Navigating The Storm and Finding a Home

Buying a home is not an easy task these days. It can be overwhelming and can leave you feeling depleted, especially in today’s market. It doesn’t have to be all doom and gloom. There are quite a few things you can do to make your home-buying journey more easeful, efficient, and, even, fun! Here are some key tools to help you navigate the market, discover, and secure your perfect home.

Interest Rates and Choosing The Right Bank 

Okay, so, this is not uncommon knowledge, but interest rates are HIGH. After going down in 2021, interest rates skyrocketed and now range from 5-7% depending on the state. We are seeing some of the highest interest rates ever and they don’t seem to be budging much at all. Although this sounds dire, there are ways to ensure that you are getting the best possible interest rate for your home. This comes down to choosing the right bank or lending institution if you are seeking a loan. 

Pros and Cons of Credit Unions:

• Credit unions can access more competitive interest rates

• They require a lower set-up cost

• Flexibility

• You must become a member of a certain credit union in order to receive the benefits

Pros and Cons Mortgage Brokers:

• Save time 

• Access to more rates and terms 

• Mortgage brokers negotiate for you

• There is more interference as you must work through the broker directly

Pros and Cons Banks:

• Banks hold the largest share in the home market

• Long-term value and reliance

• If you are already a bank customer, you have established trust

• Banks are for-profit, meaning they also want the best deal and the best return on their investment.

• It can be challenging to research which bank is best for you because there are so many options.

f you decide to go the bank route, here are some things to do when looking for a reliable bank that will work with your needs:

• Research research research. Ask for recommendations. Do not choose the first bank you speak with out of convenience. 

• Talk to your financial advisor about it.

• Go with a bank you already have a relationship with and trust. 

Befriending your Realtor

You should know your realtor on a personal level. You don’t have to invite them over for a family dinner, but you do need to understand their motives and make sure that they are in it for your best interest. Some ways to ensure that you are picking from a pot of authentic, honest realtors include:

• Seek advice from your community

• Do some CIA-style online research: Who have they worked with before? What are their values? What types of homes are they selling? Do they have some fixer-uppers/ or strictly remodeled, million-dollar homes?

• Invite them to grab a coffee and have a conversation about what you are looking for

• Use your intuition- When you have a feeling they aren’t the right person for the job, they probably aren’t. Go with someone who you trust and who listens to your needs. 

Know your Location: 

Every state, city, town, and neighborhood is entirely different when it comes to real estate. You can be in one area where homes are ranging from 300-500k and then drive less than five minutes and find homes for double that price. Because of this, it is important to know the area you are looking at. 

You may be wondering what aspects to pay the most attention to when looking for homes in a certain area. Here are a few things to consider when looking for a home in your town. 

• Demographics-How old are the people living in this area?  Are they single or married with children? What is their average income? What are their typical preferences? 

• Government Policies and Legislation- subsidies and tax credits are major factors in buying a home, policies can be put into place that encourage or discourage home buying based on scarcity or surplus

• Economic Indicators- Gross Domestic Product, employment rates, price of goods, and inflation all affect the housing market. Staying up to date with economic trends can help you stay on top of the market and know when to buy or when to hold off. 

Understanding Property Value:

Financial writer, Jean Folger, describes home value perfectly when she says, “value is defined as the present worth of future benefits arising from the ownership of the property.” What she means by this is that, more often than not, the benefits of investing in real estate reveal themselves over time. You want to pick a home that will increase in value the longer you own it. 

Here are the key things to know when considering the value of a property:

• Price is not the best determinant of value. It can drive demand and competition, but it is only one piece of real estate valuation.

• The market value is determined by something called an appraisal- a document containing specific data collected over time on property statistics. This is more important to pay attention to. 

• Appraisals are made up of different types of data, such as comparing square footage to other properties nearby, age and wear of a building, depreciation (anything that affects the long-term value of a property), or the net income that a property has produced in the past. 

• There are several approaches that can be used in the valuation process. The main ones are sales comparison, income approach, and cost approach. 

• Knowing property valuation is important when trying to find the best lenders, local tax authorities, and insurance agents

• Some other big factors in property value are the internal and external condition of the home, location, proximity to grocery stores, banks, schools, and demand for real estate on a local and national level