6-9 Months BEFORE starting your Home Search

Finding a home and moving in is one thing, but getting your finances in order before hand, is crucial, especially for first time buyers.

One of the best things you can do early on, is find a Realtor and/or Lender you can trust to go over what your house hunting timeline is!

Pre-qualifying will help you in the following ways:

Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.

You won’t waste time considering homes you cannot afford.

Pre-approval will help you in the following ways:

A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.

You can select the best loan package without being under pressure.

How will I know how much to offer?

A property will sell for close to fair market value. Part of my job as a Realtor is to advise my clients on what the market value is for a particular property. The market value is determined by what comparable homes have been selling for in the area. In other words, what buyers are paying for similar type homes. Realtors do this by running a Comparative Market Analysis on similar properties in the area. This is also, the same process the listing agent should have used to drive the property with the seller

For any given reason, a property will fall under one of these three categories:

Property is listed at market value – these properties get a lot of activity and will usually sell within few weeks of coming on the market. An offer for this type of property would have to be very close to asking price.

Property is listed above market value – for these properties, the sellers are usually unrealistic. We can write a market value offer but it may not get accepted. When a home is priced above market value, it sits on the market for a long period of time and lower priced homes have a lot more to offer.

Property is listed below market value – these are the properties that will sell within a day or two with multiple offers. In this case, the market value is above the asking price and therefore, the offer that we put on the property would have to be consistent with its market value.

You see the listing price and you think,

“No Problem!”

While that’s a good start, those aren't the only expenses to consider when buying a home. Keep reading for some of the other costs and fees you need to consider.

1) a down payment: 3-20% depending on the type of loan

2) home inspection fees: $300-500+

3) appraisal: $300-400

4) underwriting and application fees: 1-1.5% of the loan

5) escrow fees: 5% of the loan

6) mortgage insurance*: 0.5-1.5% of the loan

7) prepaid property taxes & homeowners insurance

8) HOA fees, if applicable.

*if less the 20% is being put down.

Keep in mind fees vary and can sometimes be rolled into your mortgage at closing. Talk with your agent and ask for an updated loan estimate or disclosure, so there won’t be any surprises at closing. But always remember, if you have questions? ASK! You should know what (and why) you are paying for!

Ready to become a home owner?

Reach out today to schedule your home buyer consultation!

The BEST thing for you is to find a Realtor that you can trust to guide you with the education, tools and professionals needed to make the best decision for you, now or in the future!

Not in Massachusetts? Reach out and let me help you find a trusted agent in your area!

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