Buying or selling a home is one of the largest transactions you will do throughout your lifetime. There are many steps involved and sometimes adjustments need to be made to get you into the buying or selling position. So, why wouldn’t you prepare ahead of time? And why wouldn’t you work with a professional early in the process? Here is why you need to start early and with the right professionals.
Buying a Home: Start the Process Early
1. Credit, Debt & Savings – you may think you have great credit, but you should have your lender check to make sure there are no surprises. You may need to increase your credit for the best financing. You may also find that your debt to income ratio is too high and you need to pay down some debts. You will also get a realistic number for how much money you need for closing costs, which could mean increasing your savings, or seeing if you can tap into investments, such as 401k accounts. Your credit score, how much debt you have, and how much money you have on hand to buy a home are all things that can take months to get prepared for.
2. Set up Lending – Do not wait until you’re ready to buy a home to talk to a lender. You should get preliminary numbers months ahead of your desired time to purchase a home. The lender can gather your income and debt information, do a soft pull on your credit, and inform you of what type of loan product you qualify for. Not only will this give you a budget for home buying, but also your estimated monthly payment and closing costs. This gives you time to adjust your finances if you need/want to. You will want to know your lending options whether it is for a conventional mortgage, a bridge loan, or some other type of loan.
3. Watch the Market – Once you have your preliminary budget, your realtor can set up a home search with your desired criteria. You will receive emails with matching homes so you can see what is listed for sale. Even before you are ready to buy, it’s important to understand the housing market, how quickly homes sell, if there is a lot of competition, and what type of home your money will buy. It is better to go into the home buying process with a realistic view and ready to take the necessary steps to purchase a home.
Selling a Home: Start the Process Early
1. Know Your Home’s Value – As soon as you start thinking about selling your home, have your realtor provide a comparative market analysis. This report shows how your home compares to other recently sold homes like yours. This gives you a preliminary look at what your home would sell for. Your realtor can also help you understand your net proceeds so you know how much money you will walk away with. This is extremely important if you are counting on this money to buy your next home.
2. Prepare Your Property – You can sell your home as is, but even this involves cleaning out, getting rid of years of accumulated possessions, throwing out unusable items, and donating things you don’t need. Most sellers prefer to get their home into top shape before putting it on the market. At the least, this means repairing all the little things they’ve let go over the years. Sellers may paint, update flooring, replace kitchen countertops, and the list goes on. Work with your realtor to know the best areas to invest in your home when getting ready to sell. All of this preparation will most likely take months to accomplish.
3. Set Up Your Next Step – Whether you are upsizing, downsizing, moving to another state, or building a new home, your next step will take some time to think through and prepare for. You may need to investigate areas to move to, find a builder, or choose a retirement community. Chances are you will need to set up lending or liquidate cash. Sometimes just making the decision on what you want to do next takes the most time. Working with a realtor and a lender early on will help provide you with the crucial information needed for your next step.
By Launch Kits