Finding a dream home is the end-goal for a lot of people. Finding a dream home takes time and a lot of planning, but if you know what you want, then that will make the process a lot easier. Finding the home is only part of the equation, as you also need to think about how you are going to finance that home. Below, we will start by looking at a few things you do to find the home you have always wanted and then look at some ways to finance that home.
Know Your Style
There are so many different home styles and options on the market, but if you want to be truly happy with the home you end up with, you should pick one that goes well with your style. Maybe you want a home with a large backyard for when you host visitors or one built with privacy in mind. You might even be on the market for homes that are built using styles from certain eras, like the Victorian era. Once you know your style, it will be even easier to come up with a list of exactly what you want the home to have.
Know Where You Want to Live
Different people are attracted to different living environments. Some love living uptown, some downtown, and some out in the country. Neighbourhoods do vary greatly, sometimes even in the same locality. Knowing where you want to live will help you narrow down your parameters while you do your search.
You already know what types of homes you are looking for and the neighbourhoods you are most interested in – now it is time to do some research. Online real estate listings are the best resource to find what you are looking for. They will give a lot more details like the different home styles available in different areas, proximity to important social amenities like schools, and how satisfied people are to live in different areas.
If you have the time, you could also visit different neighbourhoods to see what they look like in person. Things like noise and traffic levels, cleanliness, and how friendly the neighbours are, are all things you can find out if you visit the neighbourhood, and which an online search would never tell you.
Get Your Finances in Order
Before you actually start considering home prices, it is important to have your finances in order. Doing this makes things a lot smoother. Start by ensuring your credit report has no problems. Remember that a low credit score can disqualify you from some types of homes, mortgages, and loans.
A common reason for a low credit score is debt. To increase your loan acceptance chances, you need to deal with your debts. Start by having a plan on how to repay your debts. If you do not have a plan and a timeframe for the debt repayments, things will not work as expected. A good option for people who have lots of debt is consolidating the debt into one personal loan.
Consolidating your debts into one personal loan can help lower your interest rates and because you will be making only one payment per month, you will find it easier to control your debts. Consolidating your debts has the added advantage of improving your credit. This is because you will be seen as repaying your debts due to just paying one.
Even if you are doing all you can to repay your debts and improve your credit score, your loan application can still get rejected. If it does, some of the things you can do to rectify the situation include:
- Find out why the loan was rejected and correct the mistakes
- Provide a larger down-payment or collateral for a loan
- Ask for a smaller amount
- Wait to reapply after some time
Thankfully, there are lots of financing options for people who have had their loan applications rejected. Many brokers can introduce you to the right lenders.
Save Up for a Deposit
In almost all cases, you need to provide a deposit or down payment before you get approved for a mortgage. The more cash you have at hand, the easier it usually is to get the right plan. Many financial advisors say that about 20% of the home’s price is adequate. Ensure that the deposit comes from a reliable source because that source will be checked during the mortgage application process.
Your deposit could come from your savings, from your business’s profits or from your friends and family.
Get Preapproved for a Mortgage
Before you get preapproved for a mortgage, you need to be prequalified. Prequalification is a simple screening process which home buyers go through before they get preapproved for a mortgage. It usually involves the lender asking about your debts, assets, income, and general financial standing. After that, they give you a rate that will apply if all your answers are accurate.
Preapproval requires that you make a formal mortgage application. It includes a few forms, getting your credit score pulled and a deeper check into your finances and financial history. After this process is complete, they will let you know exactly how much you can borrow and your rate.
Find the right agent for you
You already know what you need, have already researched different neighbourhoods, have the deposit ready and preapproved for a mortgage at this stage. The only thing left is to buy the house. The first step in doing this is hiring a real estate agent. They have a better understanding of what is actually happening on the ground and will be able to give you an offer you will like.
When shopping for an estate agent, it is important to talk to a few of them. This will ensure the one you end up with actually understands what you are looking for, and they are able to provide exactly that. Talking to a few also increases the pool of properties you can choose from because different agents cover different neighbourhoods.
Next, visit the houses suggested to you. This is so that you are able to inspect the houses yourself and have a feel of their neighbourhoods. Remember that when you buy a house, you are also buying into the neighbourhood it sits on. Although you have a list of requirements and an idea of your ideal home location, getting exactly what you need is almost impossible. Therefore, you might have to choose a neighbourhood that matches your requirements as closely as possible.
It is also important that you keep a list of your most important requirements closes. This is so that you are able to reference it over and over as you look at different houses.
Finding and financing your dream home is something a lot of people think about. We all have a high-level understanding of what this entails, but not many people actually dig deeper to understand the details. The two biggest pieces of the puzzle, getting financing, and finding a realtor who understands what you need, are the biggest hurdles to overcome. Once you can fulfil both of these, finding and financing your home will be a lot easier.