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Have Your Credit Pre-Approved

Getting a credit pre-approval means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances. A credit pre-approval shows sellers that you’re a qualified buyer and helps you establish a clear price range.

The credit pre-approval process

The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it doesn’t include information on the property you will purchase. Your loan officer collects information on your credit, income, assets, and debts, and sends this information through an underwriting system. If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria.

Benefits of having your credit pre-approved

There are many good reasons for getting a credit pre-approval before you buy a home:

• It makes your home search more efficient by allowing you to focus only on homes you know you can afford.
• It lets sellers know that you can back up your offer, so they don’t have to worry about whether you can get a loan.
• It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home.
• It gets most of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.

Go House Hunting

Now that you’ve had your credit pre-approved and know how much you can afford, it’s time to go house hunting. You may look at one house or two dozen before you find the one that’s right for you. Just keep an open mind, and focus on the things that are really important to you, and you’re sure to find a place where you’ll feel at home.

Choosing a neighborhood

House-hunters should keep in mind the familiar adage about the three most important features of a home: location, location, location. That’s because finding the right home for you and your family has as much to do with the neighborhood as with the home itself. In fact, you’ll probably notice during your search that a home in one area costs much more than a similar home in another. Factors like safety, school quality, and proximity to shopping and entertainment all contribute to demand for homes in a given neighborhood.

Beyond price, what you look for in a neighborhood probably has a lot to do with your personal situation. How far are you willing to commute to work? How close do you want to be to family and friends? Do you have young children who would enjoy a nearby playground? Picturing your day-to-day life in a certain neighborhood is a good way to predict whether you will feel comfortable there.

Considering different house styles

You may want to look beyond the traditional detached single-family home. Condominiums, town houses, and duplexes can be more affordable options, especially if you’re looking in a densely populated area. These types of housing may not offer as much yard space or privacy as single-family homes, but those may not be as important to you as the chance to own a home in the neighborhood of your choice.

Building a new home

If you’ve looked and looked for your dream home without success, or if you want to be the very first owner of a brand new home, consider building. You’ll have more opportunity to customize the home’s features and design, more up-to-date appliances and building materials, and usually a builder’s warranty to cover problems that come up in the first year.

Make an Offer

So, you’ve found a house you want to buy. Congratulations! Now you need to decide how much you’re willing to pay to make it yours. In today’s real estate market multiple offers on the same home are commonplace, so you may only get one chance to make an offer that the seller will consider. That’s why it’s important to think carefully about your strategy.

Your real estate agent should be able to give you a list of similar homes nearby that have sold recently, and for how much. Although you can’t directly compare the home you want with the homes on the list without ever having been in them, you can use the list of comparable sales to get a general idea of the neighborhood’s price range.

In addition to sale prices for other homes, there are several ways you can determine a good amount to offer:

• The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs some real work?
• The market. If you are in a buyer’s market – where there are more homes for sale than there are people to buy them – prices are probably stable or falling. If you are in a seller’s market – where there are more buyers looking for homes than there are homes for sale – prices are probably moving upward.
• Your threshold. If you’ve gotten a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you’ve been approved to borrow, so think carefully about your financial situation before making an offer.

Get a Home Inspection

When you are making what is likely the largest investment of your life, you should know as much as possible about what you are buying. That’s why it’s a good idea to have a home inspected before you make your purchase. Most purchase contracts contain provisions for a home inspection to be performed within a certain timeframe, and sometimes they specify what action the buyer and seller may take if problems are uncovered.

Finding a home inspector

It’s very important that you choose a qualified inspector who has plenty of experience with residential homes. Contact a national or state association of home inspectors to find out what certifications it requires for membership and if there are any members in your area. You may also want to ask you’re real estate agent for a list of reputable companies.

What the inspection should cover

At a minimum, the inspector should examine the following:

• Exterior structural components, including the foundation, roof, siding, and chimney.
• Interior structural components, including the basement or crawlspace, attic, flooring, and ceilings.
• Major systems, including heating, cooling, plumbing, and electrical.

You should make every effort to be present during the inspection so that you will have an opportunity to ask questions and see first-hand what the inspector looks at. You should receive an inspection report with descriptions, and possibly photographs, of any problems with the home.

Close the Deal

You’ve found your home, agreed on a price with the seller, had the home inspected, and now you’re ready for the closing, where you will officially take ownership of the property. Welcome to the end of the home buying process – and the beginning of your homeownership journey.

When to schedule your closing

The closing date will depend on when the seller is ready to move out, when you are ready to move in, and when all of the mortgage details have been finalized. You may want to request a closing date near the end of the month in order to minimize the amount of interest you have to prepay on your mortgage.

