How to Qualify Your Potential New Home Purchase
When we’re on the search for a new home, we all want something that will wow us. Maybe it’s the functionality of the layout or the size for the land. Or perhaps it’s the location, features or price point. Regardless, we’re searching for our personal hook. But are we seeing the forest through the trees?
As a local real estate agent in Rehoboth Beach, part of my job involves helping you qualify your home search, so when I’m showing you properties, they’re relevant to your wants and needs.
The Mandatories
We begin by looking at essentials, such as bedrooms and baths. It’s likely you already have your numbers in mind, but it’s important to look not only for now, but also for the future.
Maybe it’s only two of you, but are you thinking of starting a family? Are you nearing retirement and looking to downsize, but still want to accommodate children, and especially, grandchildren?
Living by the beach, you can also count on quite a few friend visits throughout the year.
What about garage space? Are you done walking in the winter to your detached garage, or do you currently have no garage at all? Many Delaware residents also own boats. Are you sick of paying for storage or parking it by the side of the house?
The mandatories revolve around how much space you need. Plan accordingly to both your present and future lifestyle.
The Musts
Your musts are the home features you simply can’t live without. You can think of them as mandatories but with a caveat: it’s often difficult and expensive changing the total amount of space and layout of your home. With musts, you have some wiggle room.
Your musts are things like your appliances and outdoor spaces – washer and dryer, dishwasher, central air, porch, deck or patio, etc. Basically, they’re the devices or additional features you need to have in your home to make your life comfortable. A must may simply be having the space for accommodation, as many musts aren’t too expensive to add.
It’s no big deal adding a dishwasher as long as the plumbing easily accommodates, or changing out a countertop. Same with building a deck. However, if you feel a potential home needs a full kitchen remodel, it may be smarter to take a pass depending on what else is on the market, as this can get costly fast.
Same goes for something like public water and sewer. If a home has well water and a septic system, there’s no way to change from those until the county or subdivision decides to build the infrastructure, and there’s no guarantee that will ever happen.
The Nevers
You may walk into a backyard and have your draw drop in joy at the sight of a swimming pool. For someone else, though, the thought of all that maintenance can send them scrambling away.
We all have our own personal tastes, and when it comes to homes, “extras” can become extremely decisive issues.
When you see an outdoor hot tub, what do you think – unwinding on a Friday night after work or a neglected, stagnating cesspool? Same for a large plot of land. Will you make the most of the yard or are you done spending your weekends keeping it in shape?
The nevers are the items you really don’t want and would much rather not have to deal with.
The Bonuses
I recently hosted an open house that had a fireplace above a jacuzzi tub in the master bath. Niiiiiice. However, would I really need that? No.
When you’re being shown a home, keep in mind any bonuses you see. While they’re not musts or necessities, they have value. If you’re struggling between two similarly priced homes, the bonuses can push one over the top.
The bonuses may even warrant a higher offer. However, this is where you need to check if it’s really meaningful to your home purchase, because the home without could be of much more personal value to you.
Can You Afford It?
My wife and I bought our first home in 2005, at the height of the housing market and right before the bubble burst. At that time, we were staying with friends in a new city. My wife had found employment. I was still on the search.
With this in mind, my wife was told that she herself qualified for a $300,000 home loan on a $50,000 salary. Even better (in our mortgage lender’s eyes), we could take out a higher loan with an ARM, second mortgage, interest-only loan or a number of other options.
We went back to our friends' house not making a commitment to anything. We added up what our monthly bills would be in addition to our mortgage payment (our debt-to-income ratio) based on her salary, and saw that it would be nearly impossible to make ends meet. Once I found a job, it would be better, but still not ideal.
We settled on finding a home for a loan amount we could actually afford on one salary, just in case one of us ever lost our jobs. We also insisted on a 30-year fixed mortgage so there would be no surprises down the road in our loan.
A year later, the bubble burst. While we had two salaries at that point, we were thanking our lucky stars for our mortgage choices as we watched many people around us go under.
The Importance of a Trusted Real Estate Agent and Loan Officer
A good real estate agent is going to help you navigate all the decisions you have when buying a new home, and a good loan officer will make sure you’re purchasing something you can afford.
If you’re looking for a home near Rehoboth Beach and Lewes, or anywhere in Sussex County, please give me a call. I’ll be happy to create a custom search website for you. And if you need a good loan officer, Union Home Mortgage has just the guy.
Michael Getzlaff
The Nitan Soni Group
302-515-5711