"Not only is there the issue of financing to consider..."
Unlike the experience of buying a first home, when you're looking to move-up, and already own a home, there are certain factors that can complicate the situation. It's very important for you to consider these issues before you list your home for sale.
Not only is there the issue of financing to consider, but you also have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings.
In this report, we outline the six most common mistakes home Owners make when moving to a larger home. Knowledge of these six mistakes, and the strategies to overcome them, will help you make informed choices before you put your existing home on the market.
1. Rose-coloured glasses
Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there's sometimes a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it's already sold or that it's more than what you are willing to pay. Most home Owners get caught in this hit or miss strategy of house hunting when there's a much easier way of going about the process. For example, find out if your REALTOR® offers a House-hunting Service, which takes the guesswork away and helps to put you in the home of your dreams. This type of program will cross-match your criteria with ALL available homes on the market and supply you with printed information on an ongoing basis. A program like this helps home Owners take off their rose-coloured glasses and, affordably, move into the home of their dreams.
2. Failing to make necessary improvements
If you want to get the best price for the home you're selling, there will certainly be things you can do to enhance it in a prospective Buyer's eyes. These fix-ups could be inexpensive. But even if you do have to make a minor investment, it will often come back to you tenfold in the price you are able to get when you sell. It's very important that these improvements be made before you put your home on the market. If cash is tight, investigate an equity loan that you can repay on closing.
3. Not selling first
You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because you have to meet a purchase deadline. If you've already sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home, but have yet to make significant headway on finding your next home, you might want to put in a contingency clause in the sale contract which gives you a reasonable time to find a home to buy. If the market is slow and you find your home is not selling as quickly as you anticipated, another option could be renting your home and putting it up on the market later - particularly if you are selling a smaller, starter home. You'll have to investigate the tax rules if you choose this latter option.
4. Failing to get a pre-approved mortgage
Pre-approval is a very simple process that home Owners should consider. It gives you a significant advantage when you put an offer on a home you'd like to purchase because you'll know exactly how much house you can afford, and you already have the green light from your lending institution. There is no cost or obligation. With a pre-approved mortgage, your offer will be viewed far more favourably by a Seller - sometimes even if it's a little lower than another offer that's contingent on financing. This is an important step.
5. Restricting Yourself to one Lender
Consider dealing with a mortgage expert from a brokerage office. Enlisting their services can make a significant difference in the cost and effectiveness of the mortgage you obtain. For example, they can reduce the mortgage interest rate by having other lenders 'bid' for your business. This also expedites the process and avoids costly delays. Typically, there is no cost or obligation to inquire.
6. Failing to coordinate closings
With two major transactions to coordinate together with all the people involved, such as; mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors, or pest inspectors, the chances of mix-ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your REALTOR®.