Offers above asking! No inspection! All Cash! 30 day close!
Buying a home in today’s market is tough, especially if you’re competing with investors looking to buy investment properties, or people looking to flip homes and sell for double the price in just a matter of months.
So where do you start?
Whether it’s your first home or your forever home, it’s important to take the necessary steps to make sure you are prepared for signing all those papers on closing day.
Secure Your Down Payment
How much are you going to put down? Down payment requirements vary depending on the type of loan, the use of the property, and whether this is your first home or not. While 20% of the purchase price is the recommended amount to put down on a house, your situation may vary and it’s good to determine what you’re prepared to spend right away before you start your search. Keep in mind of closing, inspection, and other costs that can sneak up along the way!
Preapproval is the process of meeting with a mortgage banker and getting a letter that you can show your relator and submit with your offers, stating the amount that you’re eligible to purchase. Your mortgage banker will look at your income, assets, liabilities, and credit to determine how much you can afford.
So, your preapproval says they will give you a loan for a $750,000 home….does that mean you can afford that? Well, like most things in life, it depends. Can you comfortably afford the mortgage payment without sacrificing other priorities in your life, ranging from necessities, to savings, to travel? Is the price justified? What does your family need?
All of these things should be put into consideration when you determine how much you’re going to spend. And if you do decide to spend less, let’s say $400,000 in this example, have your mortgage banker only approve you for that amount so that you don’t get tempted during the search!
Hire Professionals you Trust
Our homes are the most expensive thing we’ll own in our lives. Working with the right people to make sure the transaction goes smoothly and we’re comfortable for years to come is vital. The first person you should reach out to is your wealth advisor. They know your financials, understand your situation and will be able to make recommendations on the appropriate price you can spend without sacrificing your other financial goals. They also know the current interest rate environment and can make recommendations on how much interest is appropriate for a loan right now.
After this, find a mortgage banker that you trust to get your preapproval all set up. They should be able to explain the different types of loans, point systems, and other costs associated. You should feel comfortable asking them any questions when it comes to your financing.
Now you can hire a realtor. This person should know the ins and outs of the housing market, is familiar with the area you’re searching in and can guide you throughout the process.
Last but not least, don’t forget about your inspector! Inspections are there to prevent headaches down the road, hire someone you can depend on!
Find the Perfect Home
You’ve secured your down payment, got your preapproval in hand, and have a team of professionals leading you along the way! Now for the fun part – the home search!
Tour lots of homes that meet your criteria, look at them objectively and ask your realtor for their honest thoughts. Do you like the entry way? Will you need to paint? When’s the last time the roof was replaced? Does the mud room have enough cubbies for each of the kids?
You might be looking for a move-in ready home or you may have the time and skill it takes to do some remodeling, keeping this in mind and finding the perfect home for you is what’s important.
Prepare for Closing
You did it! You found the one! Let the home decoration begin…right??
Not so fast, between your offer and closing there are going to be lots of financial checkpoints that take place, and you want to make sure you pass all of them.
Your mortgage banker should coach you through this but, generally speaking, you don’t want to make drastic changes to your income, liabilities, or assets. Don’t buy that car just yet, don’t charge thousands of dollars for new home office furniture or movie rooms on your credit card, and don’t leave your job.
Stability over the next 30-60 days will help make sure closing goes smoothly and you walk into your home with keys in hand on the day you sign!
Happy house hunting!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.