When you’re looking for a new home, it’s easier to drive around and scope out homes, neighborhoods, schools, and local parks if it’s nearby. When you’re looking to buy a house out of state, it’s an entirely different story, especially if it’s challenging to travel to.
With the overall moving rate declining over the past few years, the amount of people moving between states remains at around one-fifth. The reason many people buy a house out of state can be due to family-related concerns and job-related situations.
When buying a house out of state, we know there’s a lot of planning and obstacles involved. But the truth is, plenty of people are continuing to purchase homes out of state each year. Real estate agents and lenders are best positioned to assist potential buyers who are considering moving across state lines.
We know buying a house out of state can be difficult; that’s why we’ve put together this step-by-step guide to help buyers complete the process.
11 Easy Steps How to Buy a House Out of State in 2023
Here are 11 easy steps on how to buy a house out of state in 2023.
1. Save for Closing Costs & Down Payment
When buying a new home, there’s always a cost involved, such as closing costs and down payments. However, homeowners will quickly find that closing costs and down payments vary per state. When moving out of state, the average home price might be higher or lower than the current state the homeowner is currently living.
When considering obtaining a conventional or FHA loan, the limits can also vary by state, so potential buyers will want to ensure they’ve completed enough research beforehand. In some circumstances, buyers might be able to afford more than they think.
When saving money for closing costs and down payment, potential buyers should try to cut back on unnecessary expenses when possible. When moving out of state, a buyer may want to consider cutting down to only one vehicle to save on gas and insurance costs before the move. If buyers think they can’t afford closing or down payment costs, they should research eligible down payment assistance programs.
Once the buyer has an idea of the home prices in the state they’re moving to, they can use a closing cost calculator to estimate how much they’ll need to save.
2. Get Preapproved for a Mortgage
When choosing a lender, the lender should be licensed in the state the buyer is moving to. Potential buyers should perform diligent research to find the best lender who can provide them with the best deal.
If a buyer is relocating to another state because they’ve accepted a new job opportunity, the chosen lender must see their offer and job start date to determine if they’ll be capable of paying their loan.
When becoming preapproved for a loan, a lender will look at the following:
- Current credit score
- Debt-to-income ratio
- Down payment amounts
- History of employment
- Savings balances
3. Research Where You Want to Buy
When wondering how to buy a house out of state, one of the essential things a buyer can do is to conduct enough research on where they’re looking to buy. Once the potential buyer is pre-approved for a mortgage, they will begin to look for a home and will have an idea of their budget.
The buyer should look for median home prices within their budget. If their budget is towards a lower scale, they might want to research the cheapest state to buy a house. When searching for a house out of state, the buyer might focus on the lifestyles they enjoy, neighborhoods, parks, and school systems. At InsightfulREI, we can make an offer to any homeowner gearing towards selling their home in the Sacramento area.
4. Make a List
Creating a list before meeting with a real estate agent will help the agent assist the buyer to buy a home in any condition. A real estate agent can narrow down homes according to the buyer’s needs, such as how many bedrooms, if the school systems are great, and if the neighborhood is safe to live in.
This is why it’s helpful for a buyer to make a list when they want to buy a house out of state. Real estate listings online only give so much information, so an agent can help find homes out of state that match.
5. Find a Buyer’s Agent
When buying a house out of state, it’s essential to find a buyer’s agent since, many times; the buyer is unfamiliar with the area. A great agent will be able to find the best homes, schedule showings, and a lot more. When buying a house out of state, the buyer should take their time to find an agent.
When researching how to buy a house out of state, it’s essential to know that some states require the presence of an attorney for transactions.
6. Start Looking and Plan a Visit
There’s nothing like visiting and touring a new home in person. Pictures and virtual tours just won’t do a beautiful home justice. In the event the buyer also doesn’t mind buying a house in any condition, planning an in-person visit is best.
In-person visits not only help a buyer get a feel for the property but allow them to explore the neighborhood. In-person visits will consist of driving to multiple homes and multiple neighborhoods at different times of the day. While visiting the state, the buyer can become familiar with restaurants in the community, entertainment options, and if it’s a walkable area.
After searching for how to buy a house out of a state, the buyer should also research how many grocery stores, pharmacies, and other frequently-visited destinations residents use most.
7. Make an Offer
After the potential buyer has picked a home out of state that they want to buy, they can make an offer on the house. In addition to how much money the buyer is willing to spend, they’ll also have to consider how long they have until closing.
8. Order a Home Inspection & Appraisal
When buying a house out of state, a home inspection is essential, especially when moving a long distance. A home inspection can help find any flaws with the property that the seller can fix.
In addition, when buying a house out of state, an appraisal is recommended to provide property value. Prior to closing a home, a home inspection and an appraisal should be performed.
9. Plan the Move
What’s done after the perfect home is found? Planning to buy a house out of state requires more planning on the buyer’s end than it would just moving across town. Moving costs can range anywhere from a few hundred dollars to thousands.
The more time the buyer spends planning the move, the greater chance they’ll have to find a moving plan that suits their budget. Keep in mind not all moving companies handle out-of-state moves.
If the closing date is not finalized, buyers can consider using a moving container company.
10. Close on a Home
As part of buying a home out of state, the buyer will agree on a closing date. To close on a house out of state, the buyer will need to contact a title company and lender to ensure that all legal requirements are met. However, some states don’t require a buyer to sign in person on the day of closing and will let the buyer close on their home remotely.
11. Finalize Loose Ends
With the excitement of buying a house out of state, it’s easier to forget about finalizing loose ends. Buyers should consider booking up any utility services before the move so they’re not stuck without services. Some companies allow buyers to set up services before closing on the home.
Once the buyer has their new address, they should immediately apply for a new driver’s license in their state; as well as have mail forwarded, and any old neighbors keep a lookout for mail at the prior home’s address.
When buying a house out of state, a real estate agent is the best resource to use.
What is the Cheapest State to Buy a House?
When buying a house out of state, it’s essential to know which homes are the cheapest and which are the most expensive to accommodate budgets. The cheapest state to buy a house in 2023 is Tennessee. Tennessee has a low cost of living and low property taxes.
How to Buy a House Out of State: FAQs
1. Can I buy a house in another state with an FHA?
According to FHA guidelines, a buyer must have stable employment to get approved.
2. Can I buy a house in another state and rent it out?
To navigate legalities when buying a house out of state, it’s essential to brush up on local laws, as each state varies.