Buying your first home or even your third home can be an exciting time– however, for every moment filled with excitement about your future spent under your new roof, there will without a doubt be moments filled with stress, anxiety, and uncertainty.
At Stutsman Realty Inc. we’ve rented and sold homes to clients in Minneapolis and St. Paul communities for over 25 years. Throughout that time we learned the best pieces of advice to give our future clients when searching for a new home for sale or an Uptown apartment for rent. Our experienced local realtors want to make your home-buying experience as seamless and stress-free as possible, so we put together a guide for the best tips we could share for buying a home in 2023.
Know Your Budget
When you know how much money you are capable and willing to spend on your home search, that number will help you continuously throughout the process of buying your new home.
What Costs You Should Consider
When it comes to setting a budget, things to consider are:
- What’s the minimum monthly payment you can afford?
- What’s the minimum downpayment you can make?
- Do you have money reserved for unexpected and ongoing expenses?
- Are you accounting for closing costs?
- What costs can I reduce to afford the house I want?
While a lot of budgeting questions will arise throughout your home search, these are some of the items to consider when determining how much you can spend. It’s important not to forget to account for hidden fees, costs of upgrades, unexpected mortgage rates, and future expenses related to your house. It’s also vital to think about what your quality of life will be like in your new home if you have to reduce spending on other areas of your life in order to afford it.
Setting a Realistic Budget
Some people choose to determine these financial numbers with the help of online mortgage lending tools, while others prefer to look over their financial accounts on their own or with a financial planner. Whatever way you choose to put together your home-buying budget, it’s important that your budget meets certain criteria.
We suggest keeping the following questions in mind when setting your budget:
- Is this budget determined by my current financial situation?
- Is this budget realistic?
- Is this budget attainable at this time?
- Is this budget sustainable over a certain length of time?
- Is there anything in this budget I am not accounting for?
One of the biggest mistakes a new homeowner can make is shopping too far outside their budget, or not being prepared for all the costs that go along with owning property. Making sure you have a financial buffer you feel comfortable with and are on a monthly living budget you can live with is key to the huge life milestone you are planning for.
Accounting for Monthly Spending
Your per-month budget plan should not just include items related to your home, but your entire monthly spending needs.
You can set a budget based on your current mortgage or rent amount per month. We suggest when making a homebuyer’s budget, account for your monthly costs related to:
- Household items
- Other bills or expenses
Depending on what money you have left over after your budget of necessities and wants can help determine the realistic, attainable, and sustainable price you spend on your new home’s monthly mortgage.
Save Money Where You Can
When setting your new homebuyer’s budget, it’s important to save money where you can since you might run into some unexpected, surprise costs along the way. Canceling your streaming subscriptions, reducing the number of nights you go out to dinner, or skipping your 5-day-a-week coffee runs before work might seem like a small amount of money you are saving now. However, down the line, those little things start to add up to covering a repair here or paying for an added fee there. Saving money wherever you reasonably can on your more frivolous spending is a great way to buffer those surprise costs throughout your home-buying process.
Learn Your Loan and Mortgage Options
Understanding your current financial situation seems simple compared to learning about the different options you have when it comes to first-time homeowner loans and shopping for different mortgage rates.
Our realtors know first-hand how tough it can be to decide between various loan and mortgage providers. Knowing the right types of criteria to look for as well as how to compare them to one another will take some of the uncertainty out of shopping for your new home.
Check Your Credit Score
The first thing to know about getting a good rate on a mortgage is to work on improving your credit score as far out in advance as possible. You are competing with other people searching for homes, and when it comes down to it, lenders do not choose who can buy a home based on personality. If your credit score is not ideal, you might have difficulty getting lower rates or securing a home purchase over other buyers.
