Buying or Selling Your Home?
First, do your homework.

Do you have the Down Payment?

Unless you qualify for a program that allows for a zero or low down payment (like some first home buyer programs), you will need to come up with cash for your lender. Your lender will determine the exact amount required, with down payment amounts typically ranging from 6 to 20 percent of the purchase price. If you are selling a home and buying another home, you can often roll your proceeds - or a percentage of them - toward your down payment obligation.

Can I qualify for a Loan?

It’s highly recommended you prequalify for a loan prior to getting too far into the buying process. There are many smart reasons to do this. Sometimes people find their dream home, but they can’t get the financing in place quickly and lose out on the deal. But most importantly it gives you specific financial parameters to use when looking for a new home. That way you can stay more focused. And sellers are much more apt to entertain an offer when they know the buyer can quickly seal the deal. An offer from a prequalified buyer is considered a serious offer.

A lender takes many factors into account when assessing a loan request, but regardless of which lender you select, they all rely heavily on two statistics: Your FICO (or credit score) and your Debt-to-Income Ratio. In short, your lender is going to do the math.

Your FICO score is your credit score - named after the Fair Isaac Corporation who developed the first credit model. This model provides your credit score at the time you apply for your mortgage and is used to determine your credit worthiness. There are many factors that go into determining this score, such as your credit history and debt owed. When all factors are tallied, you’ll end up with a number ranging from 300 to 850.

Each lender sets their own loan thresholds for granting loans. The higher your credit score, the better loan risk you will be and the better the interest rate you will be offered. The average FICO score is around 700. However, you can get a loan with a lower score.

There are three credit report bureaus: Equifax, Experian, and Transunion. Your lender will gather all three scores, then apply various formulas and averaging. These bureaus are competitive and use slightly different criteria to figure your credit score. But your number will most likely be within the same range with each credit score provider. Keep in mind that if two people apply for a loan, the lender will complete the process separately for each applicant, then use the lowest score to process the loan request.

Your DIT (Debt-to-Income) ratio is how much you owe in relationship to how much you make. In other words, lenders want to know if you can afford to make another payment. To calculate your DIT they add up all your monthly debt payments and then divide them by your gross (pre-taxed) monthly income. They are typically not concerned with variables expenses, such as groceries. You can determine this ratio using a DIT calculator found easily on the Internet. You need to have a DIT of no more than 36 percent to quality for a loan.

What’s happening in the Housing Market?

In an ideal world, you want to sell when the economy is thriving and buy when the economy is more sluggish.

When the economy is booming, it's a sellers’ market. The seller holds all the cards - or most of them, anyway. Interest rates tend to be low and consumer confidence high, all leading to a robust housing market. More people qualify for loans, so you will often have a quicker sale and get your asking price, or better. If more than one buyer is interested in your property, you may even enjoy a bidding war.

If the economy is lackluster, home sales tend to slow. People still buy and sell homes, but it's more of a buyers’ market. If you are selling a home in this market, your house may sit on the market a little longer or sell for less than the asking price. But it's a good time to find a motivated seller if you're thinking of buying.

Buy low and sell high is not news to anyone. But that’s not always the way life goes. The rules of the game change considerably when you need to make a change quickly and you need to buy or sell at a less than optimum time. If you don’t have the luxury of waiting till the market swings in your favor, you wouldn’t be the first. My advice at that point is to educate yourself and proceed as best you can. You can still make a great deal, you just might have to work a tad harder.

The national economy trickles down to most communities and affects many different industries. Some communities will be more impacted than others. That’s why you need to have a good understanding of what’s happening in your neck of the woods.

You will want to see if there is a good cross-section of housing for sale in the area you are interested in. You may be ready to buy, but you will want to know what your options might be. And you want to know if sellers are motivated or if he or she has time to sit back and wait for the perfect offer. Housing inventory can vary from day to day, but most areas trend so you’ll want to get a pulse on all the areas that interest you.

Now that we've discussed the best way to approach selling your property and buying another - let's talk about how the real world works. Sometimes circumstances dictate that you must move - often quickly. Or, it's not uncommon for people to begin browsing when they start to casually entertain the notion of a new home, and they just want to know what's out there. And sometimes people aren’t even looking; they find their dream home, and then they do whatever they can to get this new home.

Regardless of your circumstances, the assistance of a licensed real estate agent is almost always your best bet. As an agent, I help people like you buy and sell property in the Anne Arundel area. Call me anytime you want to better understand the process or explore your options based on your individual needs. I can help you put all the pieces together!

Tim Poole (301) 204-1869 or timpoolerealtor@gmail.com
The Curtis Real Estate Company

Quickest Way to Find Your New Home

Gone are the days when you and your realtor had to trudge out to every property you MIGHT be interested in. Of course, realtors still take buyers to tour potential new homes. But now you typically have lots of information about the property, and a virtual tour available online, before you leave the comfort of your own home.

If you want to browse through homes for sale, your best option - other than contacting a licensed realtor - is to thumb through the Multiple Listing Service (MLS), often simply referred to as “The Multiples.” These listing were once only available to realtors, but for years now they have been made readily available by realtors to the public.

What you’ll find in the Multiples

The MLS is a database of properties for sale by licensed real estate agents and brokers. Most realtors provide access to the multiple listing through their website. This is a service for the buyer that the realtor pays for. Every realtor chooses an MLS package that best works for them, then subscribes to an MLS vendor for all the listings in a particular region of the country.

The beauty of the multiples is that they provide you real time information, so what you see is what is available at the time you are looking. If there is a status change, such as a sale pending, the listings will include that information.

The multiple listings offer a ton of information about a property and often a virtual tour. You can search for properties in several different ways. Features include filters for price and number of bedrooms desired. And tools like a Mortgage Calculator – very handy. This helps you whittle down your search fairly quickly.

If you drive buy a home that’s listed for sale with a licensed real estate agent and want more information, you can plug the address into the MLS search option and it will bring it up for you.

What you won’t find in the Multiples

Realtor-specific additional information: Each realtor who purchases an MLS package receives additional information on every property listed that is not available to the public. The specific type and amount of information varies by MLS.

Pocket listings: A seller may not want their listing made public for any number of reasons. When this happens, a potential seller will contact a realtor, but the listing is not included in the MLS. The only way to get this type of information (a comprehensive picture of the local housing market) is to work with a licensed real estate agent who knows the market in the area.

Realtor to Realtor information: Selling houses is a competitive business. You might think realtors keep all the great deals to themselves. But a realtor can’t sell propriety unless they have someone to sell it to. So, realtors are constantly in contact with each other. This is information you will only have access to through a realtor. Without one, you may never know when this insight might benefit you in some way.

I’m a licensed real estate agent in Annapolis, Maryland. Look for homes for sale using my MLS search anytime. Or give me, Tim Poole, a call or text at (301) 204-1869. Or send me an email at timpoolerealtor@gmail.com