Selling Your Home
Great news for homeowners who were stuck from selling their homes due to their homes being underwater. Home prices have steadily been increasing and many homeowners who thought they could never sell their homes can now have hope in selling their home and purchasing another home. If you thought of selling your home but could not due to your home value being worth less than what you owe, now may be the right time to see if selling your home is right for you. To maximize the price you get when selling your home, you need to avoid several things when it comes to selling your home. Selling your home is no rocket science and anyone can list their home, get offers on their home, and close on their home. However, there is more to it when it comes to selling your home. Mortgage lending standards have really tightened up after the real estate and mortgage collapse of 2008. If you had not gone through the mortgage approval process recently, you need to think twice and you will realize that it is not like the old hay days where as long as you applied for a mortgage loan, you have it. Tigher lending guidelines came into play. If you are intending on buying another home after you sell your current home, then you need to make sure that you qualify for a mortgage loan for your home purchase. As for the potential buyer to your home? You need to make sure that the potential buyer of your home has an iron clad pre-approval and is qualified so there are no last minute mortgage denial. A last minute mortgage denial from the home buyer can spiral everything out of control and can and will affect the chances of your home purchase.
Get Pre-Approved Prior To Selling Your Home
If you are planning on selling your home and buying another home, don’t just assume that you will qualify for a mortgage loan on your next home purchase because you are able to afford the mortgage payments. There are strict mortgage lending guidelines that have been recently implemented with regards to credit and income. There are types of income that mortgage lenders cannot use such as part time income, overtime income, and other income if it has not been seasoned for at least two years.
Mortgage Loan Limits
There are mortgage lending caps where the maximum lending limit for FHA loans have been lowered to $271,000 from $410,000. Conventional loan programs have also lowered the maximum debt to income ratios allowed to qualify for a residential mortgage loan. It used to be that a conventional mortgage loan borrower could qualify for a residential mortgage loan with a maximum 50% debt to income ratio, however, the maximum allowed with regards to debt to income ratios on any conventional loan is now capped at 45% DTI. There are new collection guidelines with mortgage lending where now mortgage lenders will take 5% of the unpaid collection account balance and apply that to the borrower’s debt to income calculations. Medical collections do not count. You might have errors on your credit report which affects your credit scores which you may need weeks if not months to correct them. Once you have made a decision in selling your home and need a mortgage loan to purchase another home, I strongly recommend that you contact a mortgage loan originator and get yourself pre-approved.
Window Dressing Your Home
The first 90 days of listing your home is the most crucial time for you to get a real estate offer on your home. Most professional realtors will tell you that the first impression is what attracts home buyers. Hire a realtor who you feel comfortable with. Interview several realtors and see what they have to say. Every realtor has a different approach to marketing their listing and some marketing ideas might not appeal to you. Some realtors feel that an open house is a waste of time while other realtors strongly believe in open houses. You, as the home seller, might not want an open house and let a bunch of strangers roam your home. Some realtors may recommend staging your home while others do not believe in home staging. Clutter is always a negative and all clutter in and outside of your home should be removed.
Right Pricing Of Your Home
One of the most important factors when selling your home is the pricing of your home. Your home may have all of the ammenities other homes in your area do not have and may be the best home in your block, however, if your home does not appraise out, you will not be able to sell your home to a home buyer that is dependent on a mortgage. Mortgage lenders go off an appraisal when approving a mortgage to a home buyer and if your home is priced over the appraised value, the chances are that the deal may not close unless the home buyer is willing to come up with the extra cash. Many home buyers do not have the extra cash to cough up above the appraised value. Your realtor should be able to help you price your home accordingly.
Make Sure Home Buyer Has Iron Clad Pre-Approval
If you get an offer from a home buyer to purchase your home, make sure that they have an iron clad pre-approval. All mortgage loan pre-approvals are not created equal. It depends on the mortgage loan originator. Did the home buyer’s mortgage loan originator check credit, financials, and run their mortgage application through Fannie Mae’s and/or Freddie Mac’s Automated Underwriting System? Did they get an approve/eligible per DU FINDINGS and/or LP FINDINGS? You should have your realtor and/or mortgage loan originator contact the home buyer’s mortgage loan originator to see how strong of a borrower the home buyer is.
Make Sure Everything Is In Working Order
When selling your home, the home buyer will most likely need an appraisal. Both FHA and Conventional appraisers need to inspect your home and make sure there are no hazards and everything is in working conditions. There cannot be peeling paint, broken or cracked glass, and all plumbing, electric, and HVAC systems need to be in working condition. If the appraiser shows up and the garage door does not work, the garage door needs to be fixed and the appraiser needs to come back and do a re-inspection which will not cost additional fees to the home buyer but can delay the home closing.
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