It's a new year, and if your resolution is to finally make the leap into homeownership, this might be the best time to do it.
In 2024, there is expected to be more predictability and stability for potential homebuyers. Additionally, Zillow predicts that more homes will hit the market this year, as more homeowners who locked in all-time-low mortgage rates may put their homes up for sale, growing tired of waiting for such low rates to return.
"I do believe we're going to get back to a normalcy of the market where people are going to buy, sell, rent and relocate based on what's going on in their life," said Rob Norman, eastern region president of Coldwell Banker Realty, based in New Jersey. "I don't think we're going to be as shocked or surprised by what's going on in the market, as perhaps we were in the past."
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Many first-time buyers don't even know the steps they need to take to begin the process. If you'd like to buy your first home in 2024 but don't know where to start, don't be intimidated. Here's a look at how the homebuying process works:
Save for a down payment
Ensuring you have money tucked away before starting the homebuying process is important.
Down payments are a percentage of a home's purchase price, so the amount you'd need to pay for a down payment largely depends on the price of the home you're looking to purchase. A 20% down payment is traditionally what's recommended, and the more you're able to put down means the less you'd have to pay each month for your mortgage.
While this is recommended, it doesn't mean you actually have to have that much saved up. According to a 2023 study from the National Association of Realtors, the median down payment for homebuyers across the country is just 14%. Additionally, many loans today require a much lower percentage to qualify, such as 3% for some conventional loans and 3.5% for FHA —Federal Housing Association — loans.
Get preapproved for a mortgage
It's important to get preapproved for a mortgage before you start house hunting so you know exactly what you can afford, and to save time later in the process.
This requires submitting income verification, like pay stubs, tax returns and bank statements, to a lender, as well as looking at your debt-to-income ratio.
"You have to get preapproved by a mortgage professional," said Betti Russo, a broker sales associate with Keller Williams Prosperity Realty in Wayne and Oakland. "It's to be able to know exactly what you can afford. You might think you can afford more than you can or you might be shortchanging yourself and thinking you can afford less than you actually can. The preapproval is going to really dig deep and tell you exactly what you can afford."
Russo said that in today's market, it's important to act quickly when you find a house you love. Getting preapproved also means that you'll be ready to submit your best offer right away, giving you the best chance at securing your property. Because houses are leaving the market so frequently, she said there's no time to waste.
Not only will getting preapproved help you understand what you can afford, it'll also give you a better idea of how much you'll pay for other homebuying fees. This includes closing costs, which typically cover property taxes, insurance and fees from various entities.
Explore potential neighborhoods
Once you know how much house you can afford, you'll have a better understanding of what areas you can consider buying in. Russo said she always recommends that homebuyers take the time to visit and explore areas they'd consider buying in to make sure it's the right fit for them.
"Just because there's a beautiful house there and the price fits within your budget doesn't mean that you're actually going to love living in that area," she said. "You want to pick an area that talks to who you are as a person, what you like to do and how close you want to be to certain things."
Would you rather more of a city or a suburban environment? Are you a commuter who needs easy access to public transportation? Would you like to be within walking distance of certain amenities? Russo said these are just a few factors to consider when picking a location.
Map out your wants versus your needs
Chances are, you're not going to find a home that comes with everything you want right off the bat. So, it's recommended to write a list of what features you need, as well as what features you want, but can survive without for the time being.
"The things that are your must-haves are concrete, and your wants should be like 'I would like this someday, and maybe the house doesn't have it right now, but I can change this about the house down the road,'" Russo said. "You don't have to have everything right away, especially if you're a first-time homebuyer."
Certain aspects about the property can't change, such as being too close to a highway or having a small backyard, but cosmetic things, like carpeting and kitchen cabinets, can be updated at any time. Russo said figuring this out and knowing what you want in advance is necessary to give yourself the best chances at securing your home.
"It's a very, very big sellers market still, so homebuyers don't have time to waste," she said. "They need to do a lot of preparation in order to be able to get the home that they want. They need to figure all of this out in advance so that when you step into a home, you either want it or you don't want it. And if you do want it, you have too act very quickly, there's no time to think about out."
Find a realtor
While you're not necessarily required to work with a realtor to find a home, having one does make the process easier.
Because buying a home involves a lot of moving parts, such as finding homes for sale, writing up offers, making edits to the contract and ensuring other parties are prepared, having a realtor will alleviate some stress, especially for first-time buyers.
Additionally, realtors often have a network of trusted people like real estate lawyers and building inspectors, meaning they'll be able to recommend other individuals that you may need to consult during the process.
Russo said that just because one person had a great experience with a particular realtor doesn't mean they'll be the best fit for you. She said it's important to find someone that you can mesh with, especially because you'll be working so closely with one another.
"I think referrals are really good and knowing somebody that has worked with the agent before and that they've had a good experience with them. Online reviews are also great," she said. "Experience is not always the answer, but experience is definitely a good answer. You can pick the most experienced agent in the area, but you could have a serious personality conflict or just don't like their style. Just because they've sold the most homes doesn't mean they're the best fit for you and your needs."
Do your research to find a realtor that is familiar with your desired area and that you feel will be able to fulfill your needs.
Make an offer
Russo said that when making an offer on a house, you want to put your best foot forward because you might not get a second chance.
"You need to be prepared to go in with your best foot forward. I always ask people, 'What's the house worth to you? How are you going to feel if you don't get it?'" she said. "Obviously besides your budget, that's going to determine how strong you go in with an offer."
Russo said to also remember that money is not the only factor involved in making an offer. Things like how soon you can close on the home and whether you're willing to waive an inspection also play a role.
"You need to be very flexible in your demands and do whatever you can to make the seller happy, whether that be offering a quick or flexible closing based on the seller's needs or offering inspections for information purposes only," she said. "Just make it really easy for the seller to accept your offer."
Maddie McGay is the real estate reporter forNorthJersey.comand The Record, covering all things worth celebrating about living in North Jersey. Find her onInstagram @maddiemcgay,onX @maddiemcgayy, and sign up for herNorth Jersey Livingnewsletter.Do you have a tip, trend or terrific house she should know about? Email her at[email protected].
