When it’s time to upgrade your home for something that better fits your needs, second-time buyers enter the market with a clear advantage: experience. You’ve navigated this process before so you probably have fewer questions than a first-time buyer and it’s easy to think this second time around will be easier to manage. However, things have probably changed since you’ve purchased your first home.
Second-time buyers have the advantage of insight but they still face a unique mix of challenges and opportunities than first-time buyers. Here’s everything you need to know to make buying your second home a smooth process.
Consider the current market
The housing market is ever-changing. Today’s housing market is not the same market when you bought your first home. It’s not even the same market as a few months ago! Interest rates are low but so is available inventory. Coupled with rising demand and increased home values, second-time homebuyers may be a bit surprised when they begin searching for a new home.
Understand your options
Unlike first-time buyers, second-time have the added challenge of managing the buying and selling of a home. Knowing the market condition will help you pick the right strategy for you, whether you choose to sell first then buy or vise versa. We cover some common selling strategies second-time buyers should consider in this post.
Work with an experienced lender
One of the common challenges second-time buyers face is that some of the financing process has changed since they purchased their first home. There may be a new mortgage qualification process to navigate so it’s important to find a reputable mortgage broker and loan officer to work with. They will work with you to guide you through any new processes and manage the two financial transactions you’ll be completing. Experienced loan professionals will also be able to explain different financing options and help you select the best loan structure for your specific situation.
Get preapproved
If you’ve purchased a home prior to 2008, you’ll find that mortgage qualifications have become more rigid. You’re now also able to complete the application process online, making getting a loan faster and easier. Make sure your credit is in good standing (typically above 640), have a steady income, and a low debt-to-income (DTI) ratio of around 43% or less.
Save for a down payment
While some home financing things are different from the first time, you still need a down payment. Most second-time home buyers expect to use the proceeds from their current home to fund the down payment for their new home; however, this only works if you sell your home before buying a new one. Saving for a down payment can be difficult since you’re not able to tap into your IRA like you were able to with the first purchase, so you’re on the hook for finding other ways to save for a down payment. Budgeting is a tried-and-true way to save for the down payment if you don’t want to rely on the sale of your current home first.
Embrace technology
Home buying technology has changed significantly over the years. Today, most homebuyers rely heavily on the internet to research neighborhoods, home values, and more. Platforms like Zillow provide real-time data of available homes and offer homebuyers interior features, photos, video tours, and even estimated home values. They’re a good place to begin your research phase while working with an experienced realtor.
Experience is a strong advantage for second-time homebuyers. Your established connections and insight in what to look for or ask about will make buying a home easier this time around. Use this knowledge to your benefit as you assemble a winning team to find your new dream home.
When you’re ready to start looking at new homes, we’re here to help. FCB Homes builds homes with more of everything you love: more innovation, style, and value. Visit us online at FCBHomes.com to learn more about our new home communities in Lodi and Riverbank.
