Buying a Home Out of State: Here’s Where to Start
Buying a home out of state can be complicated. But the good news is that things aren’t as difficult as they used to be.
Remote home visits, online mortgages and even digital lockdowns have become more common during the Covid pandemic. So home buyers looking out of state have a much bigger toolbox than before.
And, once you find a local agent and lender, you’ll have two great resources on your side to help you through the process.
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6 Steps to Buying a Home Out of State
If you’re considering buying a home out of state but aren’t sure where to start, here are six helpful steps recommended by mortgage and real estate experts.
1. Research neighborhoods before house hunting
“Narrow down a specific area to focus your house search on. That doesn’t mean you can’t consider other destinations, but it will dramatically multiply your workload until you can reduce it,” says Martin Orefice, CEO of Rent To Own Labs.
This means searching for a specific area or neighborhood remotely online. Learn more about:
- Cost of life
- Property taxes
- Quality of School Districts
- Crime rate
- Proximity to community services
- Shops, facilities and parks nearby
Also consider political trends in the region and the future impact of climate change on the region.
When you start looking for homes, think carefully about your future income and job security, and consider expanding or reducing the size of your household.
Will the properties you plan to host be able to accommodate a larger family if that is one of your goals? Are they on a plot large enough to expand or modify? What are your deal breakers?
You can work with a financial planner and/or tax advisor to help you determine your future financial goals and how a move may affect those goals.
2. Find a great local real estate team
“The hardest thing about buying in other states, especially if you’re still in the state you’re moving from, is finding a reliable lender who can do in-state loans. purchase,” says Jon Meyer, a licensed loan officer and The Mortgage Reports Lending Expert.
Remember that loan officers must be licensed state by state and your current lender may not be an option where you are moving.
While you’re visiting the area of your choice or while you’re searching remotely, make it one of your goals to find and recruit a great local real estate agent.
“It makes sense to use a local lender, especially in competitive markets”
—Maggie Wells, Realtor
“Have a buyer’s consultation with this agent to understand the process and the market, and ask for recommendations from the lender, because it makes sense to use a local lender, especially in competitive markets,” suggests Maggie Wells, a real estate agent in Lexington. , Kentucky.
Your agent can also refer you to other actors you may need in the process, including the title company and a real estate attorney.
“Some states are very particular about who can and cannot be involved in real estate transactions. Learn the requirements for buying a home in another state. A good real estate agent can help, but depending on the state, you may also need to hire a lawyer,” notes John Moffatt, head of creation at digital mortgage company Better.
3. Get pre-approved and start house hunting
Once you’ve connected with a local lender or mortgage broker, it’s time to get pre-approved for a home loan.
Getting pre-approved for a mortgage is strongly advised, as it will help you determine how much home you can afford in your desired market. It will also position you to make a more attractive offer on a home.
In fact, in today’s competitive marketplace, most sellers and sellers’ agents won’t even consider an offer without a prior approval letter. This step is therefore crucial.
“Once you’re pre-approved and have a good idea of pricing, ask your realtor to set up a remote home search for you,” Wells suggests.
“Get an idea of the prices in this market and get a better idea of what you can afford. Take virtual tours as soon as properties hit the market. And ask questions about anything you’re unsure of or don’t understand.
4. Prepare and list your home for sale
If you have an existing home for sale before you can move in, you will need to hire a separate real estate agent to help you market and list that property. Make repairs or upgrades now, if needed, to help your home sell quickly.
The good news is that with the housing market so hot, many sellers have no trouble finding willing buyers. And many properties sell well above the asking price. So while selling your home quickly may have been a bigger hurdle to leaving the state in the past, it should be less of an issue now.
5. Consider the contingencies of selling a home
One of the challenges homeowners may face when moving out of state is making their new home purchase dependent on the sale of their existing home.
A “home sale contingency” means that the purchase of your new home will only occur if you can sell your current home by a specific date. These clauses are sometimes necessary to prevent the buyer from owning two dwellings and having two mortgages at the same time.
Have a possibility of selling a house does not This means you have to wait for your current home to sell before looking for a home. As Meyer explains, you “may get an approval, but you won’t get what we call ‘CTC’ (clear to close) until the other house is sold and the funds are verified. “.
Of course, the logistics can be more complicated if you are managing contracts in two states at the same time.
So before you get serious about house hunting, be sure to talk to your lender about whether your purchase will depend on the sale of your current home. And, if so, what it will mean for your timeline.
6. Make an offer and don’t skip the inspection
Work closely with your agent to make an offer remotely. Avoid the impulse to forfeit your professional inspection eventuality, as it is wise to thoroughly inspect the property for defects and red flags.
“If you must return to the area, try to plan your trip so that you can be present during the inspection period. This is usually your last opportunity to enter the house before the final visit,” recommends Wells.
Once your offer has been accepted, your representatives will schedule a closing date, which you may be able to complete remotely if you cannot yet attend. Digital shutdowns have become more common during the Covid pandemic and are now much more widespread than before.
Now is the time to line up the moving services as well and prepare your family for the move.
Potential Challenges When Buying Out of State
Buying a home is already a complex process, and doing it in a different state can be an additional challenge. But having an excellent lender and buyer’s agent will be a big help along the way. When hitches do arise, trust your real estate agent to guide you through the process.
Also, remember that moving can be more expensive than you think.
Save at least $5,000 for relocation expenses and unforeseen moving expenses.
“I recommend saving at least $5,000 for relocation costs. There are unforeseen expenses when it comes to moving out of state, including transportation, moving costs, and new furniture,” says Ken Pozek, real estate agent and owner of the Pozek Group in Orlando.
Finally, give yourself time to properly acclimate to your new location once you move. It may take some time to adapt to a new place and make new friends.
“When you move to another state, you often deviate from what your basic knowledge covers. Even simple everyday things can be different, so stay patient and open-minded,” suggests Orefice.
Good candidates for an out-of-state move
According to a recent report by North American Moving Services, more than 20% more Americans moved in 2021 compared to 2020. Many of them chose to move to another state.
According to the same report, “the Carolinas, Tennessee, Florida, Arizona and Texas are the main destinations for
“Some of the top reasons potential buyers consider buying a home in another state include lower taxes, better weather, and a more affordable cost of living,” Pozek says.
He adds that millennials have proven to be the most active generation, especially during the pandemic.
“Since millennials are probably not married or have children, they are more willing to pack up and move,” he says.
“Future retirees and professionals who receive promotions and/or advancement opportunities with relocation are also good prospects, as are many college graduates,” adds Chuck Meier, senior vice president of mortgage sales for Sunrise Banks.
Anyone who can work remotely, “as well as those who can find work just about anywhere, such as teachers and healthcare workers,” should also consider leaving the state, according to Orefice.
Your next steps
Buying a home out of state can seem daunting. But it’s totally doable if you take it step by step and rely on the experts you’ve hired to help you through the process.
If you’re ready to get serious about buying a home, contact a mortgage lender as soon as possible to determine your budget and start your move on the right foot.
The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.