What to Consider Before Buying a House in this Market
South Shore MA real estate in 2022 is more competitive than ever. There is a shortage of homes and a surplus of buyers. This makes buying a home harder than ever. Here’s how to succeed as a first time home buyer.
1. Determine Your Goals
- Why do you want to buy a home? Perhaps you are currently renting and you want to convert your rent into monthly mortgage payments. Do you view homeownership as a means to build equity and achieve more financial control. Maybe you want the freedom to create a home that reflects your individual style. Why you want to buy a home will help find the right home for your goals.
- Where do you want to live? Research neighborhoods and towns. Find places that interest you. Weigh the pros and cons of each community.
- What features do you require? Determine the number of bedrooms, baths, and square footage you'd like. Do you want a yard? Do you want to live in a neighborhood? If you have children, consider school districts. Decide what type of home you want: a single family home, condominium or townhouse.
2. Know How Much You Can Afford
- Calculate your monthly expenses. This will help determine how much of a mortgage payment you can afford. The general rule of thumb is that your housing expenses should be about 30% of your monthly gross income. Be sure to factor in the total cost of owning a home, not just the monthly payment. Consider the cost of utilities, property taxes, insurance, home improvements and maintenance.
- Shop around for a mortgage lender. There are many steps involved to getting a mortgage. Do you homework and know what you need to get a mortgage. Once you find the right lender, they will tell you how much you can afford based on your income and credit score.
- Get pre-approved for a loan. This is a critical step. You will know how much you can afford. Plus, today's sellers expect this before you make an offer.
3. Hire a real estate agent
Buying a home includes multiple steps that at times can be stressful. Don’t overlook the importance of choosing a local real estate agent.
An experienced agent will guide you through the entire process, protect you from pitfalls and properly represent you if obstacles arise. According to a recent study, home buyers reported that real estate agents:
- Helped buyer understand the process
- Pointed out unnoticed features/faults with property
- Negotiated better sales contract terms
- Improved buyer's knowledge of search areas
- Negotiated a better price
- Provided a better list of services providers, i.e. mortgage lenders and attorneys
Your real estate agent will be your go-to resource who makes sure the transaction is smooth and successful.
4. Find a Home
A local real estate professional will scour the market and send you personalized listings that meet your goals and create a custom online search to help you stay up-to-date on the latest listings.
As you look at homes, don’t let physical imperfections deter you from considering a property. A fresh coat of paint and inexpensive updates will add immediate value and equity. If your desired location is too expensive, learn about market conditions in different towns. Consider flipping your first home in order to afford a more expensive area in the future.
5. Make an Offer
Your real estate agent will help you decide how much to offer based on the home’s worth in the local market. They will then present your offer to the seller’s agent and negotiate on your behalf.
6. Next Steps
Once you have an accepted offer, your agent will guide you through the necessary steps. These include formally applying for your mortgage, having the home inspected, and making sure you are fully prepared for the closing.
Deciding whether or not to buy a home is one of the biggest decisions you will ever make. If you choose to buy, purchasing the right home can be both financially and emotionally rewarding. Download our free guide with tips and advice for first time homebuyers.