For Buyers
If you are thinking about buying a house, getting your finances in order should be at the top of your checklist. Long before you start looking for houses, ideally years before, you need to start improving your credit score. Although standards fluctuate, if you want to get a good rate, your credit score should be at least 720. Spend a few years:
- Paying off debts
- Updating your credit report
- Making payments on time
- Increasing your income
- Building up savings for the down payment
Once your finances are in better shape, it’s time to get organized for a home purchase. This involves choosing a loan type, shopping for a loan, and getting a pre-approval letter from your lender. Your bank will base your qualifications on a number of criteria. Some of the financial paperwork you will need to show your lender includes:
- Proof of income
- Amount of savings
- Assets or collateral
- Employment verification
- Credit report
- And Identification information, i.e., social security card and driver's license
For Sellers
When it is time to sell your home your checklist begins with finances too, but in a different way. Your goal is to get your home ready for potential buyers. That will usually involve making improvements, upgrades, and repairs to get the most money for your home. In order to do that you need to get the cash together.
Deciding which repairs and upgrades to make depends on your location, the state of your home, and the state of the market. Note that there are some repairs you just have to fix no matter what.
If for instance you have a bad roof, this needs to be taken care of before you list your home. Very few buyers will be willing to eat the costs of major repairs. There are many minor repairs and improvements that won’t cost you an arm and a leg. Improvements that often pay off include things like:
- New Interior and Exterior Paint
- HVAC Repairs
- Window Replacement
- Entry Door Upgrades
- Updated Cabinetry
- Upgraded Flooring
Once you have a good idea of how much your home improvements are going to cost, you then need to factor in the other costs associated with selling your home. While many of these can potentially be negotiated away on the negotiation table, it’s best not to rely on it. You should talk with your agent about:
- Closing costs
- Inspection fees
- Attorney’s Fees
- Insurance riders
- And so on