Have your credit checked between 3-6 months before reaching out to a mortgage lender so that you have the opportunity to pay down some debts, remove any delinquencies, report any errors, and to overall work on improving that score. Be sure to use a reputable credit score company like Equifax, Experian, or TransUnion, and don’t forget that you get a free annual credit score check from AnnualCreditReport.com
Become Educated on Loan Assistance Options
Most new homeowners are not capable of putting down a large down payment or financing their property purchase without assistance. From loans that offer low down payment options to national and local homeowner assistance programs, there are many options available to help ease the financial stress along the way.
Some first-time homeowner loans are:
- FHA loans: these insured mortgages require only 3.5% down.
- VA loans: if you have military connections, the VA offers loans with 0% down.
- First-time home buyer programs by state: depending on the borrower’s location, most states offer loans or other assistance for first-time homeowners.
- Home renovation loans: loan types that allow you to put money toward home renovations.
- Charitable and non-profit loans: community-based programs for homeowners in a low-income bracket, organizations like Habitat for Humanity and Neighborhood Assistance Corporation Of America
Get More than One Mortgage Quote
It is important when shopping around for anything important to get different quotes from different providers, but it is essential when it comes to getting a mortgage quote. Different lenders will have different assessments of costs and offer different types of mortgages, interest rates, and other cost quotes.
Speak to many lenders and compare conventional type loans to first-time homebuyer options and other options. It’s also important to ask questions whenever you are unsure about a particular cost, fee, or other detail in the mortgage agreement. Just because a lender is sending you an offer does not mean you have to accept without determining other potentials.
Visit Multiple Homes
Just like you wouldn’t want to secure the very first mortgage agreement you are offered, you should absolutely take the time to visit multiple properties and types of homes before making a final purchase.
Many people have a mental picture of the type of house they can see themselves living in, but until you see first-hand the variety in styles of homes, floor plans, locations, and other features of the house, you cannot make a fully informed decision. It’s a good idea to visit some local open houses and to schedule time with a trusted, professional real estate agent who can bring you to tour multiple listings within your budget.
Know Your Non-negotiables
When house hunting it is not realistic to think you will end up with every single item and feature you desire. It is important when meeting with your realtor that you have a short list of must-have, non-negotiable items that you simply cannot live without.
Maybe you refuse to live through another winter without a garage, or you absolutely need two bathrooms due to the size of your family. Maybe you need a big yard for the dogs to run around in, or ideally, you would live in a location with other young families and children. Since you host all of the holidays with your family each year, it’s vital that you have a large kitchen that doubles as an open, social space. Whatever they are, come with between three to five must-have things that you need in your new home.
Be Willing to Make Sacrifices
In addition to your “non-negotiable” list, you will absolutely have another list of things you’d love to have in your new home. However, it is important to know that while you might want a house with every single item checked off, this is not always realistic.
For instance, you’ve found a home with a 2-car garage and a large kitchen with a center island– two of your “must-haves.” However, you really wanted to have a master bathroom with a tub and a fully finished basement. Will you be willing to sacrifice those things you’d like to have for the things that are not negotiable? It’s important to be willing to give a little something here and there in order to find the best home for you and your family.
Engage in Reasonable Negotiations
Once you find a home you love and it is time to put in an offer, be willing to negotiate. If your offer is a reasonable one, and the current homeowner counters with a higher, but still reasonable price, be willing to negotiate and respect the negotiation strategies of the other party involved. You have every right to refuse an offer you believe is too high, but also be respectful of not undermining and putting in an insulting offer on a home that is too low.
Find a Realtor You Can Trust
Your house-hunting adventure does not need to be done alone. Reach out to a local real estate agent with experience in the Minneapolis area. Don’t be afraid to ask questions and sign an agreement with a realtor who you can see yourself spending time with during this exciting journey to finding your new home.
Speak to a Minneapolis Real Estate Agent Today!
Whether you are in the market for a house to fit the whole family, a place for you and your partner, or somewhere you can call all your own, Stutsman Realty Inc. is here to show you the homes for sale in Minneapolis. Even if you are looking to rent an apartment in the Uptown area, our knowledgeable team can help you find the perfect place to call home. Call us today at 952-927-4144 or fill out the contact form below to get started on your home-buying journey.
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