You have made the decision and are ready to move forward and make that 30-year commitment to buy your dream home. The road to homeownership is not as simple as point A to point B. The Ann Milton Realty Team is here to lay out a buyer checklist to make your path to home ownership easier.
The peak home-buying season runs traditionally from March through May; however, in today’s market, that peak home-buying season looks different. Today we share the roadmap with specific destination checkpoints that will ease your journey to homeownership. Follow the map and enjoy the ride so that you are prepared in this market. Like most road trips, some interstate travel will be required, but interstate travel can be filled with stop-and-go traffic. Come with us on this journey and we will take a bypass to avoid road construction and standstill traffic.
Checkpoint 1: Financial Check-In and Tune-Up
You wouldn’t leave for a long road trip without ensuring that your car is roadworthy and much is the same with purchasing a home. This means you will have to be a safe bet for lenders willing to loan you the money to purchase a home. Your credit score is a large piece that they will use to determine your approval. Check and double-deck your credit report and challenge inaccurate reporting. Pay down high-interest debts, personal loans, and student loans to increase your score and lower your debt-to-income ratio. Credit scores over 760 will garner you the best rates and terms for loans and scores below 500 will prove more difficult to get mortgage approval.
Checkpoint 2: Determine Your Budget
With any trip, you have to make sure you can afford to get there and back. There is no reason to plan a trip to Italy (a million-dollar home) if your bank account will only allow a trip to the Florida Keys (a $300,000 home).
Look at your DTI (Debt To Income) like the lenders will. Use a mortgage calculator to determine to get an estimated payment for the house you think you can afford. Combine all your monthly expenses and the estimated monthly of what would be your new home. Divide this number by your monthly income. This is your DTI. 43% is the threshold number you want to stay under. If you are barely under the 43% line, this means you will likely be financially spread thin each month and “house poor” at the end of each month. A comfortable DTI to aim for would be closer to 25%. Just because you can qualify for a more expensive home, doesn’t mean you can truly afford it when you factor in your lifestyle and spending habits.
Checkpoint 3: Pre-approval and Lender Selection.
You should equate the buyer checklist pre-approval and lender selection to the packing portion of your trip. Packing the proper gear for a trip will save you time and money in the long run and create a smoother process when it comes to home selection. Don’t accept the first lender that comes across your screen. Not all lenders have the same working style. Find one that you can develop a working relationship with. This is where you will get your pre-approval for moving forward.
Pre-approval will ensure that you know the range of homes that you will be able to qualify for as well as give you some advantage over some buyers because you can show the sellers you are ready and submit your preapproval with your offer when you settle on a house. Providing the proper documentation for pre-approval may feel like the packing of your socks and underwear for a trip but it will be necessary. If you are looking for a pre-approval, we recommend CMG’s Chet Mann.
Checkpoint 4: Create a Home Wish List
Your home wish list is your journey’s itinerary in the buyer checklist. What do you need vs what do you want to have for this home to be complete? This is the same with your house wish list. Does your home need to have 2 ½ baths to fit your family? Will you want a split floor plan or a 2 story home? Know what your home non-negotiables are so that you don’t spend time viewing a home that does not meet your requirements. Want a backyard? Add detached home to your list. Are you a city girl? Add sidewalk. Foodie snob? Then look for homes around the shopping districts. Do you love a good project? A fixer-upper could be a good deal and a good time for you. Just remember that the non-negotiables should be a list of items you can’t live without or need.
Checkpoint 5: Find Your Agent
Your agent is your tour guide in the buyer checklist. Like most guides on vacation, they know the shady areas to avoid, the best place to grab a burger, send your kids to school, and how to get the most out of your journey. Matching with your real estate agent is arguably one of the most point important stops on your home buying journey.
When selecting your agent look for an agent with 3-5 years of experience. Check out profiles and reviews. Look for an agent that has lived in the area for an extended time. They will know all the sweet spots. Your agent should be up on current events that affect buying like changing interest rates that could affect home value. Use an agent solely dedicated to advocating and working on your behalf. An experienced agent can be your best ally when you are traveling this road. The Ann Milton Realty Team would love to be your agent.
