Buying & Selling A Home

Since there are costs associated with buying and selling a home, it’s important to consider the direction your life is headed and what you’d like to accomplish along the way.

• Can you commit to living somewhere for a few years?
• Does your budget have enough room for projected expenses?
• Do you plan to expand your family?

Factors such as these can guide you to find a home, select a mortgage that suits your needs, and buy.

Job and income stability are important factors for determining whether you have the means to take on a mortgage. If your employer frequently relocates, terminates, or lays off employees, it may not be in your best interest to invest in a home at this time.

Additionally, when applying for a mortgage, a lender will look at stability factors, such as how long you’ve been at your job and current address.

Do you have an idea of what a home in your desired location could cost? In addition to upfront costs, there’ll be ongoing costs, such as property taxes, insurance, utilities, and possible homeowner association fees (HOA).

Regular monthly expenses aside, homeownership can serve up all sorts of expensive surprises. You’ll want to make sure your income and savings can support these unavoidable expenses.

Before you buy, look at mortgage rates, home price trends, and inventory in your preferred area. These environmental factors will have a direct impact on what you can expect to pay.

It’s best to submit an application before you start house hunting to get a better idea of how much home you can afford. Depending on how soon you’re hoping to purchase, you can request one of the following:

Mortgage Pre-Qualification

A pre-qualification considers information provided on your application — and sometimes your credit report — to determine whether you might qualify for a mortgage. This step is helpful in getting a general idea of how much you may be able to borrow in addition to determining which loan type is right for you.

Mortgage Pre-Approval

When getting pre-approved, a creditor will conduct an in-depth review that’ll require verification of credit, income, assets, debts, employment, etc. A pre-approval is usually valid for 60-90 days and can help give you a competitive edge by showing you’ll likely get approved, narrow your search, negotiate, and close sooner.

After submitting a mortgage application, lenders are required to provide a Loan Estimate, a three-page document that goes over important details. It outlines the projected terms, payments, costs, cash needed, etc. in an easy-to-understand format that can be used to compare loan offers.

Most buyers have limited experience with buying a home while real estate professionals work with clients regularly. Since the seller is responsible for paying real estate agent fees, you can enlist the help of a professional without worrying about having an out-of-pocket expense.

If you so choose, it’s best to work with vetted agents who are fully licensed, actively engaged, and have been working in the industry full-time in recent years. The agent can provide clarity when you have questions, expand your search pool, speed up the buying process, provide helpful referrals, and negotiate on your behalf.

Next comes the moment you’ve been waiting for: house hunting. Talk to your agent about the advantages and disadvantages of a resale home, inventory home, or new build. You’ll also want to make note of must-haves and preferences, including number of bedrooms and bathrooms, budget, location, etc.

If you’re working with a real estate professional, they’ll present the offer. The seller can accept, reject, or counter.

Once accepted, you’ll enter a binding contract and will need to make an earnest deposit, typically 1-3% of the purchase price. Funds will be credited to your balance at closing.

You’re encouraged to schedule an inspection shortly after signing a purchase agreement. Though an inspection typically costs a couple of hundred dollars, depending on the home’s square footage, it’s worth pursuing.

An inspector will conduct an in-depth examination of the home’s physical structure and mechanical systems. Once complete, you’ll receive a detailed report with photos and notes; address concerns before moving forward or walk away if needed.

Now that you’ve found a home, it’s time to visit with your lender to provide information about the home and move forward with the process.

The lender will need additional documents for underwriting purposes. This will include the fully executed purchase agreement, along with proof of the earnest money deposit. They may also request updated versions of documents provided earlier, such as pay stubs and bank statements.

After that, the lender can move forward with arranging the appraisal, which determines the value of the home. This is important because it can impact the loan-to-value (LTV) ratio — the loan amount divided by the appraised value. There’s likely a maximum LTV you can’t exceed, and this number can affect rates and insurance requirements.

Once the underwriting is complete, the lender will reach out to schedule your closing.

You’ll want to share that date with the seller to schedule a final walk through of the home and ensure any issues were addressed. At this time, you’ll also want to purchase homeowners insurance.

Finally, you’ll need to review and sign your Closing Disclosure, which should look similar to the Loan Estimate, at least three days before closing. If there are errors or you have questions, contact your loan officer immediately.

On the day of closing, you’ll likely report to the titling company where you’ll sign a long list of documents, including a Promissory Note. You can typically pay via wire or present a cashier’s check.

The amount needed to close is included in the disclosure you receive prior. Soon after the payment has cleared, you’ll be ready to get your keys and enjoy.