Buying A Home

Is buying a home one of your 2023 Goals? Even if you're not ready to start house searching just yet, here are a few things that you should be thinking about now to make your home buying process easier...

• Increase your credit score. Before you start searching for houses, agents, and lenders, work on increasing your credit score which can improve your ability to get a great mortgage. Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage. (For tips on improving your credit score, check out our blog post Improving Your Credit Score)

• Figure out how much home you can afford. Take a look at your monthly income and your monthly bills to see how much money you can spend on a mortgage. Don't forget to calculate for things like homeowner's insurance, utility bills, property taxes, and a budget for home improvements and repairs. Once you figure out what you'd be comfortable spending, you'll be better prepared to talk to a lender.

• Think about your wants versus your needs. When thinking about your ideal home, don't forget to consider commute time, school districts, distance to friends or family, and neighborhood attractions in your search list. If you work in a city and value a short commute time, you may have to sacrifice having a larger backyard. But being down the road from a neighborhood park may offer a great compromise. Start looking at homes online and see what features you like, love, and absolutely do not want. You may think you want a certain style of home only to realize that it does not work for your family. And consider what home improvement projects you'd be willing to tackle yourself versus the ones that you would need to hire help on.

• Find a lender. Take the time to talk to different lenders to find the best mortgage for your particular situation. Different lenders may be able to offer you different loan packages or rates, so shop around to make sure you understand the process and what is available to you.

• Get a pre-qualification or pre-approval. Once you're ready to start searching for homes, make sure you get a pre-qualification or pre-approval letter from your lender. Many real estate agents will want to see that pre-qualification before you start your home search so they can stay within your budget. A pre-qualification letter will be a basic overview of your ability to get a loan and can be done without submitting all of your financial paperwork. A pre-approval will be more in-depth and will require you to submit bank statements, tax returns, credit scores, and other financial information to your lender. While neither letter guarantees that you will get a loan, they are a reliable indicator of your ability to buy a home.

• Speak with real estate agents. Get recommendations from family, friends, and coworkers. Take the time to contact a few local agents and see if they would be a good fit for you. You and your agent may be working closely together for several months, so you want to make sure it's someone you communicate well with and get along with.

Once you have a lender and a real estate agent to work with, you're ready to start your home search! Remember, buying a home is likely to be one of the biggest financial moves you will make in your life. Make sure you prepare yourself for the process and find a lender and real estate agent that can support you through it. 

Have questions on the next steps to take? Call our team at (434) 214-6121 to learn more about the process and how New Leaf Team can help you with your home search.  

Before you start your home search, it is beneficial to talk with a mortgage broker to learn about what kind of mortgage you would be approved for. They will look at your income, credit score, and outstanding debts (including any loans and credit cards) among other factors to determine how much you can comfortably spend on a mortgage and what price range you should be searching in. 

When applying for a mortgage, consistency is the name of the game. There are a few things that you should keep in mind to make sure you don't derail your home buying process along the way.

• Don't apply for new credit cards or loans. Each time you apply for new credit, you are seen as a greater credit risk, at least temporarily. Applying for new credit cards and loans can ding your credit score enough to hurt your eligibility for a mortgage or bump up your interest rates. This also includes co-signing for a loan with someone else. 
  
  
• Don't close any credit cards. Credit utilization is an important aspect of your credit score and looks at how close to your credit limit you are on all lines of credit.
  
  For example, if you have credit card A with a $10,000 limit and a $5,000 balance and credit card B with a $10,000 limit and $0 balance, your credit utilization is 25%. If you close credit card B, your credit utilization becomes 50%. This could significantly impact your mortgage rates. 
  
  
• Don't deposit large amounts of cash into your bank accounts before speaking with your lender. Banks and lenders want to see that you have the money to pay your mortgage each month and where that money is coming from. Adding in a large transfer of cash from an unknown source will make the underwriters question your finances and could delay or derail your purchase.
  
  
• Don't make any large purchases. While it may be tempting to buy new furniture or appliances before closing so you can have them delivered to your new home right when you move in, this could negatively impact your ability to close on time. Large purchases could impact your credit utilization and opening a new credit card to receive special financing offers, could ding your credit score. It's better to save your major purchases until the sale is officially closed.
  
  
• Only change jobs strategically. Mortgage lenders will look at your employment history to see what kind of income you bring in monthly to make sure you can afford your mortgage. If you're applying for a new job in the same field or already have a job offer in hand, they may consider the move less risky. But waiting to change jobs until after your mortgage is closed may be the better option.

The most important thing to remember when applying for your mortgage is to keep in regular communication with your lender and ask them before making any decisions that may impact your credit. Their goal is to help you make it to closing with a mortgage that you can afford. 

If you're ready to start your home search, our team would be glad to help. We can recommend local lenders to work with based on your needs and help you start your search when you are ready. Call us at (434) 214-6121 to talk with Kelly, John, or Rives about your home ownership goals. 

Closing on your new home is an exciting and often hectic time. But you should always make time for a final walk-through to make sure your new home is in the condition that you expect it to be. Depending on what time you have your closing scheduled for, your agent may recommend that you do your final walk-through the evening before or morning of closing. 