Checkpoint 6: Start Touring and Viewing Homes
Start touring and viewing homes that fit your wishlist of non-negotiables. This is the part of your trip where you pick up the postcards to remember the moment. There are house shopping apps that will let you take pictures and keep notes on the homes you view. Rank each item on your wishlist in the home between good, average, and poor. Take pictures to remember all parts. It may be easy to remember that open kitchen or the shed that would make an excellent man cave or she-shed, but aging shower fixtures or fencing that needs replacement may be out of sight, out of mind.
Remember that some items are cosmetic-don’t hyperfocus on them. Not every home will fit and there will be frustrations along the way. You may find “the one” except it is missing your biggest non-negotiable from your wish list. Don’t become discouraged with this step. Stay the course and trust your agent.
Checkpoint 7: Submit an Offer and Earnest Money
You have found the home. Your journey is past the halfway point, but there are still a few more crucial pit stops to be made. Tell your agent you are ready to submit an offer. A seasoned agent will investigate what all needs to be inspected. Don’t be afraid to attach things like a termite inspection (especially important in the Sandhills) and conditions, at the suggestion of your realtor, to your offer if you’re not about to enter a bidding war. Your official offer will be based on: the current market, the asking price if there are other offers on the table, and how long the home has been on the market, your purchase offer will be accepted, rejected, or countered by the seller. If the seller declines, you have the option of making a counteroffer.
In this market, having a seasoned agent like The Ann Milton Realty Team makes all the difference when those bidding wars begin. Once your offer is submitted and accepted, you will give your agent an earnest money check (listed on the offer). This earnest money is crucial to getting an accepted offer as it shows the sellers that you are a serious buyer for their property.
Checkpoint 8: Finalize Financing
Finalize the financing. This is equivalent to pulling into the gas station for one last fill-up before you complete the last leg of your trip. If you aren’t sufficiently fueled and equipped with proper financing your journey to homeownership will end here. You’ll start the formal mortgage application procedure once the seller has accepted your offer. Expect to give extra documentation to your lender as the process advances, even if you’ve been pre-approved for a loan. Whatever you do, DO NOT make any new major purchases that will affect your credit. And do not have your credit pulled in anticipation of a purchase. Your pre-approval was contingent on your financial standing at the time, so keep it in good standing by not applying for credit during this time. This is a paper-heavy time, so be prepared to upload a laundry list of documentation to your loan officer.
Checkpoint 9: Inspections and Appraisals
The majority of purchasers are unaware of the distinction between inspections and appraisals in the buyer checklist. The home inspection will confirm that the house including the foundation and roof are in good working order. Your home inspector will perform tests, including systems, and present you with a report detailing the results. A home inspection may uncover small issues such as electrical or plumbing issues that can be quickly fixed. They may also uncover more major issues such as mold or a damaged foundation. It’s up to you to decide if the flaws are substantial enough to pull out of the agreement, demand that the problems be fixed before closing, or accept the sale “as is” and cover the repair costs yourself.
While the home inspection is for your peace of mind, the appraisal is for the lender’s benefit. The lender does not want to lend you more money than the house is worth. To estimate the market worth of the property, an appraisal examines the home, as well as comparable recently sold residences.
Checkpoint 10: Repairs, Concessions, and Closing
Negotiate repairs and concessions as needed with the information from the inspection and appraisal. This is the part of the journey where you barter and bargain for the prize souvenir you want. Again follow the advice from your seasoned and experienced realtor.
The type of market you’re in can affect your ability to negotiate. In a strong seller’s market, getting concessions can be tough because the seller can move to the next offer. However, if it’s an issue that will be raised by any buyer — you may still have negotiating power.
Congrats on Completing Your Buyer Checklist
You’ve arrived at your desired location by following your buyer checklist. Before you the keys are handed over, you will have a final walk-through with your agent near your closing day. This is to double-check that everything is in order and required repairs were completed to close our your buyer checklist.
You’ll have a final walk-through with your real estate agent on or near closing day. It’s been a long journey, but you’ve finally arrived at your new home. Congratulations, you have arrived at your dream home!