5 Things Homebuyers Need To Know When Making an Offer
The homebuying process can be daunting. Whether it’s your first, second, or even fourth home, the process never gets less complicated. And all the complexity involved can tend to create some anxiety, especially when it comes to making an offer on your absolute dream home. But we’ve outlined five things that will help you be prepared and more confident when it comes time to submit your offer.
1. It’s Best To Be Pre-Approved for a Mortgage
Pre-approval is the process in which a lender ultimately determines if you are very likely to be approved for a mortgage. This acknowledgement signals to the sellers that you’re a serious buyer with good financials – facts that can subsequently ease their mind about accepting your offer. Pre-approval will also help establish your budget, making it easier to find your dream home in a price range you can afford.
2. Factor in Closing Costs
Before making an offer, you need to seriously consider closing costs – as they could potentially take you beyond your budget and put a damper on any excitement associated with finding your dream home. Closing costs are typically 2-5% of the purchase price, so be sure to include that number when calculating whether you can afford a house or not.
3. Think of the Easy-to-Overlooks
Don’t gloss over any detail. The cost of home ownership isn’t solely wrapped up in your mortgage payment. It includes home insurance, utility bills and other miscellaneous costs. Before making an offer, you should consider asking for additional information, such as to see the water and other utility bills from the past year, and factor those into your budget.
4. Check Out the Neighborhoods
It’s important to remember that you’re not only buying a house, you’re also buying a neighborhood. Not literally of course, but the value of any home is largely determined on similar homes in the neighborhood and other surrounding areas. So, make sure you compare your dream home to as many comparable homes – especially ones that have recently sold – as you can, to ensure you’re getting the best price.
5. Limit Contingencies as Much as Possible
Every offer will have contingencies, for a number of reasons. Most will relate to any necessary repairs that come out of the home inspection. The best approach is to be reasonable, especially in this market. If your offer is asking for too much, it’ll turn sellers away. So, do yourself a favor and improve your chances of success by keeping the contingencies to reasonable necessities before making your offer.
It’s challenging enough finding your dream home. So when it comes to making an offer on it, you want to make sure you’re putting your best foot forward – submitting an offer you’re confident and happy with, on a home you’re beyond excited about. Sticking to the five tips above should get you off to a good start. And remember: don’t hesitate to contact a Guardian Mortgage professional for any questions you have, or to get started on a pre-approval letter.