2. Start Your Research Early: Narrowing down your list of must haves, nice to haves, and desired areas are top priority here. In the current market, knowing what you want puts you at a competitive advantage. Getting comfortable with the available inventory to refine your list early will allow you to make informed and timely decisions when “the” house comes on the market.
3. Determine How Much House You Can Afford: Before you jump into your search it is important to determine how much house you can afford. It is recommended that your housing budget not exceed 25% of your monthly income, remember to leave room in the budget for taxes, home owners insurance, and HOA fees if applicable. Since property taxes, insurance, and HOA fees vary check in with your realtor for ball park figures. And don’t forget about the Philly 10 year tax abatement that can really help on that monthly budget.
4. Save for a Down Payment and Closing Costs: The days of being required to put 20% down are in the past, today’s first time home buyers are putting as little as 3% down. In addition to a down payment you can expect to pay around 3-5% of the purchase price in closing costs. Closing costs include appraisal, home owners insurance, title insurance, and home inspections. But have no fear you can shop around to ensure you are getting the best prices. You can even negotiate the cost of these items to be covered by the seller, ask us how!
5. Get Prequalified and Pre-Approved: While a pre-approval isn’t a requirement for house hunting, it is strongly suggested and here’s why. A pre-approval shows sellers you are a serious buyer, and in todays competitive market, an offer is viewed as incomplete without one. To get pre-approved, your lender will need to verify your financial information (proof of income, taxes, etc.) and submit your loan for preliminary underwriting.