Whether you are buying or selling your home, it’s an exciting time in life! It often means a change for the better has presented itself and that can be nothing but exhilarating! Okay, we’ll admit that the unknown is a bit of a nail biter at times. However, we hope you’re leaning toward the exciting aspects of moving more so than the stressful points.
Are you upgrading or downsizing? Are you looking for your first home, a vacation home or ready to purchase the home of your dreams? Is it a buyer’s or seller’s market right now? Whatever the case may be, have you decided on a realtor? What about looking into the mortgage lender situation?
There are some factors to consider whether buying or selling. Finding a realtor is an integral part of either process. A realtor knows the ins and outs of the business like no other. A realtor will work hard for you. Buying or selling your home could be like a day at the beach.
Let’s take a look at the process from both the seller’s and the buyer’s viewpoint.
Selling your home
Before you put your home on the market, it’s very beneficial to take the time to spruce it up a bit. A fresh coat of paint will set off your rooms in a big way. Consider renting a storage unit to free up space and declutter your home. All that empty, uncluttered space will allow potential buyers’ imaginations to soar!
Home staging is another valuable suggestion for sellers to consider. Staging your home creates the warm, fuzzy feelings that make sellers want to live there. Rearrange furniture to make rooms look larger and add some throw rugs and pillows to the mix for a cozy atmosphere. Also, there is something to be said for aromatherapy. Purchase some plugins with essential oils to place about your home.
Give your home a curb appeal makeover, too! It will make a difference. Of course, keeping up with the yard work is a given. A neatly mowed yard free of debris will attract buyers. However, taking the time to plant some flowers or adding some mulch or shrubs to your landscaping will welcome buyers to your home as soon as they pull in the driveway. It can boost the odds that your home will sell quickly.
Small investments can lead to a significant return. However, a word to the wise, do not overprice your home!
Seller documentation
Most of the documentation you will need to sell your home will more than likely be things that you have on hand. It will just be a matter of locating them. How easy that is will depend totally on your filing technique. We know that can mean digging through every drawer in your home. But, you know it’s there somewhere. Right?
- A copy of your mortgage
- Final purchase and sale agreement
- Deed – If you still owe a balance on your mortgage, the deed is on file at the country courthouse. The seller’s lender provides you with the document to transfer ownership at the closing.
- Title report – This may also be called title insurance. It ensures that the deed is free and clear on the property. Meaning no one can come back on the buyer at some point claiming they have a lien on the property.
- Property tax information, including your most recent tax statement
- Homeowners insurance information
- Any reports or documentation that relates to the property, i.e., a new furnace or a/c unit recently installed, or proof of any major home renovations or repairs.
- Lease agreement, if you are currently renting out the property.
Also, we will note here that homes built before 1978, require that you include a copy of a lead-based paint disclosure. Your realtor can assist you with this one. Your buyers must sign a document to acknowledge they have received the lead-based paint disclosure.
If you need to remain in your home for some time after the sale, you can have a rider drawn up to meet your specific requirements. A rider is an addendum to the standard sales contract. Your realtor will be familiar with this process and, again, will be glad to assist you.
Likewise, your buyer could request a rider be drawn up to include any specific requirements that they want to have met before purchasing the property. It could consist of something like your agreeing to make certain repairs to the property.
By having all your documentation in place, the sale of your home should be a reasonably straightforward process.
Home buyers and the lender
If buying a home is your goal, you can hit the ground running by gathering the necessary documentation before seeking a realtor. Having this information in hand when beginning the process not only saves time but shows your realtor you are serious. They may be providing you with prospective homes to view before the day is out!
Mortgage lenders
It is a good idea to determine the amount you can obtain to buy a home before you start looking for one. Many people use their banks to secure their mortgage. In today’s lending market, however, it would probably benefit you to shop around. You might also keep in mind that some realtor companies double as mortgage lenders, too.
There are a variety of mortgage loans available to Californians. They are:
- A 15-year or 30-year Fixed Rate Mortgage
- An Adjustable Rate Mortgage
- FHA Loans
- VA Loans
- USDA Loans
- California First Time Home Buyer Loans
- Conforming Loans
- Non-conforming Loans
Your lender can help you determine which option is best for you and your family.
