Where does your home fit in your plan?

As we exit the COVID-19 pandemic, remote work opportunities, child care challenges and a lot of time to reflect have changed what home means to many people.

The premium on at-home office space and big backyards has caused home prices in many suburban markets to increase dramatically. And now that major cities have exited lockdown, prices in urban markets are creating isolated opportunities for people who want a bit more hustle and bustle in their post-pandemic lives.

Answering these four questions will help you decide if you’re considering the right move at the right time for the right reasons — and at the right price.

1. Why do I want to move?

After being locked up at home for the better part of a year, many have become a little tired of their house. But looking for a change of scenery might not necessarily be the best reason to dive into this challenging housing market.

There are less permanent and less expensive ways to see the world, such as increasing up your travel schedule.

If you're tired of working at your kitchen table or that spare bedroom converted into an “office,” you may consider renting shared office space closer to home that allows you to be more productive.

On the other hand, if your employer is more accepting of working remotely, then maybe moving to your favorite city or beachfront home are options to evaluate.

And depending on the stage of your family, you may be looking for a larger house or downsizing to a nicer location.

2. Am I ready for a battle?

Just about anywhere you're looking right now, demand is outweighing supply of new and existing homes.

Low interest rate mortgages have allowed the competition to become fierce in many states, particular ones without state income taxes and warmer climates.

Under normal circumstances, buying a home can be as demanding as having a second job. In this current hot market, you really need to do your homework and be prepared to act fast.

3. Am I preapproved?

Many sellers are fielding multiple competitive offers shortly after listing their homes. They don’t have to sit around and wait for you to get all your paperwork squared away when others are able and willing to pay the asking price — or higher.

Before you even start browsing online for new homes, it is important to understand how this fits into your overall wealth plan and get connected with a lender.

A preapproval letter could put you in a much better positions to act when you do find that dream home.

Even when you do have everything in order and have made the offer, it still can be a little slow when you're buying a house.

Once your offer is accepted, it's time to work with your banker to underwrite your mortgage. You can get a head start on this step if you organize all your relevant financial information, such as tax returns, bank statements, pay stubs and a letter from your employer confirming you have a job.

4. How much can I really afford to put down?

Be aware and Prudent. All those programs with low downpayment requirements and/or adjustable rates could put your mortgage underwater if the housing market cools in a hurry.

In this market, a higher downpayment makes your offer look more solid to sellers. You also might have some extra leverage to negotiate with lenders if you’re shopping for the best mortgage rate.

However, when people start budgeting for major purchases, they often eye money they have set aside in emergency and retirement savings accounts.

While the goal is to enjoy your new purchase, it is crucial to understand how any liquid funds that are “re-purposed” from a liquid category to an illiquid asset will affect your current and future plan. Ask yourself:

A well-thought-out plan that reflects your lifestyle goals along with the impact of a home purchase will allow you to evaluate your decision and ideally provide the necessary comfort and eliminate any concerns.

This article is provided by Pete Alepra, a financial adviser at RBC Wealth Management in Cedar Rapids; peter.alepra@rbc.com. The opinions in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. RBC Wealth Management is a division of RBC Capital Markets, a member NYSE, FINRA and SIPC.