Ahead: Low rates, good deals
This is shaping up to be an interesting year for real estate. Lots of shadow inventory and low interest rates mean the smart buyer can get a great deal. Our panel of experts outlines some key unknown facts that will transition a home shopper to a homeowner.
1. Files in order
You know you need to pre-qualify for your loan, but are you still scratching your head to determine the exact documents you need for pre-qualification? GuaranteedRate.com spells it out: tax returns (at least one year, or two years if you are self-employed or commission-based); W-2s (last two full years showing income from your employers); pay stubs (over most recent 30- day period); bank stubs (last two months of statements); invest- ment account statements (last two months).
2. Don’t rock the financial boat!
Before seeking a mortgage, prospective homebuyers should not make any major purchases or life changes, change bank ac- counts or apply for or open/close credit card accounts. Ultimately, you’re trying to avoid presenting a drastically different credit pro- file, as it could cause unnecessarily delays. Christin Luckman, vice president of mortgage lending at Guaranteed Rate says, “We stress the importance for clients to maintain a financial profile identical to what is presented at time of application. I had a client who was approved and ready to close but purchased a new car one week before closing, which added a significant monthly payment to his debt. A final credit check revealed the new debt, we had to re-qualify him and he nearly lost the home. Luckily, my client had enough room in his approved ratio for additional debts, but many clients who are in the same position would not have received the loan.”
3. Cover your tracks
Homeownership comes with a host of new expenses in addition to the mortgage: condo fees, property taxes, maintenance, and long-term and emergency repairs. It is critical potential buyers know what their current monthly spend is, according to Katie Wethman of The Wethman Group at Keller Williams Realty in Virginia. Track everything for at least three months (six to 12 is even better). Especially if you are currently renting, chances are your housing expenses will be higher than your current rent, and it is imperative to know how much wiggle room you have.
4. True cost of private education
If you think buying the lower-priced house in an area with an undesirable school district can be fixed with a private school, you may need to think again. While sending your kids to a public or private school is a personal decision, the principals of Boston-area-based Benoit Mizner Simon & Co. Real Estate, Debi Benoit, Amy Mizner and Sheryl Simon, break down the numbers: “It may be cheaper to go for the more expensive house and better school district than to send your kids to a private school, as private schools can cost up to $225,000 over four years. When looking at that number, which could pay your child’s college tuition, the extra $75,000 you would have spent on the more expensive house in the neighborhood with the better school district doesn’t look so bad anymore, does it?”
5. Stealth moves
When you find your dream home, chances are pretty high that someone else also has their eye on it. Chantay Bridges of Clear Choice Realty in Los Angeles shares some secrets to make that dream a reality:
- When there are multiple bids, do not low-ball your offer. If possible, try to come in at full asking price.
- Do not waive your right to interior inspection. If there is no immediate access for viewing, ask your agent to write your offer “pending interior inspection.”
- If the house for sale is really popular and there will be an open house, ask your agent to schedule a viewing before the open house, if the listing agent and sellers will allow it.