Buying a home in the new economy

You’re sick of renting. You’re tired of roommates. You want a yard where your pets and kids can run around and have fun. It doesn’t matter what state the economy is in, the reasons for buying your own home remain the same.

At this moment in time, economists are on the lookout for the signs of a bona fide recession. Inflation’s staying high, but people are still spending. Some people are discontented at work, but the unemployment rate is the lowest it’s been in a long time. For many of us, the present economy feels like uncharted water. It can be hard to figure out if this is the right time to buy, but that doesn’t mean you can’t put in the work now to snag your dream home when the time comes.

Here are the five action items you need to take care of to make the most of your home-buying experience.

1) Get financially fit

If you haven’t already, open a savings account; when you have your account open, start putting in as much as you can afford comfortably every pay period. This will help you build up capital for a down payment. The higher your down payment, the better your odds of getting a good mortgage, and the less you’ll have to pay each month.

While you’re at it, talk to your lender about getting pre-approved for a mortgage. They will run a credit check and talk about your options. This is a vital step, as it will help you establish a baseline around how much house you can afford. A pre-approval letter also demonstrates to sellers that you are taking the buying process seriously and that you are ready to take the next step if you find a house you love.

Have bad credit? Talk to your bank about ways you can boost your credit score quickly and effectively; they may have consolidation loans or programs designed to help people with little to no credit.

2) Enlist the help of a real estate broker

A real estate broker is trained to know their service area. They are licensed and required to be in good standing in order to sell a house. Brokers can cut to the chase and find the perfect house for your situation. Best of all, you don't necessarily have to pay a real estate broker up front for their work: in most cases, they are paid by the seller at closing. Brokers are generally paid entirely on commission, which is why they eagerly sniff out the best house for you and your family without any money down. Put them to work for you early in your home search to get the best deal you can.

3) Start looking for motivated sellers and fixer-uppers

Some sellers are eager to move out and want to sell their homes in a hurry. Others still are willing to offer their home “as-is” or acknowledge that the home will need a lot of work and will come down on the price accordingly.

If you’re a handy individual or if you are willing to hire a contractor to put in some additional work, you might luck into a real bargain. Search for “fixer-uppers” and short sales with the help of your real estate broker; they will know what to look for in listings.

4) Practice saying “No, thank you”

Buying a home can be a stressful and, at times, high-pressure situation. Certain sellers may be eager to get a buyer locked into a contract. With both rates and inflation being high, the bottom line is the most important thing for you to consider; as such, you should make sure you feel comfortable saying “no” to high-pressure pitches or homes with more than a handful of interested buyers. Remember: other houses will come along and you do not have to buy the first property you see. It is better to wait for the home that is just right for you, and that may, at times, mean walking away from the table in the interest of a better deal.

5) Wait for the (possible) drop…

If you are interested in buying a home but don’t have any major motivators (new job, relocation, family changes, etc.), it might be best to wait and see if interest rates go down over time. Rates are variable and can go up and down over months and years. It may be prudent to spend your first six months to a year shoring up your savings and shaping up your credit in anticipation of a rate drop. Once you get locked into a good rate, you can enjoy your home more knowing you won’t be paying excessive interest rates on top of your principal.

It might seem like buying a house at this point in time is impossible, but don’t lose hope…the right house for you is out there, and the energy and effort you put into finding it will be worth it once you’re handed the keys.