Buying and selling a home is a major financial transaction. If you are a first time buyer, you only have one thing to worry about, but if you are buying and selling at the same time, there are many challenges to think about. Here is a quick guide to help you take care of the financial side of the process.
Selling and Buying
With the exception of first time buyers, most people have to sell their property before they buy. This means that the money you make from selling your property is used to buy the new one, but what happens if you spot your dream home before your property has a buyer?
One way around this conundrum is to take out a bridging loan. Interest rates are higher on short-term loans. You will need a specialist lender, but if you believe you can sell your property fast, this is a good option to consider. The other option is to secure a home loan using the equity in your current property, and then repay the original loan when you sell.
Do You Need to Sell?
Before you put your home on the market, be honest and ask yourself whether you really need to move. It may be more cost effective to upgrade a few features or add an extension to create more room. Buying and selling properties costs money, so bear this in mind and do consider moving trends in the US. Sometimes waiting a couple of months makes the property more valuable.
Price it Right
If you do decide to sell, be sure to price your home competitively. A house is only worth what a buyer is willing to pay for it, so if you price it too high, you will not find a buyer. On the other hand, if you price it low, you will attract a lot of interest and could end up making more money on the sale.
Staging your home is an essential part of the selling process. To be successful at this, you need to put yourself in the buyer’s shoes. View your home as a prospective buyer might see it. Remove clutter and dress each room to tell a story. Buyers want a home that fits their aspirations. They also want a home they can picture their family living in. Tick all these boxes and you are guaranteed a quick sale.
Most real estate agents understand the benefits of advertising properties online, so choose an agent willing to list your property on all of the major online property portals. Most buyers look at properties online before they view them in person. Great photos are the key to generating interest.
Buying a Home
Once you have a buyer for your home, or you have decided the time is right to buy your first home, it is time to start looking for a property. There will no doubt be plenty choose from, but since this is probably the biggest purchase you will make in your lifetime, do not rush blindly forward without thinking things through.
Check Your Credit Profile
Unless you are a cash buyer, you will need to take out a home loan to buy the property. Before you start looking at mortgage lenders, check your credit profile. If there are any mistakes on your file – and it does happen – this will adversely affect any mortgage applications you make. If you spot any errors, take appropriate steps to have them removed from your file.
Get Pre-Approved for a Home Loan
Always get pre-approved before you start looking for a home. Being pre-approved means the lender has looked at your financial history and has made a decision about how much they are willing to lend you. This one simple thing will save you a lot of heartache, since you will not end up falling in love with a home you cannot afford to buy.
Buy a Home You Can Afford
Most lenders these days are more responsible than they were prior to the big financial crash. This means they are less likely to give mortgages to people who cannot afford to make the repayments. However, as a prospective borrower, you do still bear some responsibility in this regard.
Be realistic about how much you can afford to spend on a home. There is little point stretching your budget to the limit to buy a property that needs a ton of work. You will not be able to afford to spend anything on the house. Buying a home usually involves many compromises. For example, you might be desperate to live in a particular neighborhood, but the houses you are interested in are too expensive. So instead, look at a cheaper property or consider a different neighborhood.
Factor in Running Costs
Another important consideration is the running costs of a property. Mortgage payments are the biggest cost when owning a home, but you also need to budget for the cost of living in it. There will also be periodic home maintenance costs to factor in, since being a homeowner means you have to bear these costs.
Pay for a Home Inspection
Never buy a home without paying for a home inspection first. Homes are often staged by sellers to look wonderful, but just because the kitchen is gorgeous or it has amazing views over the ocean, this does not guarantee there are no structural problems or termite infestations in the attic. This is a big purchase, so protect yourself from major financial outlays by having the property checked out by a surveyor. And if you do discover anything nasty, negotiate on price or walk away from the deal.
Practice Due Diligence
Always perform basic checks before you buy a home. For example, visit the property at different times to check the neighborhood and research schools if you have kids to consider. These details all affect the resale price of a property, practice due diligence before you put a bid in.
Buying and selling can be stressful, but if you stay calm and pay attention to the details, the process should go through smoothly.