Near record-low mortgage rates and the freedom to telecommute means home buyers can explore new, and potentially more affordable, areas to live. But right now, nationwide, homes are selling at their fastest pace across all price ranges. Here are nine tips for buyers looking to score their dream home.
- Make sure your credit score is good. A better credit score can mean a difference of tens of thousands of dollars over the life of a mortgage. Have a game plan to clean up your credit score if needed, before starting the pre-approval process. You may discover it’s better for you to wait to buy until you can improve your score.
- Shop around for a mortgage.1 It can mean a difference of several hundred dollars a month. Talk to different lenders to ensure you get the lowest possible rate, and ask questions about the interest rate, down payment amount, and estimated closing costs, among others. Zillow has a network for mortgage2 lenders to consider.
- Get pre-approved so you can move fast. Pre-approval means you are approved for full financing and requires a more comprehensive finance and credit check, which differs from pre-qualification which is good for shoppers still figuring out what they can afford.
- Transfer gift or loan money into your bank account, now. Zillow’s 2020 survey of consumers shows that 40% of buyers with a mortgage and 52% of first-time homebuyers receive loans or gifts from family and/or friends to help with the down payment. Ready-access to that cash factors into your pre-qualification.
- Factor closing costs into your budget. This is what you pay beyond the down payment, and may include taxes, appraisal fees and homeowners insurance, among others. Preparing for these can limit stress after your home purchase, especially if your offer was at — or over — your budget.
- Write down tradeoffs you’re willing to make ahead of time. Heading into a potential bidding war, it’s prudent to have a clear list of priorities as well as house features that you can live without so that you stay within your budget.
- Narrow your options fast with virtual tours. Homes in a hot sellers market can go under contract in about two weeks. And 12% of homebuyers say they would be willing to purchase a home sight-unseen. Get the speed edge over other buyers by previewing homes using virtual or 3D home tours, and take advantage of self-tour options when available.
- Consider an escalation clause in your offer. This is language in your pre-approval letter that ensures your best offer is always in front of the seller. The downside to an escalation clause is you might pay more than you originally intended. To avoid going over budget, shop for homes that are below your maximum price point.
- Work with an agent with extensive local market knowledge. Finding a trusted guide and counselor can be crucial in a competitive environment. An expert local agent can help you understand what makes a winning offer in your area. On Zillow, you can be connected with a local Premier Agent who will guide you through the homebuying process.
We have more tips on buying a home in a hot sellers market, from a licensed mental health counselor, who provides some general tips for coping with the stress of the process.
- This research is from September 2019 and includes mortgage rate information that may not reflect current available mortgage rates.
- The network of mortgage lenders is made available by Zillow Group Marketplace, Inc. (“ZGMI”), a licensed mortgage broker, with its main office located at 1301 Second Avenue, Floor 30, Suite 3000-A, Seattle, WA 98101. (206) 470-7000. NMLS #1303160. Current list of state licenses and disclosures available here. ZGMI does not recommend or endorse any lender.