When you cook, using “mise en place” means you have all your ingredients cut, measured, peeled, grated, sliced and you have your bowls, utensils, and pans ready to use before you begin the cooking process. This gives you the opportunity to inventory the ingredients and observe if you have everything you need. Using this method, you are less likely to leave anything out or miss a step because it is all “set up” and ready to use.
In today’s highly competitive environment, this same technique will work well in buying a home where multiple offers are received, and bidding wars are commonplace.
The buying process begins with:
Checking your credit score – your credit background will determine if you can get a mortgage and it will also determine what interest rate you will qualify for. The better rates are reserved for borrowers with the best credit. Having a lower credit score means you pay a higher rate due to additional risks to the lender. You can get free copies from all three major credit bureaus at www.AnnualCreditReport.com. You may also be able to see your FICO score via your bank app on your phone or by looking at one of your credit card statements. It really is becoming quite commonplace for financial institutions to have available a credit score.
Review your budget – know your monthly income and your monthly living expenses. You can set up a spreadsheet or use an online program to watch these numbers for you. This will give you an idea of your left-over monies and let you know what else you can afford. Also, add to your budget any big-ticket items that you need to pay for in the future and how much you need to set aside to cover that future cost. A lender will use debt to income ratios to qualify a buyer. This method may show they are eligible for more than they are comfortable with. I can refer you to a mortgage professional who can discuss your situation with you in detail.
Get an appointment with a mortgage banker – their job is to get borrowers approved for a mortgage. They do not use online calculators but will review your credit reports, give you suggestions to improve your credit, verify your income, assets, and liabilities and suggest loan programs that will benefit you. They will even provide you with a “pre-approval” letter and phone verification that might get you to a better negotiating point on a real estate contract with a seller.
Initial Cash Investment – The requirement for a down payment and closing costs are based on the type of mortgage you choose. This can also be dependent on any cash you want to put down on the home. A down payment can range between 0 to 20 percent. Be aware that mortgage insurance will be required on mortgages where the down payment is less than 20 percent. Normal buyer’s closing costs are from 2 to 5 percent of the mortgage loan.
Homeownership costs – Most mortgage payments include the principal and interest plus 1/12 the annual property taxes and insurance plus mortgage insurance if required. Other expenses that will be incurred by the homeowner include maintenance, HOA dues, utilities, upkeep, and replacement of equipment and appliances.
Process and timeline – people tend to feel more comfortable when they understand the process of buying a home and the length of time it takes for the different steps. I will be able to provide this information based on the type of mortgage and local market conditions.
Know the numbers – being familiar with the basic statistics makes planning and even, negotiation easier to predict. Important data, relative to the type of property you are buying, includes the current supply of homes for sale, days on market, sales price to list price ratio, and percent of cash sales in your price range. This is another area where I can be very helpful.
Must-have features – the concept of a “dream home” is more myth than reality. In my previous post, “Make your Offer Successful in a Low Inventory Market” I talk about this topic. Because you rarely get everything you want even when you are custom building a home. Especially, in a highly competitive market with rapidly increasing prices, you should create a list of your “must-have” and “nice to have” features and amenities. This can be helpful when you are determining whether to write a contract on a home.
Build your “home” team – this is another topic I covered in “Make your Offer Successful in a Low Inventory Market”. By selecting the best “players” for each position, you will have a much better chance for a successful sale and a satisfactory transaction. I am in a unique position to guide you through the entire process and recommend trusted professionals for each job that needs to be done.
An excellent meal includes fresh, good food, the right ingredients, superb preparation, and execution. Whether you are following a recipe or doing it from memory, each step is important and affects the outcome. The same is true for buying a home. Get everything together before you start looking at homes.
For more information on buying a home, download our Buyers Guide.
I can provide Insider Information on Fairfax VA homes for sale. Get you a FREE Market Snapshot Report of Your Northern Virginia Home’s Value, or Search All Northern Virginia Homes For Sale. Put that data you need at the tips of your fingers!