BUYING SIDE
1. Keep Your Money Where It Is
Congrats on the new BMW that will match perfectly in the driveway of that home you have an offer on - unfortunately, the car might be the only place you have to live in once the mortgage underwriters see that on your credit. Loan Status: DENIED. In the 3-6 months leading up to the purchase of a home (no matter what the price is), don't change anything in your financial DNA. Lenders want to see a complete and risk-free paper trail, so keep your assets where they are. The age of technology we live in doesn't leave much room for error on your end, so don't try to paint that "false picture" by randomly shuffling your birthday cash advances you convinced your grandma to send you into your "New Home" account. It won't get you very far.
2. Get Pre-Approved
Chances are, any Realtor that is worth your time will make sure you have a pre-approval letter from a lender. This is done for a few reasons: 1) to make sure you aren't falling in love with a home that is out of your price range, and 2) to make sure you aren't using the Realtor as a tour guide. It's also good to remember the difference between a "Pre-Qualification" and a "Pre-Approval." A Pre-Qual only requires basic information, and generally does as much good as spinning a "Wheel of Fortune" to see what they will give you - unreliable. A Pre-Approval requires an actual mortgage application and financial background, giving the lender a pretty clear picture of what you're capable of. So go ahead - flex those financial muscles and show 'em what you got.
3. Draw The Line
Save the awkwardness at the Fourth Of July BBQ with the neighbors. Get a property survey done to make sure you have a good idea of where your property lines are. Some Realtors might say it's a nuisance, but it will be completely worth it in the end when you figure out your land actually goes back another 20 feet from where you thought. If you don't have the documentation from the start, you could have extra legal troubles, fees, hassles, and costs down the road when your neighbor decides to build an amphitheater in his backyard that has most of rows "R" through "V" in yours.
4. Don't Time the Market
Trying to guess when the market is at rock bottom is like trying to guess the number of jellybeans in that jar at the carnival - with some careful studying, you can be close, but you'll rarely be spot-on. Don't obsess with it - Real Estate goes up, then down, then back up again, etc. Instead of waiting for "THE" low, just buy "IN" the lows. People often ask me when the best time to buy is, and my answer is always simple: The best time to buy is when YOU find your dream home...period.
5. Bigger Isn't Always BetterWon't your family be so impressed this Thanksgiving when they see you have the largest home in the neighborhood? Absolutely - but future buyers probably won't. The biggest homes in a neighborhood generally only appeal to a small audience. Your home value (even if it is huge) will only go up as much as the other homes around you. Real Estate 101: Buy the worst home on the block, and make it a fixer-upper.
Again, I hope you're writing this stuff down. Back to sellers next week!
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