“I’m a homeowner” has a nice ring to it, doesn’t it? After all, it means you’ve achieved a milestone that’s been part of the American dream since, forever. Now that’s something to be proud of.
Tired of hearing about how “buying a home is the single largest purchase you’ll ever make?” Read too much real estate advice online, and your home buying plans might start to keep you up at night.
Sure, there’s plenty to watch out for in a real estate transaction. But with some careful planning and a level head, buying a home doesn’t have to be so scary. Here’s some of our best advice to make home buying go right.
Dreaming about how awesome it will be to add “homeowner” to your personal resume will get you nowhere if you don’t know what you can actually afford. If you want a concrete number without slaving away over a bunch of math calculations, this calculator will spit out a quick estimate of the max home price you can afford to pay. Talking to a mortgage lender is also a good idea (we work with Jim Pomposelli at Perl Mortgage a lot). When you get pre-approved for a mortgage, you will be approved for an exact purchase amount, based on your income, credit score, and other factors.
Enough numbers, let’s get to the fun part! Where do you want to live? To make a good investment, there are a few things to be thinking about when you answer this question. First of all, is the neighborhood you have in mind consistently improving? Or does it look the exact same as it did 10 years ago? Remember, you’re not just investing in a home, you’re also investing in a location, so pick one that’s not going out of style any time soon.
Next, let’s talk timeline. The longer you own a property, the more it will appreciate in value and the more extra cash you get to walk away with when you sell it. You should plan to own your home for at least 5 years to come out ahead, so make sure you choose a home that fits your lifestyle long term. The best way to turn a home purchase into a poor decision is to move too soon. If that sounds spooky, ask us about the benefits of renting your place out.
So you know how much you can afford and where you want to live. How can you use that information to make sure you’re making a good investment decision? First, it helps to know some signs that it’s a good market to buy in. The real estate market is seasonal. Spring is known for being the most popular time to buy, while winter is known for being slowest. If you choose to buy when homes are in high demand in the Spring and Summer, you’ll have more selection, but also more competition and higher prices. In the winter months, you’ll have fewer options to choose from, but less competition too. That means you might snag a sweet deal if you’re not too picky about your new home’s particulars. So, decide which is more important to you: the “perfect-ideal-most-amazing-home?” Or a great price? You’ll also get more bang for your buck if you can lock in a low interest rate for your mortgage. The cheaper you can borrow money for your mortgage, the less you’ll pay to own the property. The past 5 years have been characterized by extremely low rates, but that’s about to change in 2017. You can find the latest federal interest rate by doing a quick google search, or by talking to any lender.
Finally, your mother was right: if it seems too good to be true, it usually is. In Chicago, you might get a lower price if you’re on a noisy street, in a garden unit, or against the el tracks, but these could also make it more difficult to sell or rent your home for the price you want down the line. Google all you want, but a local realtor who lives and breathes Chicago real estate will have the most detailed perspective that’s tailored specifically to your search and the current market.
Feeling better about making that decision? Hopefully, these were 5 minutes well spent and you’re breathing a sigh of relief right now. You want to make a good investment, and we’ll be there every step of the way to make sure that happens!