This market change is not localized to Wellesley. Both analysts and real estate agents are reporting solid increases in house prices and high demand across the country. The real estate market is spiking due to many factors including the improved economy, a lower unemployment rate, smaller distressed home inventory, move-up buyers who are acting before prices and interest rates climb any higher, and homeowners who previously lost their homes to foreclosure recovering their credit ratings and returning to the housing market. This market change is welcome news to sellers. For buyers, this market means you really need to do your homework before jumping into house hunting. If you are trying or ready to buy a home, here are the steps you need to take to be successful when you find that dream home:
Check Your Credit Rating
Begin by going to www.annualcreditreport.com to verify your credit history is accurate. Also, go to www.equifax.com to check your credit rating. Ideally you want a credit rating of 740 or higher. You can improve your credit rating by making sure that all your bills are paid on time and your credit card balances are paid. Your outstanding debt, your outstanding debt in relation to your total available credit lines, the length of your credit history and any new credit you've applied for all relate to the size of mortgage you will be approved to receive. Don't open new lines of credit like credit card accounts or make any large purchases until you close on a home. Mortgage lenders are beginning to recheck credit, sometimes just days before closing.
Assemble Your Cash
Most home sales require a down payment of 20% of the home's purchase price. An additional 5-10% of the home's purchase price may be needed to cover points, application fees, inspection fees and tax advances. If you are receiving financial help from a family member in the form of a gift, get it in the bank now. Many banks require that the funds be available to you for 3 months before closing.
Assess Your Mortgage Options
There are fewer types of mortgages available to individuals than there were a few years ago. Less options do not translate to easier answers. Today's mortgage market is online, offline, and available through more numerous sources from mortgage brokers to federal mortgage programs. It is worth your time to research the types of mortgages and the risks and expense of each. Consider banks that offer portfolio loans.
Get a Pre-Approval Letter
A pre-approval letter gives you credibility as a serious buyer. It defines your house-shopping parameters and negotiating strength. This letter also levels the playing field with all-cash buyers, investors and other bidders. This letter is important, whether or not you need a financing contingency.
Prioritize Your House Goals
Before you begin looking at homes, construct a list of what criteria you are looking for in a home. Make sure the criteria you list takes into account your immediate needs but also considers what will serve you well in five or more years. This means investigating neighborhoods, schools, commuting routes, etc.
Sell Your Current Property
If you are a move-up buyer, get your current property onto the market and under agreement before you begin your serious house shopping. Sales contingencies will not be acceptable to sellers in this market.
Focus On Shopping
Explain your house criteria to your broker so she can alert you to potential homes as soon as new houses are listed, or even before a house goes on the market. Make seeing new properties a priority in your schedule.
Construct an Advantageous Offer
Find out all you can about the best dates and terms for the seller. When you know what is most important to the seller you will know where to negotiate and what will make your offer more attractive. Take into account the recent sales of comparable homes in the neighborhood and town. A final offer will probably require compromise from both buyer and seller, even in a seller's market. Focus on your top priorities and keep your emotions free from the negotiations.
Need a Guy?
Rutledge Properties has dependable, timely referral for all the trades. Contact us if you need names of mortgage resources to help you pick a mortgage option and/or get a pre-approval letter.