Whether you’re a first-time home buyer or have plenty of experience, purchasing a house is just plain stressful. It’s a complicated process involving both strong emotions – it’s a home, after all – and what may be the biggest financial investment of your life. Even if the process appears to be going smoothly, it only takes one mishap to kill the deal. Your financing could fall through at the last minute, another buyer could come in with a higher offer, a home inspection could reveal hidden problems, or the appraisal could come in below the sale price, affecting your mortgage terms. That’s a lot of “coulds.”
No matter how hard you try, some aspects of buying a house are simply beyond your control. However, there are ways you can minimize the stress involved and get through the process with fewer bumps in the road.
How to Minimize Your Home-Buying Stress
1. Know What You Want
A real estate agent can’t read your mind, and if you don’t know what you want, you’re going to spend a lot of time looking at houses that just don’t match your needs. If you’re specific about your requirements and can provide a little direction, though, an agent can be of tremendous help finding the best home for your family.
Things to take into consideration include:
- Number of bedrooms and bathrooms
- One-level or multi-level
- Type of exterior (wood, brick, or vinyl)
- Noise level in the community
- Practicality of the floor plan
- Desired square footage
- Type of housing (condo, townhouse, or single-family home)
- Distance from places of worship
- Distance to shopping and expressways
- Distance to work
- Age of the home
- Amount of maintenance required
- School districts
2. Be Flexible
If you have a detailed checklist of exactly what you want in your perfect house, know now that there simply is no such thing as a perfect house – unless you have the money to design and construct one from the ground up. Learn to be flexible. Don’t compromise on major requirements, but understand that it’s unlikely you’re going to find that carbon copy home of the one you’ve imagined.
Prioritize your wants and determine which features you can live without. Let’s say you want a house with a huge master bathroom, a remodeled kitchen, an upstairs laundry room, four bedrooms, an impressive foyer, and a pool. Well, you’re probably not going to find it – but that doesn’t mean you can’t find a house with a majority of the items on your list. Decide what’s most important to you and your family, and be reasonable with your requirements.
3. Get Pre-Approved for a Mortgage Loan
Financing a property can lead to some serious headaches. You may feel that qualifying for a home loan shouldn’t be too difficult, but after careful review of your credit and income a lender may think otherwise. It’s always advantageous to get pre-approved for a mortgage before bidding on houses. If you were to fall in love with a property only to learn you’re ineligible for financing, it could leave you with a pretty sour feeling. Save yourself a lot of heartache and stress by putting all the financial pieces in place from the get-go. Plus, some sellers and agents choose – wisely – to work only with buyers who have been pre-approved by a mortgage lender.
In order to help ease your path toward pre-approval, clean up your credit by paying all your bills on-time. This raises your credit score, increases your favorability to banks, and helps you qualify for the best possible interest rate. Additionally, keep all your recent income records and bank statements on-hand. Lenders require this information when determining mortgage eligibility.
Paying down consumer debt can also help you qualify for a mortgage since lenders factor in your debt-to-income ratio when deciding whether or not to approve your application. However, while debt repayment is important, you shouldn’t sacrifice building a financial cushion in favor of it. Buying a house is expensive, and you’re going to need money in the bank for moving costs, mortgage fees, repairs, furniture, and other related expenses.
4. Listen to Your Real Estate Agent
Sure, you can educate yourself on the buying process, but unless you have a background in real estate, chances are that your real estate agent knows a lot more than you. You chose this person to help you find a house, thus it only makes sense that you listen to the advice you’re given. In other words, once you provide the destination, let your agent help get you there.
If, for example, your real estate agent recommends adding certain contingencies (conditions that have to be fulfilled before completion of the sale) to an offer, such as a requirement that the seller make a certain repair, or that the house meets a satisfactory home inspection, heed the advice – it can save you a lot of money, labor, and stress. Additionally, your agent may discourage a low-ball offer, knowing that this could potentially offend a buyer and ruin your chances of getting the property. Rather than fight your agent, trust that he or she knows the industry. Remember, agents don’t get paid until a sale closes, thus they have no reason to sabotage a deal.
5. Save Enough Cash
This is by far one of the most expensive transactions you’re ever going to make, so be sure you understand the cost of buying a house before taking the leap. You’re financing a large sum of money, and because of closing costs and other mortgage-related expenses such as earnest money deposits, home appraisals, and home inspections, if you run out of money mid-deal, you may have to pull out.
So, what can you expect? Your mortgage lender is going to require a down payment, typically between 3.5% and 5% depending on your type of loan. There’s a mortgage application and credit check fee, as well; plus, the earnest money deposit, home inspection, and appraisal fee. And let’s not forget the expense that many people overlook: closing costs, which can range from 3% to 5% of the mortgage balance. Closing costs include origination fees, discount points, title insurance, title search, underwriting fees, recording fees, and credit report fees.
Yes, you can expect a measure of anxiety when buying a house, but don’t lose sight of the fact that this is supposed to be an exciting time – not an occasion to lose sleep and have panic attacks. Minimizing the stress is all about preparation. Rather than jump into a home purchase blindly, take your time, educate yourself, and do some legwork. You’re going to live in your new home – and live with its financial impact – for a long time, so take a step back and enjoy the process responsibly.
What other tips can you suggest to reduce stress when purchasing a home?