Buying a home is a big project that requires financial preparation. For those who already own a home as well as for those who will purchase a home for the first time, the very first step is to contact a good Real Estate Agent. A good Real Estate Agent is very well connected and will be recommending you to different professionals all throughout the process. Your REALTOR will FIRST put you in touch with a great loan officer who will provide you with first-class service and issue a pre-approval letter before even you start looking for a home.
A pre-approval letter is required by all sellers and their Real Estate agents. It shows them that your finances have been checked up and that you are going to be able to get a loan to purchase a home for a certain price range. No offer is taken seriously without a pre-approval letter!
A loan officer will go over your finances (income and debts), pull up your credit report and check all your debts and all your small and big loans one by one. He will be able to advice you on what you need to do to improve your credit score or warn you on a late payment or a problem you need to fix that you were not even aware of. Sometimes you can not obtain a pre-approval letter because of a problem in your credit report or a low credit score. If it is a small issue, fixing your credit report and updating/improving your credit score could take as low as 4 days but when the issue is bigger, it could take up to a year or more to fix your credit report/score and thus to be able to get a loan to purchase a home.
Even if you credit report/score is perfect, financial preparation is required. To purchase a home, you will need to have saved in your bank account the down payment and the closing costs . Down payment depends on your loan program and can be as low as 0 - ZERO for Veterans and 3% for non-veterans (depending on your income and where you live). Down payment is related to the type of loan you are getting. Closing costs will depend partially on the loan program and on the lender you are using. It will also depend on the recordation & transfer taxes of the state and county you are buying in and on the fees charged by the Title company doing the title search and being a third party to the transaction
The closing costs you need to come up with at closing can be negotiated with the seller. In other words, your REALTOR can negotiate that the seller pay all your closing costs or part of your closing costs depending on the type of loan program you are applying for.
If the asking price is $400,000 and you are able to ratify a contract with a price of $390,000 with $10,000 closing costs help, that means that the seller is only getting a NET of $380,000. This also means that if your total closing costs are $20,000 (Just an example), you will not need to bring $20,000 at closing to cover closing costs but only the difference which is $10,000.
Thus, If your down payment is 5%, you will need to bring at closing in this scenario:
1/ down payment of 5% of $380,000 + 2/ Closing costs of $10,000 = $19,000 +$10,000 = $29,000
Buying a home could also involve selling your current home which will require even more work and preparation especially if the proceeds from the sale of your current home will be applied as the down payment towards the purchase of your next home.
In this scenario, you would want to sell your home for TOP DOLLAR and would want to work with a REALTOR who will advise you on how to get your home ready for sale and who will be willing to include Staging as part of their service . STAGING is a proven way to sell homes for TOP DOLLAR.
I personally hire, at my own cost, a professional Stager for each one of my listing. I also consult with an interior designer in regards to the new paint colors to be used all throughout the house and in regards to any needed renovation or upgrade (small or big). I also advise all my sellers to do a pre-listing inspection and take care of all the repairs upfront. Thus, the house does not only look like a Builder's Model Home but is ready to move in and has nice features all buyers will desire.
Please let me know if you have any questions! Don't hesitate to call me directly at 301-366-9890!
Working with a sincere heart for the best interest of my clients