BUYERS: How to Get Ready Now
If you're planning to purchase a new home now, or once the pandemic has passed, this is a great time to start thinking of next steps. The market is going to be booming, so to be a competitive buyer, you should be prepared and know what to expect. Here are some things you can do now, to make sure that you're ready to roll as soon as the gate opens.
1. Find a trusted Real Estate Agent. I know, I am a Real Estate Agent, so of course I'd say that... but right now it is particularly important to find an agent you trust who can help you in this process, for multiple reasons.
-- First, agents have access to the full MLS which shows not only houses currently on the market, but ones that will be coming available soon. Currently, this includes homes not listed that are in inactive status due to COVID-19, and that will be relisted once the pandemic passes. So, a real estate agent can view these homes, their fact sheets, seller disclosures, and often photos, while they won't appear on commonly browsed sites like Zillow and Realtor.com. Your agent can't schedule showings at these homes for you, but they can watch them so that once they're back on the market you are one of the first people to view the properties.
-- Secondly, there are a lot of rules and regulations regarding real estate sales in general, but particularly during these time of restricted business activity. Your real estate agent will know how to prepare you properly to deal with this. Also, your real estate agent will understand the local market and be able to advise you on fair housing prices, conditions and inspections, contingencies, home warranties, and next steps in the process.
-- Finally, did you know that most often the buyer's agent is paid from the seller's proceeds? So as a buyer, you really have nothing to lose and everything to gain!
2. Get your financing in order! Your real estate agent can recommend some trusted lenders for you to work with, if you aren't sure where to start. You'll also want to work with your agent and lender to determine if you qualify for FHA, VA or USDA loans. Regardless, the process generally looks something like this:
-- Figure out your monthly budget and what you're willing to spend, and speak to a few lenders. They can help you determine how much house you can afford, and also will make sure your projected budget is reasonable. You may be surprised to learn that lenders can also point you in the direction of local, state and federal assistance programs that can help you to cover closing costs you may incur. Additionally, if you're concerned about your credit scores, speak to a lender sooner rather than later. They can review your scores and history, and give you some pointers on how to try to fix those scores more quickly so that you can qualify for better interest rates and/or higher mortgage amounts (if needed), without having to wait years (often, sometimes there are other circumstances that can not be fixed, such as bankruptcies and foreclosures, etc.)
-- Your lender can also prequalify you, so you know how much of a loan for which you would likely be eligible. The next step is to get a preapproval. This is very important, because the preapproval will verify the information you provided the lender and provide you with a conditional commitment for a mortgage loan. They will also explain what the conditions are, which can vary depending on the type and amount of loan you're obtaining. Often, the preapproval is valid for a short, specific period of time, but with the current circumstances you may be able to press for the preapproval period to be extended. The preapproval shows sellers that you are definitely serious about purchasing, and that you can afford to!
-- Most lenders will also advise that you don't make any large purchases or open new credit cards, etc. once you're preapproved. This will change your preapproval and the process will need to start again.
3. Finally, and maybe most importantly, make a list of NEEDS and WANTS in your new property. For example, you may NEED three bedrooms, two bathrooms, and an office, but you may WANT a pool. Or, maybe your daughter is a champion swimmer and you really do need that pool so she can practice. Really think about your needs and wants, and if you are so inclined, even place a value or priority on your Want list so that your Real Estate Agent can focus on the most important items for you.
This is my favorite part of the process: weighing the needs and wants, looking at the existing house and the potential, figuring the costs and benefits, and finding the homes that are the best fit for your family!
Happy house hunting!