Prioritizing Your Wants and Needs as a Homebuyer in Today’s Market
Mortgage rates are unquestionably higher than they were last year. And if you're thinking about buying a house, this might be on your mind. This is because higher interest rates affect how much it costs to borrow money for a home loan. When looking for a home this winter, you'll need to be strategic in order to find one that meets both your needs and your 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.”
In other words, when looking for a home, it's critical to distinguish between what's a necessity and what's a nice-to-have. And the best way to grasp this is to create a list of desired features for your home search.
What is the first step? Get a mortgage pre-approval. Pre-approval gives you a better idea of how much you can borrow for a home loan, which influences how you build your list. You don't want to fall in love with a house that is out of your price range. Once you've determined your budget, you can start listing (and prioritizing) all of the home features you want.
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 dealbreakers, 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.).
Finally, once you've created your list and organized it in a way that works for you, talk to your real estate advisor about it. They'll be able to help you refine your list even further, coach you on how to stick to it, and find a home in your area that meets your requirements.
Putting together a list of necessary features for your next home may appear to be a minor task, but it is an important first step in your home-buying journey today. Connect with a local real estate advisor if you're ready to find a home that meets your needs.
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