Many are planning for big changes in 2021, but what if you’re planning the biggest change; buying a home? This year don’t be blindsided, get agent-approved tips and tricks so you can approach the buying process with confidence.
Goal 1: Know your financial standing
Maybe you’ve been saving for a while and finally feel you have your savings and credit in good enough standing to purchase your first home. While covering a down payment and mortgage is an important first step, be sure to consider closing costs, move in expenses, and how much house you can actually afford. After escrow closes, prepare for fees and expenses to finalize your mortgage, typically ranging from 2% to 5% of the home’s purchase price and vary based on your state, loan type, and mortgage lender. So if you are purchasing a $350,000 home, you could expect to pay upwards of $17,500 in fees. Additionally, buyers generally are responsible for paying for a home inspection which can range in cost from $200 to $500, although this can be negotiated in the purchase agreement. Finally, once moved in it’s safe to assume you’ll want to have some cash set aside for miscellaneous repairs, remodels, and furnishing. So before falling head over heels with your dream home, be sure to plan for the legwork of assessing where you stand financially.
Goal 2: Manage & Protect Your Credit
It’s every real estate agent’s worst nightmare; their client rolls up on closing day in a new car. Why? Because their client’s mortgage application could now be at risk. Besides having a solid credit score prior to entering escrow, it is paramount to withhold opening any new credit account. Why? Because applications for new credit can hurt your score in two ways, first any lender making a hard inquiry (checking your credit score) will mean a tiny hit in your score. This hit could mean a tiny increase in your mortgage rate, which can add thousands over a many-year span. Second, a new application or closure of an old account can again adversely affect your score. This is because the length of your credit history determines 15% of your FICO credit score. And part of that 15% is based on the average age of all your open accounts. So keep paying those bills on time, keep your credit card balances low, and don’t fiddle with your credit applications and you’ll be in good shape to close on that home.
Goal 3: Pick a Great Real Estate Agent
Think about what makes a good doctor to you; is it the level of care they offer? Their educational background? Their bedside manner? Receiving great healthcare means picking the right doctor for you and likewise, receiving great real estate support means picking the right Realtor. To earn the title of REALTOR® an agent must be a part of the National Association of Realtors and abide by their strict code of ethics. Much like a doctor’s Hippocratic Oath, this code of ethics ensures you are being represented by a dedicated professional. Aside from an agent’s qualifications, consider their experience, reputation, specialties, negotiation skills and overall compatibility. Don’t be afraid to interview agents to find the perfect fit. And remember, when buying a home it is standard practice that sellers pay the buyer’s agent’s commission.
Buying your first home is sure to be one of your most proud and memorable accomplishments. Not to mention your biggest investment. So do your research and reach out to financial and real estate professionals for help answering questions as early as possible.