When people are seeking houses for sale in Mt. Shasta, they typically wait until the snow is gone, which can be anytime between March and May. However, this year the market got a jumpstart with Buyers starting their search in January.
Maybe all the news about rising mortgage rates has inspired them to get moving. Either way, the race is on, inventory is starting to build, and competition among Buyers is heating up.
Want to make sure you lock in the home of your dreams? Here are four steps for Buyers to prepare for the spring season:
1) Fluff Your Nest Egg
Okay, this step should actually have started well before the hot buying season approaches. Homebuyers need to save money for inspections, appraisals, earnest money deposits, down payments and closing costs—which can include prorated property taxes, insurance, loan origination fees, and other line items that can make your savings feel inadequate very quickly.
In a previous post, I detailed how much money you should save to buy a house, so I’ll keep it brief here. The general answer is: Fluff your nest egg as much as you can because the sale price is never the true cost of a house.
2) Get Pre-Qualified*
Before you start getting excited about looking at houses, you need to work with a lender to determine what price range you can afford. There are two stages to this: Pre-qualification and pre-approval.
Being pre-qualified means you’ve spoken with a lender, and based on the VERBAL info you’ve divulged, the lender is pretty confident you’ll be able to get a loan. Most Realtors won’t show properties to buyers who are not at least pre-qualified.
Pre-approval happens after you gather and submit all the required financial documents, records, and statements needed by the lender. The underwriter goes over this with a fine-tooth comb, and offers an even stronger vote of confidence (or not) regarding your loanability.
Three essential elements are good credit, cash to close (see Step 1), and verifiable income from a job you’ve held more than two years. If you’re lacking in any of these three elements, it may be best to hold off on buying a home. A good mortgage broker will give you ideas on how much work you need to do on your credit, savings, or job history.
Once you are pre-approved, try not to make any big financial changes in your life between pre-approval and close of escrow. This would include things like getting fired, switching jobs, buying a car, or charging a bunch of new furniture on your credit card. This could change your debt-to-income ratio and jeopardize your loan—and your new house.
*If you’re in the small percentage of cash buyers who don’t need financing, congratulations, you can skip this step.
3) Do Your Research
Internet-savvy homebuyers are more empowered than ever to take research into their own hands. Syndicated portals such as Realtor.com, Zillow, and Trulia provide a wealth of property information for the modern buyer. While those sites aren’t always 100% accurate, they paint a pretty decent picture of the market in any given area.
I’ve been quite impressed with the level of knowledge buyers bring to the table. They know what they’re looking for, where they want to be, and often times, which houses they want to look at before they reach out to a Realtor.
Arming yourself with information often makes the homebuying process faster, easier, and gives you more leverage when you get to the negotiating stage of the purchase.
4) Hire a Realtor
Buying a home can be a long, drawn out, confusing, and emotionally-draining experience, but you don’t have to go it alone. Hiring a good Realtor will help mitigate the stress and confusion, and hopefully bring a little fun to the process!
There are tons of Realtors out there, so how do you choose one you want to work with? Getting a referral from a friend of family member is a great place to start. If you don’t have a referral, interview a few different agents.
You’re going to be spending a lot of time with the Realtor you choose to work with, so make sure you find someone who’s enjoyable to be around. It also helps if they are passionate, hungry, responsive, and a super-fantastic communicator.
Once you have have built a solid nest egg, been pre-qualified by a lender, done your research and chosen your Realtor, you’re ready for the fun part: getting out to look at houses. Then, when you find one you love, you’re in a perfect position to write an offer. And when the inventory is low, and the competition is fierce, that’s a great place to be.
Happy house hunting!
Photo Copyright: nexusplexus via 123RF Stock Photo
Nikolas Allen is a Realtor® with J. Harris & Associates in Mt. Shasta, California. He helps people through the complex process of buying and selling their homes. He’s also a super-fantastic communicator, if he does say so himself.