In my last post on homeownership, I spoke specifically about my favorite reason for becoming a homeowner and I provided some information on how to better prepare yourself early on for the home buying process. In this post, I am going to share more specifically about tips for getting started with house hunting. This step would take place after you’ve learned a bit on the home buying process. Many of these tips are mostly being shared based on our own experiences with recommendations from the Michigan State Housing and Development Authority (MSHDA).
How to save for a down payment
When it comes to saving for a down payment the answer seems to be fairly simple, start early – while you’re young – save, save, save! Even a little bit goes a long way. Putting this money in a savings account or place that you can stash it and forget about it is best…then you won’t be tempted to dip into it. If saving early on wasn’t something you were able to do, you can also find ways to lower your expenses in other areas, and then start stashing. Again, don’t be discouraged if it’s only $20-50 per month. Every little bit counts. Set up a long term goal – over the course of X number of years on how much money you’ll save to go toward a down payment on a home. Be realistic about your salary and income over those years and what your bills are and then see where you can start saving, little by little. The “how” when it comes to saving for a down payment is to simply get started, be consistent, and be realistic. I would also recommend reaching out to a local mortgage lender to get an idea on what your price point would be on a home and a ballpark estimate on how much you’ll need to save. Some individuals looking to get money for a down payment will also come up with other creative ways to get the money needed, whether that be borrowing from family, selling investments, or other miscellaneous things. There is also down payment assistance through MSHDA that can help you get started! If you’re a first-time homebuyer, check out MSHDA’s Michigan Down Payment. The program provides down payment assistance up to $7,500 for first-time homebuyers. Eligibility requirements apply.
How to work with a real estate agent
When we started to get the ball rolling on house hunting, our first step was to ask around for recommendations on a real estate agent – we went to friends and family for their recommendations. Here are some great things to consider when shopping for a real estate agent: Who in the area do people love? Who have local friends and family had a great experience with? Did the agent return calls quickly and efficiently? Do they have a good understanding of the local housing market? The list goes on. But we found that firsthand recommendations were the way to go. We then called and set up an appointment with the agent to get a feel for their personality and work style and to ensure it would be a good fit.
One thing that is important for new homebuyers to know that we weren’t quite aware of before we got started is how the agent and homebuyer relationship works and what the agent actually does.
- First, you are to look to your agent as a trusted guide. They will learn more about what you want, need, budget, and preferences. They will then help you start to narrow down your choices and get an idea for what is realistic given your purchasing power.
- Second, it’s important that your agent has a great network of people they work with. That includes a team at their agency, and professionals such as lenders, home inspectors, and contractors.
- Third, is that the agent a great advocate for you and your family when it comes to the right home to purchase. When it came to buying a home in Minnesota (while living in Michigan) we had to really put a lot of trust into our agent because we couldn’t be there in person to look at homes. Our price point was very competitive and the turnover was very fast and insane! Our agent would Facetime with us and do a walk through and then give us a very honest assessment on the home once outside. There were many times when our agent would tell us “There’s a lot of work that would need to happen in this house…I think you can do better. Let’s be patient.” Taking his word for it always worked in our favor and we ended up with the house we wanted and at a great price. It still needed some work but overall it was the best for our money.
- Fourth, your agent should be good at negotiating and moving things along quickly if the market is competitive. Our agent was so good at this. We had put an offer in on a home and he had paperwork to us to sign via email immediately, we ended up being outbid only hours later but in the end, he was ready to have things signed and locked and loaded for us if need be.
- Fifth, their ability to manage the fine print. The paperwork is insane. This was something I was not ready for whatsoever…but if we had chosen not to go with an agent, I’m pretty sure the paperwork and contracts would have broken us immediately. There was exhaustive work that our agent had to put in in order to secure the home for us – he called us on Sundays, in the evening, texted us, etc. The thought of having to do all of that leg work on our own was overwhelming – thankfully, we didn’t!
How to manage your monthly mortgage payments
The great thing about “managing” monthly payments is that most of the management side of things goes through the bank that you’re getting your mortgage through. However, naturally, your job is to make sure that you make your payments on time! It is also equally important to understand what is wrapped into your mortgage payment. For us, it included the mortgage loan payment itself, homeowner’s insurance, and taxes.
How to find your perfect neighborhood
Finding your perfect neighborhood can be tricky if you aren’t familiar with the city or town that you’re moving to. This was the case for us. We were newbies to the city we were moving to and had to do some asking around and digging to find which neighborhoods were super kid and family-friendly. We loved that our agent was very knowledgeable about the neighborhoods we were looking at. He knew which areas were family and kid-friendly and which we should avoid. We wanted an area that was a close drive to everything and also had good schools and playgrounds in the neighborhood.
While the homeownership process and house hunting may seem stressful and cumbersome…it is so very worth it! If you live in Michigan and want to get started on becoming a homeowner but need some friendly guidance – reach out to MSHDA or check out their website to learn more.
What are your house-hunting tips? I’d love to hear your stories!