5 Things to Consider if You’re Buying A New Home for the First Time In While
Some years ago, you bought your first home. If you’re like most people, you don’t have a photogenic memory of what the experience was like. Rather, it was just a blur of people, paperwork and hand cramps from signing your name and initialing the corner of documents for so long.
Well, consider this a refresher course for your very specific set of needs. In addition, there have been some changes in the process since you bought your last home -- we’ll highlight those here.
1. Determine how much of your current home you actually own.
Most of us to don’t own our houses completely when we turn our attention to an upgrade. But hopefully you’ve been in your house long enough to have equity that can be used in the purchase of your new home.
2. Be aware of the costs of selling and buying.
Selling your home may incur commission costs, marketing costs, and some seller closing costs, depending on the circumstances. And in addition to the down payment on your current home, don’t forget you’ll have to pre-pay insurance and taxes for the year. And, of course, there are closing costs as the borrower as well.
Plug in some numbers and see where you stand. Estimate monthly payments, evaluate interest rates and calculate down payments with this simple tool.
3. Think about the timeline.
If the market is a seller’s market (as it is today), you may sell your home quickly but it could take you a while to find a new home. If you need to move before your new home is available (or even contracted), what will you do? And if the market is a buyer’s market, you could find a home quickly. However then you have 2 house payments while you are waiting for your home to sell.
4. Big changes since 2006.
If you haven’t purchased a new home since 2006, recall the burst of the housing bubble and the Dodd-Frank Act that created a significantly new regulatory environment since then. You’ll experience more questions to be answered, more paperwork required, and a longer time in getting the loan to close than you may remember in your last purchase.
5. Other recent changes:
- New regulations emerge with regularity. Some of the rules that may impact you even if you had a more recent home purchase include:
- New Forms: The old Good Faith Estimate you may have received as you were shopping for your loan has been replaced by the Loan Estimate. The old settlement statement (known as a HUD-1) has been replaced by the Closing Disclosure.
- New Timelines: The biggest change is a requirement that the borrower receive the Closing Disclosure 3 days prior to the closing of the loan. This adds time to the loan process and can mean that last minute changes may require the closing date to be postponed.
Finally, the personal financial situation of the borrower has become a much bigger part of the mix with the Ability to Repay requirement. Your experience will not be the same as your best friend’s experience, even if you are going through the process at the same time. In choosing a lender, looking beyond rate to someone who can help navigate the rough waters of the more regulated and paperwork-intensive process is a smart move.
A Sente Loan Specialist will be happy to schedule a call to answer any questions you might have.