You can still buy a home in Dallas-Fort Worth, even with the soaring prices. Dallas has seen non-stop price increases over the last few years and new neighborhoods are being built every day. Beyond providing a home for you and your family, one of the biggest reasons for purchasing a new home is acquiring equity. While purchasing a home in recent years has become more challenging, it’s still possible to provide a home for your family and build the equity you’re looking for. So whether you’re looking to build your own home at a more affordable price with more immediate equity or purchase an existing home, here’s what you need to know when purchasing a home:
10. Don’t make any big purchases
In the 3-6 months before purchasing your home, you should be careful not to open any new credit cards or make any large purchases, especially those that require financing. Also, moving any significant portion of your money around will also create scrutiny. Your goal is to be able to show a lender and/or mortgage company that you have steady income and are a responsible spender-and of course that you can pay your mortgage. Breaking this rule could make it harder to get financing.
9. Be sure to get pre-approved (and buy only what you can afford)
Before you go shopping around and looking at the homes of your dreams or thinking you might build a mansion, you need to know how much money a bank will be willing to give you. Having a pre-approval letter in hand will make it easier for your realtor to help you find homes that can work for you. While a pre-approval letter might qualify you for a pretty large mortgage, you should consider whether you will use the full amount because the mortgage will just be the tip of the iceberg. (see #4)
8. Know about the land you’re buying
In considering the land your home will sit on, it is in your best interests to be sure to get a survey of the land to make sure there are no underlying issues – including any easements that might exist on the property. A realtor will usually ensure this is done, but be sure one is hired.
7. Look to build…equity
While building a custom home will likely take more time, besides the benefit of being able to design every element of your home, there are other financial benefits. Many times if you select the right land, you will be able to build a home of greater value for less than the cost of an existing home and acquire equity faster.
6. Look for appreciation
Don’t be in a hurry to buy the biggest home on the block as it will appreciate at a slower rate than less expensive homes in the same neighborhood. It’s important that you’re also working with a realtor who has your best interests in mind and will not just let you buy the biggest home so they have a larger commission. While it’s amazing to buy a home in the newest, fanciest neighborhood, it can be more beneficial financially to buy a home in the up and coming neighborhood.
5. The mortgage is the tip of the iceberg
There are a lot of other costs to consider when purchasing a new home. While the mortgage is the first thing you might consider when purchasing a new home, it’s also important to consider HOA fees, property taxes, utilities, lawn care, maintenance/repair costs, general upkeep, and furniture for your new home. There are many joys of home ownership but be sure to keep these costs in mind as well.
4. Make a business decision
It is easy to walk in a home and fall in love with the beautiful courtyard, floor to ceiling windows, 12-foot ceilings, play area for the children, beautiful flooring and bathroom décor and forget all about the costs of that beautiful home. Be sure not to purchase your home on emotion—think long term. You will need to be sure to ask yourself questions such as: will this home cost too much to fix? What will be the upkeep? Are there warranties included? How long will my commute be? While the staging of a home can help you imagine what the home will be like when you move in, be sure to take the emotion out of the decision and look under the covers.
3. Get a health check
So you’ve found the home of your dreams and are ready to buy? Well, not so fast! When seriously considering buying a home and immediately after you have put an offer on a home, you should be sure to get a professional inspector to examine the home so you know as much as possible about the challenges that home may present. A good inspector will let you know if there is an issue with the HVAC (air conditioning) system and whether or not you’re looking at having to pay several thousand dollars to have that fixed or simply ensure the most important feature – the foundation – is not in desperate need of a repair. An inspector is generally concerned with the safety of the home and helps highlight issues that may impact insurability. It is up to you to also do a thorough review of the home to discover any other issues (e.g. damaged floor boards) that may help you determine if you want to purchase the home and/or consider negotiations. Both the professional inspection and your review will be important in considering whether to purchase the home.
2. Make a reasonable bid
As you’re probably well aware, DFW home prices are skyrocketing so make sure you’re setting reasonable expectations. In a competitive market, you want to make sure you put in a bid that’s competitive if you want to have a serious opportunity to purchase your desired home. Bid too high and you pay too much for the home. Bid too low and you risk losing it to a better offer. Your realtor should help you determine a reasonable bid based on your home comparable to homes sold in that area as well as the professional and personal home inspection.
1. Make sure you know the market and work with a knowledgeable realtor
Dallas-Fort Worth is a pretty large market and there are tons of homes for sale, but not every area of the DFW market is the same. Based on where you want to live and what you can afford, it’s important that you understand the various neighborhoods that will fit into your budget—a knowledgeable realtor should help you be able to navigate this. Whether you’re looking for the best school districts, trendiest part of the DFW area, or the next up and coming neighborhood it’s important that you and your realtor understand what’s going on. Purchasing or building a home can be a stressful process so make sure your realtor understands every nuance of the home buying process and has your interests as top priority.