Home-buying season is upon us, which means that if you’re looking to sell your home, you need to start preparing yourself for the process. While selling or buying a new home may seem like a daunting and undesirable task, don’t worry—we’re here to help make sure your four money-musts are taken care of before listing your home on the market. Keep reading to learn more.
Clear your current credit status
If you’re selling your home, chances are you are looking to buy a replacement one—and to do so, you’ll need to make sure you have good credit standing.
“It does not matter what your credit score is to sell your current home,” explains Two Rivers Bank & Trust Retail Loan Officer Julie Brown. “Your credit score becomes a qualifying factor when you are planning to purchase a home after you sell your current home, and will need to attain a mortgage.”
The best time to spot potential credit issues is before listing your home on the market; this gives you enough time to acknowledge the issues and fix them accordingly.
“So, for example, if you are selling your current home and need a mortgage to secure your next home, you will need to verify your credit prior to listing your home and making an offer on the next home,” says Brown.
Some credit rehabilitation projects take months or years to complete, so you need to make sure you allot yourself enough time to build up your credit score and feel good about your financial situation.
Know your financial limits
As with any major decision in your life, it is important to know your limits. Typically, individuals become interested in selling their current home after receiving a raise or promotion. But remember that while you may feel like you can afford a bigger or more expensive home, you must also factor in the increase in your mortgage, as well as the monthly upkeep that comes with owning a bigger or newer home. Even if you are looking to downsize to a smaller, more manageable home, it is still important to do your research and find out exactly how much you can afford. For financial clarity, be sure to enlist a team of experts you trust, including a reputable realty agent, mortgage broker, tax adviser and financial planner.
Evaluate your borrowing capacity
The best way to assess your borrowing capacity is to meet with a financial adviser—like one of the many home lenders and mortgage loan officers at Two Rivers Bank & Trust.
“By analyzing your current financial situation, as well your current net income and expenses, Two Rivers will be able to make recommendations as to which loan options are best suited for your individual needs,” says Brown. “What’s great about Two Rivers is that we are able to look at multiple loan products, both in-house and in secondary markets, to see what option best suits your personal situation and goals.”
Create a financial plan
A strong financial plan when selling your home is a must. There are a lot of hidden costs you need to be aware of when selling your home. When you bought your home, the seller most likely paid both agents’ commissions—now it’s your turn. Make sure you calculate the average five to six percent of the purchase price that you will need to pay for your agent’s time and work throughout the buying process. You’ll also need to take into account the possibility of needing to renovate or update your home before selling. Depending on what you need to do, this could cost you anywhere from a few hundred dollars to a few thousand dollars.
“One additional factor you need to be mindful of when you are selling your home, is that any and all liens or debts attached to the property must be paid off in order for clear title to be transferred to the buyer,” says Brown. “Typically, these lingering expenses, such as a current mortgage, can be paid at closing with any proceeds from the current sale.”
Contact Two Rivers Bank & Trust to learn more about how we can help during the home-buying process. Our home lenders and mortgage loan officers are ready, willing and eager to help you through the home financing process.