Mortgage interest rates dropped recently and home prices have moderated in many areas, making it a good time to buy. If you’ve never bought a home before or if you currently own a home but have never bought and sold at the same time, the process can seem intimidating.
You can ease your anxiety by formulating a game plan and by assembling the best team of professionals you can find, including a mortgage person; a real estate agent or two if you’re buying and selling in different locations; inspectors; an insurance agent; a closing agent or escrow officer; and an attorney, depending on where you’re buying.
The two key players on your team are the mortgage person and the real estate agent. Once you have these selected, they can help you line up the additional help you need. The best recommendations for real estate professionals are from acquaintances who recently had a good experience buying in your area. Be sure to ask if they would use their agent or mortgage person again.
The first step is to find out how much you can afford. Most buyers need a mortgage in order to complete a home purchase. A lender will qualify you for a certain loan amount depending on how much cash you have available for a down payment and closing costs — the various fees associated with buying or selling a home.
Other relevant factors are your credit score, your verifiable income and what type mortgage you decide to use for your purchase. There are a lot of different mortgage options: 30-year fixed-rate mortgages, 15-year fixed, interest-only, as well as various types of adjustable-rate mortgages.
HOUSE HUNTING TIP: You can work with a mortgage broker who will shop the mortgage market for you and place your loan package with the lender that offers the best deal. Or, you can work directly with a lender, such as Bank of America or Citibank. Just make sure that you understand what kind of loan is being offered. You might want to consult with an independent party like your accountant or financial advisor to determine which kind of financing is best for you.
Once you know how much you can afford, ask your mortgage broker or lender to have you preapproved for the financing you need. This requires that you complete a loan application and have your credit checked. This will put you in a good bargaining position with the seller.
While you’re checking on financing, you should also find a real estate agent. If you’ve never bought a home before, you should use an agent who is a good communicator and who will take the time to explain the process. Also, keep in mind that your agent will be interfacing with the other parties in the transaction. You want someone you trust and who you are sure will represent you professionally and work diligent on your behalf.
Repeat home buyers who will be selling and buying using the same agent will also want to make sure that the agent has good marketing skills. It’s a benefit if the agent is organized and has good resources.
A good seller’s agent can help you get ready to sell your home by creating a task list of the things that need to be done before your home goes on the market. Your listing agent should be able to give you the names of reputable people who can assist you with cleaning, painting, hauling, storing, inspections, staging, landscaping and whatever else you need to prepare your home for a profitable sale.
THE CLOSING: With this ground work completed, you are ready to seriously hunt for a home.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.