Throughout this article you will be introduced to different key factors you’ll need to know when Buying or Selling your home. If you’re at a loss of what to know about the two situations or even just curious of what you need to know when buying or selling your home, the information in this piece can be used to fulfill any questions or concerns you might have.
Buying a House
Buying a home can be a big and intimidating next step in your life, especially if you don’t know all the key factors or even where to start. So let’s start from the beginning with one of the most important questions you can ask yourself:
How much does buying a house cost?
When attempting to answer this question, you need to take into consideration a number of different factors. Where you want your home to be located, the size of the home, and what condition you’d like your home in. As you do when purchasing a lot of items in life, you need to make a budget. What are you willing to spend? To answer that question you need get a rough estimate of your gross monthly income. To help you figure that out, here’s a formula used to calculate the amount:
- [Hourly Pay] times [Hours Per Week] times 52 divided by 12 equals [Your Gross Monthly Income]
Finding out your gross monthly income can help you determine not only how much you’ll be able to use when purchasing your home but also what size of loan you will be able to apply for. In most cases mortgage companies are more willing to rent to people who they feel confident are able to pay the monthly mortgage; so providing your gross monthly income would be indication of evidence they need.
When you apply for a loan, lenders can establish how much you’ll qualify for with a simple formula. Typically, your monthly mortgage shouldn’t be any more then about 28% of your monthly gross income. But let’s not get ahead of ourselves, buying a house isn’t just solely determined by the price of your future home.
Determining your mortgage can come down to something called, PITI. This acronym stands for, principal, interest, taxes and insurance.
- Principal is the amount of mortgage paid every month, and if you ask some people, they would say it’s the most important part of the payment because it factors in the amount reduced from the unpaid balance of your mortgage.
- Interest is one of the ways a lender makes a profit on your loan. The largest payment is paid to interest, with only a small fraction of the payment applying to principal. As time goes on, and payments are made over a period of years, when you get closer to the end of the amortization period, a larger portion of the monthly payment is paid to principal with a smaller amount applying toward interest.
- Taxes in this case are usually limited to property taxes. With the taxation system varying in different locations, each location’s system is different. Furthermore, the taxes can change from year to year, and sometimes properties can be reassessed upon resale, so dont always depend on the current property taxes remaining the same.
- Insurance is very simple to explain. If you’re buying a single-family home, you’ll want to make sure you get homeowners insurance policy. When buying a home you shouldn’t put off getting the home insured for the simple factor that some insurance companies don’t insure certain types of homes, such as older dated homes. When purchasing insurance you should know that the lender will include a portion of your payment to pay for your next insurance policy but the first payment for the policy will have to be in full at closing.
With all of these factors to consider, you also need to estimate how much you will be able to put down as a down payment. Commonly used, many buyers base their down payment on roughly five to ten percent of their future homes value.
In a lifetime you often hear the term, “Credit Score”, and know that its of importance. But there’s a lot of people that don’t actually know what a credit score is and how it can work. As defined by Wikipedia, a credit score “is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual”.
When determining whats good and what’s bad when it comes to credit scores it can be a confusing process to go through. To add more clarification, For a score with a range between 300-850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most credit scores fall between 600 and 750. With this said, even though having a low credit score is generally bad, it doesn’t mean you have no chance of buying a home. With a credit score below 600, you can still apply for an FHA loan which is a mortgage that’s backed by the US government, as well as being insured by the Federal Housing Administration.
All the factors of buying your home
When buying your home you don’t want to jump the gun and buy the first house that seems good enough. First ask yourself, “Am I truly ready to buy a house?” Buying a home is a big commitment, you want to make sure your ready for it. There’s a lot of firsts in your life. Buying your first home is definitely something you want to not only be prepared for but to enjoy and make memories that will last forever in.
Don’t be afraid to ask questions. This is your future home, so find out all about it. From the condition and price of the house, to its location or even a crazy story behind it. There’s so much you can find out and know about your home that can hold key importance to it.
While being caught up in the excitement of buying your first home, you can miss out on a surprising little detail at the end. The closing costs. As it can be a bit of a surprise, a lot of people don’t have time to budget for it. While its a surprise, closing costs are there for a reason. They are costs that the lender is owed that are to be added to the original purchasing price of the house in order to cover different costs related to the lender and to the title of the house. Here is a list of fees that may be included in closing. The list is inclusive of fees you may see, but it’s not likely that your loan will include all of the fees listed here.
