How to Prioritize Your Wants and Needs as a Homebuyer in Today’s Market
There’s no denying mortgage rates are higher now than they were last year. And if you’re thinking about buying a home, this may be on your mind. The higher rates will affect how much it costs you to take out a loan for your home. As you set out to make a purchase this winter, you’ll need to be strategic so you can find a home that meets your needs and budget.
Danielle Hale, Chief Economist at realtor.com, explains:
“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, . . . Another key point is to avoid stretching your budget, as tempting as it may be given the diminished purchasing power.”
When looking for your next home, keep in mind what you actually need versus what you want. To best understand this, make a list of desired features for your home search.
The first step? Get pre-approved for a mortgage. Pre-approval helps you better understand what you can borrow for your home loan, and that plays an important role in how you’ll craft your list. After all, you don’t want to fall in love with a home that you can't afford. Once you have a good sense of your budget, make a prioritized list of all the features you would like in a home.
Here’s a great way to think about them before you begin:
- Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).
- Nice-To-Haves – These are features that you’d love to have but can live without. Nice-To-Haves aren’t deal breakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender (examples: a second home office, a garage, etc.).
- Dream State – This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: farmhouse sink, multiple walk-in closets, etc.).
Lastly, go over your list with a fine-tooth comb and then speak to your real estate advisor. They will help you streamline the list even more, give you pointers on how to stick to it strictly, and find a house that falls in line with what you're looking for but is also in your price range.
Now that you've decided you're ready to buy a home, creating a list of must-have features is your first step. This may seem like a small task, but it's crucial in helping you find the right home for your needs. Once you have your list put together, reach out to a local real estate advisor who can help guide you through the process.