Sometimes shortly after buying a home, some people find that their life circumstances change for whatever reason. This could be a job loss or transfer, medical problems, divorce or other unexpected circumstance. Now, when they need to sell, they find that because of how much they paid when they bought it, they now are going to have to come to the closing table with money, in order to cover their mortgage payoff, commission and closing costs.
Obviously, a Home Buyer in the situation of needing to sell within a couple years of buying and being able to cover all their costs and walk away from the closing with a profit, is going to feel really good about themselves. Those Home Buyers qualify as Savvy!
Buying a home can be an intimidating process, both personally and financially. It is the biggest decision that most people make in their lives. Becoming informed, is being Savvy when buying a home.
You can take control of your own home buying experience by doing some research. Instead of relying on what others say, figure things out for yourself based on your budget. Determine how much of a monthly mortgage payment you can afford. This allows you to go into a conversation with a mortgage lender armed with information. Having that knowledge will allow you to make better decisions and feel more confident about where you stand.
Some people have bought several homes in their lifetime. But for most people, buying a home is a rare occurrence, if not a once in a lifetime event. Some real estate terms will be new to you and there will be issues or scenarios you don’t fully understand. Don’t be afraid to speak up. You are spending a lot of money and you should feel comfortable at all times. As you absorb and apply the information in this course you will become much more confident!
Being Savvy in Your Approach
Let’s imagine that you are tired of renting or living with Mom and Dad. At this point in your life, you are ready to buy a home. Before going out and looking at houses, you need to know what your financial abilities are. In fact, if you are the one who is mostly responsible for the finances in your family, it is premature for you to get the family, (even if that is just your spouse) excited about buying a home, before you even verify your ability to buy.
To be Savvy in your approach, you will want to know your financial ability before you have any other thoughts or take any other actions toward home buying.
- No disappointment or embarrassment. You and your spouse don’t want to go out, find a home, and fall in love it, and then find out that you don’t have the financial ability to buy it. This may seem silly, yet it happens all the time. Your time would be wasted, the Realtor’s time (This would also say something about a Realtor who will show homes to a buyer without advising them to verifying their ability first.) If you told family and friends that you are house hunting, you will have to walk it back if you find out you can’t qualify. This could be embarrassing.
- Many sellers, including banks, will not respond to an offer that is not accompanied with a Pre-Qualification / Pre-Approval letter from a lender.
- When you are Savvy, you have a Pre-Approval, along with a Commitment Letter from your lender. This makes you a “same as cash” buyer, just subject to appraisal and title work, and you can close quickly. Now, with this in hand, you have more negotiating power!
When you take these steps, your chances of making a good deal are much higher than the non-Savvy buyer.