Credit report
The first thing you should do is to get a copy of your credit report. You are allowed one free copy a year and can obtain it from any of the three major reporting bureaus. They are Experian, TransUnion, and Equifax. The FICO score is the number most lenders check. The scores range from 300-850. The higher the number, the lower the risk.
You will also want to look for any reporting errors. Sometimes, there is a matter that despite being taken care of was not reported to the credit bureaus. It negatively impacts your score. Take care of any incorrect information on the report before contacting lenders.
Pay stubs
Lenders want to know that you are gainfully employed. Photocopy your last two pay stubs and retain the originals.
W-2’s and tax returns
Typically, lenders want to see your W-2’s and tax returns for the last two years for both you and your spouse. Copies only, of course, you should always keep the original documents in your possession.
Bank statements
Depending on the lender, you will be asked to provide copies of your bank statements for the last two or three months. Copy every page, even if it’s blank.
Other assets
Make copies of any statements of any stocks, bonds, retirement accounts, or mutual funds that you own.
Current driver’s license
You can have a copy made if you are meeting with your lender in person, but if mailing in or dropping off your documentation with a loan application, make sure to include a copy of your driver’s license. Validation that you are who you say you are is always required.
Upfront costs
It would be best if you inquired whether or not there will be any fees or charges that you will be required to pay in advance. Some lenders charge a loan origination fee and a credit report fee. Also, an appraisal fee may be another cost that is paid upfront when you are to the point of accepting the loan. Do not pay any expenses, however, before that point in time.
Home buyers and the purchase
Paperwork and more paperwork seems to be the name of the home buying game. After providing all the documentation that a lender requests to assure that you are a worthy loan candidate, they will determine your pre-approved mortgage amount. Now, it’s time to find the home of your dreams!
Choosing a realtor to assist you may be the best option. However, it doesn’t matter if you use a specific realtor or go rogue and strike out on your own to view homes that appeal to you. The seller’s realtor is always willing to work on your behalf as well.
When you find your new home, and the buyer has accepted your offer, the first step in purchasing your home is completing the sales contract.
Sales contract
This document also referred to as the purchase agreement, is a legally-binding contract that sets forth the terms and conditions of the sale. The California Association of Realtors’ “Residential Purchase Agreement and Joint Escrow Instructions” form is the document by which most California home sales are founded. This agreement covers the offer to purchase, the sales contract and lists instructions to the agent or attorney managing the escrow. This agreement will also contain any conditions that need to be met before closing. Inspections, disclosures, and financing would fall under those conditions.
Home inspection
It is wise to get a home inspection done before closing on the property. A home inspector looks for “hidden” issues that can be undetected but can cause significant issues in the future. Your lender may require a home inspection. They may even have a preferred inspector.
Appraisal
An appraisal to determine the property value is something your lender will want in hand before the close.
Title documents
A clear title is a big deal in a real estate transfer. Title insurance for the buyer ascertains that the seller has no remaining or unknown liens against the property that could arise at some point after closing. Some title problems that could surface include errors and omissions in the deed, mistakes in the title search, forgery, or undisclosed heirs. At the close of escrow, your title company records the grant deed. It transfers ownership from seller to buyer.
Disclosures
The state of California requires that the seller provides certain disclosures to the buyer. Any readily known defects, as in leaks, a neighborhood nuisance, or a natural or environmental hazard located nearby. The seller also must make known whether someone has died inside the property within the last three years. A lead-based paint disclosure would be given to you should the home have been built before 1978. You will have ten days to inspect the home for lead if you choose to do so.
Loan documents
All the required documentation for obtaining a loan with your lender (listed above) will be on file before closing. Your lender will receive a copy of the sales contract and any documentation of counteroffers at closing. They will receive a copy of the title search and escrow instructions that underwrite your loan. At closing, you will be required to sign a promissory note for the balance of the loan. A deed of trust which ties the repayment of the mortgage amount to the home’s title is also signed.
The deed of trust is the document that allows the lender to foreclose if you fail to meet the requirements to repay the loan.
It’s a win-win
A realtor can be essential in helping you coordinate the buying and selling process.
No matter whether you are the buyer or the seller, moving to the next phase of your life doesn’t have to get put on hold during the transition process. Ensuring that you have a few things in place beforehand will guarantee a smooth sale.
And smooth sailing is the way to travel through life whenever possible. Don’t you agree?