- Application Fee
- Attorney Fee
- Closing Fee or Escrow Fee
- Courier Fee
- Credit Report
- Escrow Deposit for Property Taxes & Mortgage Insurance
- FHA Up-Front Mortgage Insurance Premium (UPMIP)
- Home Inspection
- Homeowners Association Transfer Fees
- Homeowners’ Insurance
- Lender’s Policy Title Insurance
- Lead-Based Paint Inspection
- Loan Discount Points
- Owner’s Policy Title Insurance
- Origination Fee
- Pest Inspection
- Prepaid Interest
- Private Mortgage Insurance (PMI)
- Property Tax
- Recording Fees
- Survey Fee
- Title Company Title Search or Exam Fee
- Transfer Taxes
- Underwriting Fee
- VA Funding Fee
Buying a home can be an absolutely amazing thing to do and it’s great next step you can take in life where you can make memories that will last a lifetime. But buying a home can be a stressful time if you don’t know everything you’re in for. When buying a home do as much research as you can to make this next step hassle-free.
Selling Your Home
Selling your home—especially if you’ve never done it before—can be surprisingly time-consuming and emotionally challenging. Strangers will come into your home and poke around in your closets and cabinets. They will criticize a place that has probably become more than just four walls and a roof to you, and then, to top it all off, they could offer you less money than your home’s value.
Just knowing a bit of information that’s provided in this article can help save you not only some of your time but risking any mistakes while selling your home.
Time your sale
No, it’s not what it sounds like. There’s not a certain time limit of how fast or slow you can sell your house and you don’t have to keep track of the time it takes you to sell the house. Timing your sale just means knowing when to sell your home. You’ll want to prepare your house to be sold, make sure that not only does the inside of the house look presentable but the outside does too. For example, for you were planning on selling your house in Winter, you may want to take in key factors that could affect the sale such as weather and how it could affect the house. Aim for maybe selling the house in Spring where a lot of nature is in bloom and the weather is nice, giving your house a nice and “homey” feeling.
Timing doesn’t only mean making sure you have the perfect plan for the house but also that you’re ready to sell the house, financially and emotionally. Knowing the right time to sell your house can make a huge difference in both your selling experience.
Make a plan
The most important advice? Develop a plan. The selling process can feel out of control unless you take control, and having a plan is the key. That means making some important decisions:
- Hiring an agent or going it alone
- Determining when to list
- Setting a price
- Selecting what to keep and what to leave behind
- Staging your home
- Plotting your next move
Set a realistic price
When selling your home it’s not a surprise that many people want the big bucks for the home, who wouldn’t? Setting a realistic price will not only make selling your house easier but give you the good exposure you need. Nobody wants to pay more than they need to. Price it even a little too high and you could miss out on your best group of buyers. Price it too low and you risk leaving money on the table. Using different tools and talking to your agent can help you figure what price is right for your home.
Look at the house through buyer’s eyes
While this step does not necessarily seem as important as the others, it’s great advice to listen to. Remember back to when you were buying your own home and what you were looking for. You would want the house to meet certain standards while having an amazing and affordable price. Make the house look nice, fresh and buyer worthy. You know what it’s like to be the buyer, use that to your advantage.
Get ready for visitors
Before buying a house you always want to get a good visual on the house that could be your future home and that’s exactly what buyers are going to be doing. Shifting your mindset from homeowner to home seller will also help you decide which belongings to keep, store, sell or give away. Some pieces might be perfect for staging your home; your agent can offer advice and even connect you with a professional home stager to help make those decisions. Decluttering and de-personalizing your space are essential so buyers can envision making the space their own. It’s not always easy to have potential buyers – strangers – tromping through your space and looking at everything with a critical eye. Make sure to accurately measure the square footage of house that way you can give estimate of the size when you’re selling it. For a single room:
- Measure both the length and width of the room.
- Take the two numbers and multiply them.
The answer to that calculation is the square footage of your room.
If you want to measure your entire house, calculate the square footage of each room in your home, and then add them together. Do all the rooms in the house including, bedrooms, closets, basement, attic, and even miscellaneous areas. If you aren’t sure if an area counts as a room or not, it probably does.
If you plan on living at home while selling, make sure to keep the house spotless and presentable for the buyers. Like the saying goes, “The better it shows, the faster it goes.”
Documents you’ll need to sell your home
Lastly, you’ll want to make sure you’re prepared on this part because if you aren’t, it can make the selling process stressful and longer. Isn’t it great to be not only hassle-free but stress-free?
Make sure to get all the documents as possible:
- Documents on professional inspections that have been made on your house at any point in time
- Your homeowner’s insurance
- Documents on improvements, maintenance, renovations, or repairs that have been made on your house
- Warranties on appliances that you plan on keeping in the house
- Any documents related to real estate agents who have helped you with your house
- The original sales contract
- Financing or mortgage documents
- The title of the house
- Documents that can be shown as evidence of who owns the house
- Tax records
- Appraisal records
Buying or selling your home can be an amazing thing to do as long as you prepare and give yourself the proper research you need to fulfill either of these situations. While both situations can hard and challenging, remember to have some fun and enjoy it. Both are very big steps to take and can give you a great buying or selling experience.