How to Score Your Dream House When the Market Is Hot

By on

Long gone are the days you could practically name your own price for the house you wanted to buy.

Prices around the nation are soaring, and houses are being snapped up by buyers, often in just a matter of days.

As of July, nearly half of all homes on the market around the country sold in less than a month, and prices have climbed more than 13 percent in the past year, according to the National Association of Realtors.

With houses in such demand, you could easily find yourself in a bidding war for the right house in the right location.

By following certain steps, you’ll improve the chances of scoring the house of your dreams.

Do your legwork

Before you talk to lenders about mortgages, spend some time online and get a basic idea of how much home you can afford and how much your monthly mortgage payments might be. Sites such as Zillow.com have a variety of calculators that can help you make those determinations. Also get copies of your credit reports from AnnualCreditReport.com to make sure you don’t have any black marks against you that will preclude you from getting a loan. Each year, you’re entitled to a free credit report from each of the three main credit reporting agencies – Experian, Equifax and TransUnion – though you’ll have to pay to get your credit scores.

Get preapproval

Once you know how much you can afford to spend, you should get mortgage preapproval from a lender. The preapproval means that based on your income and credit report, you can afford a certain mortgage amount. Having the preapproval tells real estate agents you’re serious about buying a home, and it also lets you know how much you can afford, so you won’t waste your time looking at houses outside your price range.

Lock in your mortgage rate

While mortgage rates remain extremely low, in recent months they’ve started to climb. When you find a good rate, be sure you lock it in with your lender. With a lock in place, the rate you’ll pay for your mortgage is guaranteed, even if rates in general continue to rise. A lock is for a set period, such as 30 or 60 days, but could be for shorter or longer lengths of time.

Don’t dawdle

Time is often of the essence when you want to buy a home. If you find a great house at a great price, there’s a good chance other buyers will have their eyes on it as well. This isn’t the time to mull it over for a couple of weeks. Instead, make your offer as soon as possible. As long as it’s included in the contract, you’ll still have a chance to have the home inspected, and you’ll be able to walk away if things aren’t as they seem on the surface. (Not having a home inspection is one of the dumb moves a homebuyer can make.)

Pay what you can

It’s not uncommon to put up $500 or $1,000 as earnest money when you want to buy a home. But if you can afford to put down $5,000 or $10,000, do it. This shows the sellers you’re serious about purchasing their home. If they’re considering several offers, your offer just might land you at the top of their list. Just make sure you’re certain of the terms covering its return.

Have you tried to purchase a home recently? Share your experience on our Facebook page.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,266 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Goforth Mortgage Consulting

    A homebuyers first step is always financing. Loans are too complicated these days to start anywhere else, so talk to a mortgage consultant you trust. Although you can lock a rate in at anytime once you’re pre-approved, most lenders will not allow you to do so until you have an accepted purchase contract.