Rents are rising in many places, but mortgage rates remain alluringly low. The combination is enough to entice many wanna-be homebuyers into the market. But once there, some are haunted with misgivings and second thoughts.
Ashley Richardson, a seasoned real estate agent who’s affiliated with the Council of Residential Specialists ( www.crs.com), tells the true story of a pair of clients who were obsessed with worries about the implications.
After a long search, the couple finally settled on a townhouse. But after an anxiety-ridden two days, the couple backed out. Months later, the couple found another property, but they lost out on that house, as well, by submitting a lowball offer.
Richardson offers these pointers:
1 Keep in mind your reasons for wanting to buy. Fear is a powerful factor that can stop people from realizing their home-buying plans, even when logic tells them to go forward, says Sid Davis, a real estate broker and author of “A Survival Guide for Buying a Home.”
“Obviously, no one has a crystal ball about real estate values or about rental rates. But everyone needs housing, whether rental or purchase. So if your dream is to own a home of your own … you might kick yourself later if you let worry stop you,” Davis says.
2 Seek the early backing of a reputable mortgage lender.
Though federal mortgage standards are gradually becoming less stringent, most lenders still go to great lengths to ensure that the loans they originate are solid.
For example, they’ll likely ask for at least two years’ worth of tax returns.
The time you spend documenting your financial fitness to buy a home is well spent if the lender gives you a “pre-approval” letter, an important tool as you negotiate for a property.
“Another advantage of pre-approval is that it helps you define your comfort zone on how big a mortgage you can afford.” Davis says.
3 Take a cautious approach to home selection. Last year, many neighborhoods were short on property available for sale. But inventories are now gradually rising, and more would-be sellers are expected to surface as spring approaches.
“Start with a list of maybe 10 or 12 houses in the best neighborhood you can afford. Then, gradually narrow that list to a shorter one. In the process, you’ll learn more about what you’re looking for,” Davis says. However, he cautions wariness about any agent who tries to convince you to buy a place that doesn’t meet your core criteria.
4 Screen for homeowners eager to sell soon.
Tom Early, past president of the National Association of Exclusive Buyer Agents, says there are always “test-the-market” sellers who have no urgent need to move. But there are also highly motivated homeowners who must move due to professional relocation, a financial setback or divorce.
“Some people are astoundingly candid about why they must move. You don’t need to pry, just ask why they’re moving and they’ll open up,” Early says.