Your budget is your suitcase

I’ve had a few conversations recently with people who are thinking about buying a home this year or next. It’s never too early to plan ahead and understand what to expect—buying a house is a BIG deal! That being said, your first inclination might be to hunt down a real estate agent, but you’d actually be skipping an important step.

When planning a trip, you consider what you want to do and then pack your bag accordingly. You can’t bring your entire closet, so you have to be selective. You need to think about what’s most important to ensure you enjoy your trip and avoid being weighed down by excess luggage. When it comes to buying a house, your budget is your proverbial suitcase. That’s why my top recommendation for anyone thinking about buying a home is to talk with a mortgage lender first (and if you need a referral, let me know). This guide can help you choose the right lender if you are comparing multiple companies.

I like the analogy of a suitcase because it helps people prioritize their needs and wants to get the best bang for their buck. For example, imagine you view a house within your budget that has a STELLAR backyard but not much storage. If you don’t have kids or a dog, aren’t very outdoorsy, and hate mowing, that yard might not add value for you. On the other hand, if you’re sentimental and have a lot of keepsakes to store, a house with more storage would better suit your needs.

Now, think back to your suitcase—your budget. The yard adds value and factors into the home’s price, but you don’t need it. It’s like packing a winter coat for a scuba trip; it doesn’t make sense! Instead, you take out the coat to make room for your mask and flippers. Similarly, if you focus on properties with less yard, you may find one within your budget that offers the extra storage space you need. This analogy also applies to location—different areas will take up more or less of your suitcase space. Thinking about home values objectively in this way helps you understand market value better, which makes your home-buying process more efficient.

It’s best to meet with your agent with both your wish list and suitcase size in hand. Skipping the lender isn’t necessarily a mistake, but consulting with one first can make your meeting with the real estate agent more productive. One of an agent’s greatest assets is setting clear expectations for you, and they can do that best when they know what kind of home fits your budget and needs. After the consultation, you might decide to wait and save more, or you might feel ready to dive in sooner than expected.

It can feel daunting to reach out to a real estate agent or lender when you’re just thinking about buying a house, but trust me—it’s not a waste of time. Taking this step will not only answer your questions and ease your worries, but it can also put you in a much better position. If you’d like to take that first step and chat with me or connect with a trusted lender, reach out to us, we’re happy to help!

Note on Credit Checks:

If you’re hesitant to talk with a mortgage lender because you’re worried about them pulling your credit score, the impact is usually minimal. A hard inquiry typically results in a loss of 5 points or less. Still, make the appointment! Many lenders won’t pull your credit immediately, and you can start by asking questions to better understand the process.

To learn how credit scores are calculated, this resource is a great starting point!