Here is a list of things that you should look at when you walk-through the house: 

• Make sure all of the Seller's personal property and debris has been removed. Check every room and spaces like the basement, attic, and crawl spaces to make sure nothing has been left behind. 
• Check that all the repairs you've requested have been made. The Seller's Agent should be able to provide you with a list of receipts for work that was done by contractors or for new items that were purchased. 
• Look over the property to make sure no major, unexpected changes have been made since you last visited the home. 
• Check that all items of personal property included in your contract are still on site. This includes items you may have requested (such as refrigerators, washer, dryer) and items that are written into your standard contract. The standard contract in Virginia includes items like blinds, ceiling fans, curtain rods, audio-video mounting hardware, mailboxes, exterior plants, smoke detectors, and more.  
• Make sure all appliances are operating correctly and are in the same condition as when you last visited the property. Don't forget to include your hot water heater and HVAC systems in these checks.
• Walk through the yard to make sure no major changes have been made to plants or shrubs, unless you have been notified in advance. 
• Look for the garage door opener and other remotes for appliances in the home.
• See if they have left instruction books and warranty information on appliances and fixtures. Most agents will instruct sellers to leave them out on a table or kitchen counter where they can be easily found.
• Make sure all window screens and storm windows are in place or stored somewhere in the house.
• Check to see if your doorbell, alarms, and intercom systems are working properly. 

Of course, all of these items are dependent on the terms of your contract. If your contract says that an appliance conveys in an as-is condition or that a certain shrub in the backyard does not convey, your personal checklist should reflect that. 

Your agent who attends the walk-through with you will also help you go through the list and check on items to make sure everything is in the condition that you expected things to be in. If repairs are not made or things that were supposed to be left behind have been taken, your agent will want to get in touch with the Seller's agent quickly to rectify the situation. Sometimes this can be in the form of a credit at closing, an amount held in escrow until the situation is fixed, or even purchasing a new item to replace something that is missing or damaged. 

Your agent will be your guide through the walk-through, just as they have been throughout your real estate transaction. 

If you have more questions about what to expect during a real estate transaction, call New Leaf Team at (434) 214-6121. One of our licensed agents will be glad to answer your questions. 

Even if you aren't planning to buy a house soon, improving your credit score can have a positive effect on your financial health. Credit scores are used in evaluating a range of loans such as personal loans, car loans, and home mortgages. They determine the terms of your loans and whether you can afford these loans or not.

Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage.

What determines your credit score?

Your credit score is an evaluation based off the following factors:

• Payment history
• How much you owe & where
• Length of your credit history
• How much new credit you have
• Type of credit you have

Generally speaking, your payment history and amounts owed will have the biggest effect on your credit score.

How to Improve Your Credit Score:

1. Check for errors in your credit report. Thanks to an act of Congress, you can download one free credit report each year at annualcreditreport.com. If you find any errors, correct them immediately.

2. Don't max out your credit cards. Pay down as much as you can on your credit cards every month and if possible, try to pay off the entire balance every month. Keep in mind that transferring credit card debt from one card to another could lower your score.

3. Don't open new credit card accounts. One of the biggest mistakes that you can make while buying a new home is to open a new credit card to finance items for your new home. If you are in the process of applying for a mortgage or buying a home, run any large purchases or financial decisions past your lender to make sure they won't affect your ability to close on your new home.

4. Shop for mortgage rates all at once. Having too many credit applications can lower your score. However, multiple inquiries about your credit score from the same type of lender are counted as one if submitted over a short period of time

5. Avoid finance companies. Even if you pay off their loan on time, the interest is high and it may be considered a sign of poor credit management.

6. Wait 12 months after credit difficulties to apply for a mortgage. After a year, you will be penalized less severely for any problems you had.

Low inventory can make for fierce competition when buying a home. Here are a few things that you can do to stay ahead of the game and increase your chances of getting your dream home.

1. Get prequalified for a mortgage. You will know exactly what you can afford and be able to make a firm commitment to buy. Having a prequalification can make an offer more desirable to a seller.

2. Stay in close contact with your real estate agent. We will be on the lookout for the newest listings that meet your criteria. One of the benefits of working with New Leaf Team is that you will have 3 agents who know your home search requirements keeping an eye on new listings for you and ready to take you on appointments when a home goes on the market.

3. Scout out new listings yourself. Listings that are For Sale by Owner will not appear in our MLS search, but may be listed online. While we will conduct our own searches both on and off-line for you, you should also keep an eye out for For Sale by Owner or Coming Soon signs in neighborhoods that you like. And don't forget to tell friends and family that you are searching for a home, they may know someone who is thinking of selling your dream home. Send us the information you have and we'll be glad to set up showings.

 4. Be ready to make a decision. Spend plenty of time in advance deciding what you can afford and what you must have in a home so you won't hesitate when you have the chance to make an offer.

5. Bid competitively. Your first inclination may be to start offering something less than the highest price you can afford, but if you go too low in a tight market, you can lose out. We'll work with you to determine a bid that is both competitive and within your budget.

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move can make an offer unappealing. Remember that if the market is tight, you'll probably be able to sell your house quickly as well. Make sure you talk to your agent about what contingencies you may have so we can make a plan for how to address them when making an offer.

7. But don't get caught in a buying frenzy. Just because there is competition for a home doesn't mean that you should buy it. Make sure that the home will fit your needs in size, features, and location. And even though you want to make your offer attractive, don't neglect inspections that help ensure the house is a sound investment.