more on this topic, but each buyer’s situation is different and merits an individual conversation. So, if you’re in South Florida or thinking of buying, selling or leasing here, let’s talk: 954.224.2825 or maggie@debianchi.com. I would love to help you make your real estate goals a reality.