Who should be there

Closing practices vary based on location, but attendees may include the following:

• Buyer and seller
• Real estate agents for the buyer and seller
• Closing agent
• Title company representative
• Mortgage company representative
• Attorney

What happens at closing

Despite all the new technologies that are streamlining the mortgage process, the closing phase remains very paper-intensive. You will have to review and sign a hefty stack of documents, some of them in duplicate and triplicate. You will also have to pay for any closing costs, including:

• Lender fees, such as an appraisal fee, credit report fee, origination points, and discount points
• Third-party fees for services not provided by your lender, which may include a settlement fee, title insurance, and attorney’s fees
• Prepaid items that must be paid to your lender in advance, such as prepaid interest, hazard insurance, and deposits to set up an escrow account

Move into Your New Home

So you’re ready to start life in your new home – congratulations! Now all you have to do is get yourself, your family, and your belongings there intact. You can save time and energy by hiring a moving company, or save money by doing it yourself – it all depends on how much stuff you have, how far you’re moving, and how much you can afford to spend.

Hiring a moving company

The key to choosing the right mover is trust. To find a company you can have confidence in, look for one that:

• Has been in the business for a number of years
• Has a clean record with the Better Business Bureau®
• Can provide several references to satisfied customers
• Meets the standards of your state’s professional association for moving companies, if there is one

Moving yourself

Your move may not require professional help, but pulling it off successfully does require a professional approach. You wouldn’t want your moving company taking shortcuts, so why should you?

Preparations should start well before moving day. Keep these tips in mind:

• Get the right moving supplies, and plenty of them. High-quality boxes, padding, and other packing materials are a good investment.
• Take a room-by-room inventory of everything you will take with you, and get rid of the rest either in a garage sale or by donating it to charity.
• Label each box you pack, and keep a list of its contents to make unpacking easier.
• Set aside a box of items you’ll need immediately after you arrive, such as cleaning supplies, kitchen utensils, dinnerware, bath items, tools, and a telephone.
• Have kids pack a box of their favorite things to unload right away at the new house.

Settling in

Making yourself at home in your new surroundings is about more than unpacking. Try to explore the neighborhood and get acquainted with neighbors right away. Ask about stores, playgrounds, and places of worship, so you don’t have to put your life on hold while you familiarize yourself with the area.

Five Tips on Selling Your Home

1. Hire a good agent

Some sellers choose to go the FSBO (For Sale by Owner) route in order to avoid paying a sales commission – usually around six percent of the sales price – but for many people, a good Realtor is the key to a successful sale. You should expect your agent to help you:

• Set the right price. Realtors can give you information on recent comparable home sales in your area, helping you understand pricing in the local market.
• Do the leg-work. Creating advertisements, screening prospective buyers, and showing your home are all very time-consuming and labor-intensive.
• Review the contract. A real-estate sales contract is a complex and legally binding document – a professional can help you make sure it reflects your interests.
• Find the right buyer more efficiently. A good agent will know how to screen for buyers who are most likely to want your house and be able to make a good offer on it.

2. Think like a buyer

Prospective buyers who look at your home will probably have looked at other homes for sale in the area. You should do the same. Buyers will be comparing your home to the ones they’ve already seen, and looking at them yourself may give you an edge on the competition.

Ask your agent for information on comparable homes that have sold recently, and any that are currently on the market. Drive by each one and note your first impression – you may get ideas for enhancing your own home’s curb-appeal.

3. Hire your own inspector

A home inspection isn’t just for buyers. Hiring an inspector before you put your home on the market can be a smart move if you want to prevent – or at least prepare for – any issues that might come up during the buyer’s inspection. Uncovering problems ahead of time can give you:

• A smoother process. The more problems you correct before the sale, the less likely it is that a defect will stall the process.
• More accurate pricing. Rather than having to haggle over the price because of defects, you can set your asking price to account for the cost of repairs.

Make sure you choose a qualified inspector with plenty of experience. You may want to ask your Realtor for a list of reputable companies, or contact a professional association of home inspectors to find out if there are certified members in your area.

4. Spruce up before you sell

Some relatively small and inexpensive improvements can make your home much more attractive to buyers – but be careful not to overdo it. A remodeled kitchen is sure to fetch a higher sale price, but probably not enough to pay for itself. A sparkling-clean kitchen with a fresh coat of paint, on the other hand, can make a valuable impression on buyers at a low cost.

Keep these tips in mind as you prepare your house for showing:

• Start outside to create curb appeal. Sometimes the key to getting buyers inside your home is to make them notice the outside. A mowed lawn, trimmed hedges, and clean siding can give a neat and tidy first impression.
• Get rid of clutter. Buyers want to be able to visualize themselves living in your home – seeing lots of pictures on the walls and personal items lying around makes that more difficult.
• Hire a professional cleaner. Cleanliness can have a major impact on your sale, especially when it comes to kitchens and bathrooms. Cleaning your home yourself may be alright, but for a truly spotless home a professional cleaning can be a good investment.

5. Sell when the season is right

Listing your house at the right time of year can make a big difference in how quickly it sells and for how much.

Spring and summer

In most markets, home sales usually peak during April and May, and often remain strong through July. This is the preferred time for most families to move because it falls at the end of the school year and brings warm weather.

Autumn and winter

Like the weather, the real estate market tends to cool off quite a bit during the late fall and winter months. That doesn’t mean you can’t sell your home, though. You may be able to get a better price because there will likely be fewer homes on the market. It can also be an advantage if you’re looking for a quick closing, because buyers will be eager to close by year-end so that they can claim a mortgage deduction on their taxes.