How To Buy A House In Another State
There are many reasons people move out of state. They may move for a new job, to be closer to family or to experience a new place. Whatever the reason, the moving process shouldn’t take your focus off this major life change.
Some knowledge and strategy upfront can make the whole transition easier for you. Let’s go over how you can research, plan and strategize to make buying a house in a different state a positive experience.
1. Assess Your Financial Situation
Before you pick out your new home or make a home purchase, it’s crucial to assess your financial situation. You should have a solid idea of what you can afford by factoring in your down payment and closing costs.
Property values and home buying expenses can vary by state. So it’s essential to know how far you can stretch your money. When assessing your financial readiness to buy a house, lenders will look at your:
- Employment history
- Income
- Down payment percentage
- Debt-to-income ratio (DTI)
- Credit score
- Assets
While a mortgage lender will walk you through the process, it’s important to have a handle on your finances. You’ll know best whether you can afford a certain house in a certain state.
2. Research The Area And Cost Of Living
When you start the home buying process, research where you’ll be living. Look at neighborhoods in the city and research different suburban areas. Consider looking at school districts and neighborhood safety. You may also want to research popular business areas and cultural sites.
Try to get a sense of the types of towns or neighborhoods you’re interested in, their proximity to work and how they compare to surrounding areas in terms of income and amenities. Research an area’s cost of living to determine what’s a good fit for you.
A specific neighborhood may be very popular, which can translate to higher home prices and living expenses. Nearby towns and neighborhoods may be more affordable, and you can still benefit from the proximity to a popular area.
3. Find A Local Real Estate Agent
Once you find an area you like, it’s important to find a local REALTOR® or real estate agent. An experienced agent will know the area and what’s trending. They’ll be able to match you with a property that meets your needs.
When choosing a real estate agent, trust is key. It’s normal to shop around for agents to find one with experience working in the area you’re interested in. Your real estate agent needs to be someone you can rely on. You should be able to communicate with them and feel that your needs and desires are understood.
The real estate agent you choose will keep an eye out for suitable properties in your new state. They’ll send you new listings and can even provide you with a virtual house tour. A good agent will be keyed into what’s happening in the local market. They’ll also be able to strategize with you once it’s time to put an offer in.
4. Get Mortgage Preapproval
Before you do any serious shopping, you need to get your finances in order by getting preapproved for a mortgage. A lender will examine your finances and credit report during a mortgage preapprovalto determine how much they’re willing to lend to you and at what rate and terms. This step will help establish your price range for potential homes to begin the house hunt.
5. Plan A Visit
Visiting the area you’re planning to move to before you move is considered best practice. You can look at pictures and videos all day, but nothing compares to the real thing. Work with your real estate agent to set up multiple tours to make the most of your time while you’re in town.
When looking at properties, take a walk or drive around the neighborhood to get a feel for it. You may discover things you never noticed online. For instance, maybe you didn’t realize how close a house is to a wastewater treatment plant until you smelled the air. Similarly, you can get a better sense of interesting attractions or activities nearby.
6. Consider A Short-Term Rental Or Temporary Housing
You may need a temporary rental if you sold your house before you purchased the new one. Consider finding temporary housing close to the neighborhood you’re house hunting in. It may help you get a better idea of what to expect out of the neighborhood you’re moving to.
Living in the area can help make communicating with your real estate agent and touring homes easier. If a home gets listed, you can schedule a tour the same day and put a bid in as soon as you’re ready. In a competitive market, every second counts. Being local can help you jump on a listing as soon as it hits the market.
7. Prepare For The Unexpected
Buying a home out of state and relocating can come with unexpected costs. Yes, you should plan for the costs of moving. But you should also build enough savings to cover expenses you don’t see coming. Every detail on your thorough checklist may be checked off, but emergencies can still happen.
Weather events, traffic accidents or transportation problems can add delays and extra costs. Depending on the specifics, you may need extra cash for a hotel room or to replace some items.
Another part of being prepared is keeping the essentials with you. Don’t pack away your prescriptions and send them off with the movers. If something happens, you may be separated from the medicines you need to stay healthy. Likewise, keep all important documents (financial paperwork, birth certificates, etc.) on you. You never know when you’ll need them, and you need to know where they are at all times.
8. Put In An Offer
When you find the right home, communicate with your agent to make an offer. Buying an out-of-state house may call for special contingencies. If you haven’t sold your current home, a home sale contingency may buy you additional time. This is also the time to consider financing, appraisal or inspection contingencies. Because your agent understands the local market and how competitive it is, they can help you determine which conditions to include in your offer.
9. Wait For An Inspection And Appraisal
If your offer is contingent on a home inspection, the inspection must be completed before you can close on the home. An inspection assesses the condition of a house. If the inspection reveals expensive repairs, it may delay your move, or you may choose to back out of buying the house. You’ll also need a home appraisal. An appraisal is often required and scheduled by lenders to establish how much the house is worth.
Appraisal and inspection processes and standards can differ by state, so it’s important to work with a trusted, experienced agent.
10. Close On The House
If your offer is accepted and all contingencies are settled, you’ll move forward with the closing process. The closing process (or loan origination process) can vary by state, but it usually takes around 30 –60 days. How long closing takes will depend on contingencies, your lender, the state’s closing procedures and more. Once closing begins, you can better establish a moving timeline.
You may be able to schedule an eClosing. This allows you to close on a house remotely, which can be extremely convenient for out-of-state home buyers.
11. Hire Movers
Unless you’re going to do the work yourself, the next step is to hire movers. Shop around for a moving company that provides the services you want at the best price. Ask for recommendations or referrals from friends and family. Using your closing date as a guide, you can schedule your movers and start packing.
12. Create A Move-In Checklist
Finally, drafting a move-in checklist will help you keep track of everything and ensure nothing falls through the cracks. Crossing items off helps you stay organized and start to adjust to this big life change.
- Depending on the services included in your moving contract, here are some suggestions of what to include in your checklist:
- Find a moving company or rent a moving truck
- Reserve a storage unit if you can’t move in right away
- Figure out temporary housing if necessary
- Make travel arrangements
- Pack and label moving boxes
- Transfer utilities
- Update your address
- Set up mail forwarding
