How to Find Affordable Real Estate When Moving to a New State

Are you planning to move to a new state? Maybe you’ve found work elsewhere, want to be closer to family, or are simply looking for a change. Whatever your reason may be for moving across state lines, you’ll need a place to call home.

But before you make that move, you’ll want to get familiar with home prices in the area you plan to relocate to. The thing is, housing can be pretty pricey, especially these days when the average price across the nation has increased quite a bit.

So, how can you find affordable real estate when moving to a new state? Here are a few tips to help ensure you don’t spend any more than you have to.

Look Outside City Centers

Many times people who move to a new state tend to look at the major metropolises, especially if they’re unfamiliar with all the other smaller cities in the state. But odds are, home prices in the biggest cities are probably the most expensive.

Rather than dish out a huge amount of money to live in a city center, consider living just outside the city core for more affordable housing.

For example, if you’re thinking of moving to Seattle, WA, but can’t afford the average price in the city (which is over $800,000 right now), you may want to consider neighboring cities with much lower housing price tags, such as Tacoma or Federal Way, which have current average home prices of $403,000 and $462,000, respectively. Both cities are within a half-hour drive to Seattle.

In this case, you could be paying about half of what you would pay if you were to buy directly in the big city.

Hire a Local Real Estate Agent

Don’t underestimate the power of a real estate agent who is familiar with the area you’re looking to buy in and has plenty of experience in the world of real estate. By working with a local agent after you move to a new state, you can get the inside scoop of the best prices for homes that meet your criteria.

An agent will negotiate on your behalf to get the price you can afford, and will have your best interests at heart when helping you find the perfect home for you. And since you don’t have to pay for their services (sellers usually pay their commission after it’s split with the listing agent), there’s no reason not to work with a seasoned real estate agent who’s local to the area you want to buy in.

Consider a Home That Needs a Little Cosmetic Updating

Homes that are move-in ready often command higher prices than homes that need a little TLC. After you move to a new state, if you’re OK with buying a home that needs a bit of work, you could be saving yourself a ton of money. While this may require a little elbow grease on your part, you could be adding instant equity into the home after it’s been fixed up, without having to pay full price for the property.

Plus, you can fix the home up exactly as you please so that it suits your needs and tastes.

Find the Lowest Mortgage Rate Possible

No matter how high home prices are, the interest rate you pay on your mortgage will make a huge difference in what you pay over the long run. Mortgage interest rates have a direct impact on the overall cost of buying a home.

The higher the rate, the more you’ll be paying in interest over the life of the loan. But the lower the rate you can secure, the more money you can save over the long run. Even a 1% difference in the rate you pay can have a huge impact on how much you pay in interest overall.

To illustrate, let’s look at a $400,000 mortgage with a 30-year fixed-rate mortgage. If you were to pay 4% interest on that loan amount, you’d be paying $284,746.93 in interest over the life of your loan.

On the other hand, if you were to pay 1% less at 3%, you’d be paying $205,667.79 in interest overall. That’s a difference of over $79,000!

Luckily, mortgage interest rates right now are extremely low and have dipped to record lows multiple times over the past year. As of the time of this writing in February 2021, the rate for a 30-year fixed-rate mortgage is 2.81%.

That’s why it’s so important to try your best to secure the lowest rate possible. While you can’t do much about the going rate, here are some of the things you can do to ensure you don’t pay any more in interest than you have to:

Boost your credit score. Your mortgage lender will assess a few factors to determine your ability to secure a mortgage and what interest rate to charge you for the loan amount, and your credit score is one of them. Your credit score determines your creditworthiness, which is a crucial factor that lenders use to assess your risk as a borrower.

A higher credit score is always recommended when applying for a mortgage, or any other type of loan for that matter. With a higher score, your chances of securing a lower interest rate are higher. But if your score is currently lagging, you may want to take steps to improve it before applying for a mortgage.

Increase your down payment. With a higher down payment, you can take out a smaller loan to buy a home. A smaller loan amount will reduce your loan-to-value (LTV) ratio, which is a good thing in the eyes of the lender, as it reduces your risk level. In turn, your lender may be more willing to offer a lower rate, which can save you a bundle in interest payments.

Pay down your debt. Your lender will also look at your debt-to-income (DTI) ratio, which is a measure of your debt relative to your income. If a big percentage of your income is currently dedicated to paying your current debt, you may not have much left over to pay a mortgage. If that’s the case, you may be considered a higher risk in the eyes of your lender, who may increase your interest rate to offset this risk.

To reduce this risk and boost your chances of securing a lower interest rate, consider paying down your debt first, which can effectively reduce your DTI.

Work with a seasoned mortgage lender. An experienced mortgage lender can help you apply for the right type of mortgage for your situation, which can help you save money over the long run.

Be sure to team up with a trusted local mortgage lender, like Sammamish Mortgage. You can use our free tool to discover Live Mortgage Rates and find the best mortgage product for you.

Finding Help with Moving Professionals

We hope you found this blog post How to Find Affordable Real Estate When Moving to a New State useful. Be sure to check out our post 10 Tips For Buying A New Home for more great tips!

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How to Find Affordable Real Estate When Moving to a New State

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