Today’s market is hot for buyers and sellers alike. Due to the pandemic, some companies are shifting permanently to a remote work model, enabling employees to relocate should they want. Others are moving for new jobs or to be near family and friends. Still others are taking advantage of home turnover around them to move to a more desirable neighborhood.
While the reasons may be different for everyone, the result is the same: it’s a wonderful time to buy and sell. There are a few things you can do to make moving into a new home and selling your own much easier. Even if you’re not ready to move immediately, it’s smart to prepare in advance so that when the right opportunity comes, you can seize it.
1. Apply for Your Mortgage
Before you can buy a new home, you’ll need to ensure that your finances are in order, and the first step is to determine what kind of mortgage you can get. This will help you know how much house you can afford. Nerdwallet lists five steps for getting preapproved for your mortgage:
- First, you’ll need to discover your credit score. There are several sites that allow you to check your credit score for free. You’ll want a score of at least 620, and anything above 740 will enable you to get good mortgage rates from most lenders.
- If your score looks lower than you think it should be, be sure to look into your credit history closely. Resolve all outstanding issues before applying for your mortgage.
- Find out how much of your income is going toward paying off debt, whether credit card debt, home loans, student loans, car loans, or even loans for appliances and technology. This is called your debt-to-income ratio, or DTI. Not only will this help you understand the amount of debt you can take on with a new mortgage, but it will also influence the kind of mortgage you can get, as most lenders prefer a DTI that is at or below 36%, with the new mortgage included.
- Prepare for a productive first meeting with your prospective lenders by having all of the necessary information at hand. Generally, this includes social security numbers, your current address and employment details, bank and investment account information, proof of income, and tax forms and pay stubs. It’s best if you have records for two years of employment, and if you’re self-employed, you’ll want to bring at least two years of tax records. Also, be sure to have proof of ownership for any other assets you plan to sell to help you make your new down payment, be that a house, a boat, a car, or something else. We recommend calling your prospective lenders ahead of time to ensure that you have gathered all of the necessary information.
- Finally, contact and meet with a few lenders to ensure you’re getting the best mortgage and the best rate. If you’re working with a builder, they often recommend about three lenders with whom their clients have worked in the past, so start here and compare rates. Working with a recommended lender is smart because you know that they have already been vetted and successfully partnered with home buyers in your situation.
If you want a simple and effective place to start calculating your mortgage before you meet with lenders, take advantage of Blenheim Homes’s free mortgage calculator. While this won’t give you an exact rate, it will give you a helpful starting place to prepare your finances and determine your budget.
2. Prepare Your Own Home
Next, be sure to prepare your own home for resale. Block some time in your schedule to attend to anything that needs to be fixed or updated, whether it’s a leaky faucet, torn weather stripping around a door, or a room that needs a fresh coat of paint. If you have time, put in a little extra work to boost your curb appeal by refreshing your outdoor landscaping, cleaning gutters, re-roofing and repainting if you need to, etc. While you may not have the time or budget to undertake a full remodel, remember that the most important places in terms of ROI are your kitchen and bathrooms, as well as the initial impression your home makes when prospective buyers drive up and see it from the outside for the first time. Taking time to attend to minor fixes and updates in these areas can give you a big payoff when you’re ready to list your own home.
3. Find a Realtor and Get an Appraisal
The next step in preparing your home for resale is to find a realtor and get an appraisal. Knowing what your own home is worth will help you when you list it to be able to move quickly, as most buyers will want to see an appraisal. Ask your friends, family, and coworkers for recommendations on good realtors who can help you navigate selling your current home and buying your new home.
4. Have an Interim Living Situation Lined Up
As we mentioned in the beginning of the article, the buying and selling market is moving fast right now. See if you can find an interim living situation in case your home sells quickly and you aren’t yet prepared to move into your new home. For example, if you’re building a new home, your project will take some time to complete with the customization options you want, so you’ll need to find a way to live with family, friends, or in another inexpensive interim situation, like an apartment without a long lease agreement, while you wait for your new home to be completed.
5. Know What You’re Looking For
Just as important as all of the previous steps is knowing what you want in your new home. Which neighborhoods will give you an easy commute, good schools, the right balance of city and rural living, proximity to friends and family, access to important community locations, etc.? Beyond that, what type of house are you looking for? How many rooms and bathrooms do you want? Knowing your preferences beforehand can help you navigate the buying experience more quickly and more confidently. If you’re working with a builder, check out which home models are available and which customization options you want. This last step is the most exciting, so have fun and dream a little!