A few days ago my kids begged me to take them to the park so they could peddle some home-made donuts and lemonade. Not gonna lie, I admired their entrepreneurial spirit! They were excited, but then got a little nervous about talking to strangers (who wouldn’t be after years to parental pounding, “Don’t talk to strangers! but that’s another topic for another day).
As they went along from person to person, they were kinda relieved to see some familiar and smiling faces of neighbors who were visiting the park at the same time. When I saw they were chatting it up (and selling some wares I might add) to our generous neighbors, I unhid myself from my undercover reconnaissance location behind a tree and joined the happy group.
As we visited as friendly neighbors do, the classic question, “What do you think home prices will do?” came up as it usually does and we were off to the races.
After a bit of chit chat on the topic, the wife earnestly expressed their desire to buy a new home this year, but were unsure if now would be a good time or not. (Now, most ask this question, but it’s not the most important question. I talk about that in my article here: “Is now a good time to buy a home” Could Be the Wrong Question to Ask“).
She expressed concern about home prices, rates and other things that are so important. The end conclusion was that they needed a new home and it that change would happen in the next six months to a year.
What did I tell them? I gave them the my “the three things for potential homebuyers to do BEFORE jumping into the market that could save them a truckload of money” pointers. They seemed to appreciate that and I appreciated that they bought some items from my kids.
Three things for homebuyers to do BEFORE jumping into the market that could save truckloads of money.
- It’s never too early to prequalify. Start the pre-qualification process now, even if you’re “sure” that you can’t currently qualify. You’ll be given a roadmap of how to best set yourself up for home-buying time. In fact, I can’t tell you how many times someone comes to get prequalified for a mortgage with the idea that they “won’t buy for a year” and within one month they’re under contract for a new place. Be aware that when you prepare early, you’ll give yourself the best shot to get the best house. Start the prequalifcation process now.
- Gather your assets: we help our clients do this as a routine part of our customer service process. Here’s the thing: you may have assets that you may not be aware of that can assist you in getting a new home. We see this all the time. A short time ago we helped a client discover that through the creative combination of her available assets, she was able to allocate money to places that allowed her monthly budget support a house payment. Assets include the tangibles like money in the bank. But there are a number that you may not even consider like: future job opportunities, retirement accounts, gift funds from family, co-signers, alimony, etc etc.
- Cash and debt allocation: super common question: should I use cash for a down payment or to payoff debts? The answer is: it all depends on various factors. Often we see a combination of saving for a down and paying off the highest payment debts as a good strategy. Or, it’s not uncommon to get a mortgage to consolidate all debts and lowering payments so cash can be saved. But the only real way to know is to crunch the numbers and look at various combinations to come up with the perfect scenario for the lowest monthly payments.
In summary, even if the house market is volatile, it’s never too early to start that pre-qualification and build out a personal road map.
Ready to get setup your own personal road map? You can start by doing any one of the following:
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