Step Two: Home Shopping - Finding Your Dream Home and Winning the Offer

You are so far ahead of the game at this point.  You understand your loan options, what your payment will be, and how much money you need. Most critically, you know what your maximum home price is. Now comes the fun part: finding your dream home and negotiating the price. But before you start shopping there are a few critical things to take care of first.

Lock Down Your Finances

Before you do anything you need to lock down your finances.  That means do not change your financial status in any way.  If you need to, make sure you call your lender first as any changes could impact your pre-approval.  Do not quit your job, buy a car or go get a new credit card.  These things can void your pre-approval and jeopardize all the work you have done to this point.   


This is very important to understand: your pre-approval letter does not guarantee financing. You still need to meet many conditions before you gain final approval. You can void your own approval by making large changes to your finances while you are shopping.

So long as your finances have not changed by the time you are ready to buy then you have nothing to worry about.

The Power of the Pre-Approval Letter

Your pre-approval letter does two very important things for you. First, it lets you know what your shopping range is so that you don't waste time looking at homes you cannot afford. Second, it makes you much more attractive to sellers and realtors. A pre-approval letter lets everyone involved know that you can come through with cash. Basically, you can prove that you aren't wasting everyone's time.

Mistakes to Avoid that can void your pre-approval

  • Credit inquiries. Don't let people pull your credit. Do not start shopping for mortgage interest rates, yet. You are too early in the process to worry about that. Rates will likely be different at the time you are ready to lock in a rate anyway.
  • Major purchases. Do not buy a new car, start buying furniture, or anything else until after your loan has funded. New monthly payments could increase your DTI ratios and void your approval. You could also deplete your savings and not have enough of a down payment or reserves.
  • Change jobs. Do not change jobs in any circumstances, even if the new job is better paying. Your employment, including how long you have worked at your current job, is important. Stability in employment is a major factor in approval.
  • Undocumented Deposits. Before your loan can fund the lender will need to see your bank statements. If there are large deposits that are unexplainable you could lose your approval. Document any gifts or large sales that you have made to streamline the process.
  • Divorce. A divorce is a major financial wildcard. Denial is very likely if you are going through a divorce (even if your spouse was not on the pre-approval application!) Finalize your divorce before attempting to buy property.
  • Late Payments. Be extra careful to make all credit card, loan, car, and utility payments on time. Lenders look at your rent payment history, too. Even if you have paid everything on time for years, one small mistake could cost you your mortgage.
  • Closing Accounts. Believe it or not, but closing a credit card that you have paid off can disqualify you. While you are likely excited to be paying off debts, do not close your credit cards after paying them off. When you close a credit card account you lose the payment history on that account. This often negatively affects credit scores. 
  • Settling Collections. In the same way that closing credit cards can drop your credit score, you should avoid settling collection accounts. Your lender already considered these collection accounts when issuing your pre-approval. There is no reason to settle on them now.
  • Legal Issues. If you get into a lawsuit during your shopping period you may become disqualified. Wage garnishment or heavy fines would likely affect your ability to repay the loan. Talk to your lender early if you find yourself in court.

I know this is an exhaustive list, but it can summed up by the following truisim: keep doing whatever you were doing at the time of your pre-approval. Your approval is safe as long as you don't change anything.

What do you Want? Determine your Non-Negotiables

If you've been renting for your entire life you have likely always thought about your dwelling in the short term. What was most important was likely the distance from your work and the monthly rent. You knew that if your circumstances or needs changed that you could move without issue.  You knew it was a temporary dwelling. 

When you buy a home, however, you are commiting to that property for at least a few years. You might even be looking at a forever home, depending on your needs. It is very important that you determine what your non-negotiables are early. Typical non-negotiables are things like:

  • Number of bedrooms. How many rooms will you need to support your family (or planned future family?)
  • Yard. Are you a gardener? Do you plan on having dogs that need running space?
  • Pool. Are you a lap swimmer? Or do you want a place for your kids to enjoy in the summer?
  • Schools. Is it important to you that there is a prestigious private school nearby? Or that your home is zoned for a particular school district?
  • Number of floors. Do you have an elderly parent living with you? Or do you plan on retiring and living in this home forever? Stairs can become a major obstacle for some in the future.

It is important to make the distinction between your non-negotiables and your wish list. A home with a great view is of value to everyone, but it may not be as important to you as having enough bedrooms to support your family.

You may feel like you already know exactly what you want, but it is important to write these items down. A list of non-negotiables and wish list items makes it easier to determine what is within your budget.

Finding the Right Location

This is the single most imporant factor when finding the right home. Remember, you can change anything about your home except for its location.

Everyone's needs are different, and each neighborhood is different as well. You should consider your lifestyle and your preferences. Would you like to live within a planned development where all the homes fit a certain aesthetic? Or would you prefer to live in an older community with a variety of unique homes.

Consider the proximity of places that you frequent. Do you need a daycare center for kids? What about nightlife? Are you a hiker or a beachgoer? Is there a local place of worship that matches your beliefs?

Location has an impact on the long-term value of your home, as well. You should make sure that the home you buy conforms to the location if resale value is a factor for you. If your home is very unique compared to the neighboring properties it will likely not appreciate well. Lets take a home that is much larger than the average home size in an area, for instance. Buyers that are attracted to a neighborhood of small homes will likely not be able to afford the larger home.

Finding the Right Property Type

Finding the Right Amenities

Putting it All Together

Surveying the Market

Check Out Properties Online

Drive Through Neighborhoods

  • Talk To Locals
  • Day vs Night

Assemble Your Team

Finding the Right Real Estate Agent

Stay in Touch With Your Lender

Do You Need A Real Estate Attorney?

Finding the Right Property Inspector

Closing Agent

Other Team Members

Looking for The Right House

Put Your Agent to Work

Keeping Track of New Listings

Compare Against Your Non-Negotiables

Looking Past Staging

  • List: Recent Remodels: Red Flags

Reviewing Seller Disclosure Reports

Doing Your Own Initial Inspection

Searching for Overlooked Houses

Houses Not Yet On The Market

For Sale By Owners

Distressed Properties

  • Short Sales
  • Foreclosures
  • Houses in Probate

You've Found the House! Now What?

Winning The Offer

Negotiating and Forming a Contract

Competing Against Cash Offers



Hot vs Cold Markets

Offer Accepted! Forward to Closing

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