Financial Tips for Selling and Buying a Home

Planning your next move? Whether you're upsizing, downsizing, or just looking for a change, a little financial planning can make the process much smoother.

This guide will walk you through the basics — understanding the market, preparing your budget and making smart financial choices. And don’t worry, you don’t have to figure it all out alone! With the right team, including a mortgage loan officer and a real estate agent, you’ll have the support you need every step of the way.

Ready to get started? Our loan officers are here to help!

Assembling Your Team

Before diving into buying and selling, it's important to assemble a team of professionals who can guide you through the process. Here are some of the key players you should include:

• Mortgage Loan Officer: A mortgage loan officer will help you make the best financing option to meet your needs.
• Real Estate Agent: A skilled real estate agent can help you navigate market conditions, set the right price for your home and negotiate offers.

Having the right people by your side can make the journey easier and help you make confident, informed decisions.

Getting Pre-Approved

A mortgage pre-approval is a lender's commitment to offer a home loan based on your financial profile. It typically involves reviewing your income, assets, credit history and existing debts. Getting pre-approved early can help:

• Establish Your Budget: Know how much home you can afford before you start shopping.
• Speed Up Closing: Sellers prefer buyers who are financially ready, making the process smoother and faster.
• Competitive Advantage: In a hot market, pre-approved buyers stand out, showing sellers you’re serious and ready to buy.

The good news is pre-approvals are free at Landmark!

Navigating Market Conditions

Before listing your home or making an offer on a new one, it's helpful to understand the current housing market landscape, often referred to as market conditions.

• Market Conditions Overview: Real estate markets can vary significantly, ranging from high demand and low inventory (in which sellers may have the advantage), to markets with more inventory and negotiable prices, or neutral markets with balanced conditions where neither buyers nor sellers hold a clear advantage.
• Current Local Inventory: Even though there might be national or regional trends, market conditions often involve nuance. Your real estate agent can help you assess the home inventory in your area. Think about what criteria is a “must-have” versus a “nice to have.” For example, maybe you’re willing to give up some square footage to have a home in a high-performing school district. Or perhaps you would prioritize a big backyard over a finished basement.

Fortunately, you don’t need to be an expert. Your real estate agent and mortgage loan officer will guide you through what’s happening in your local market and help you make informed, confident decisions.

Buying and Selling Simultaneously: Crunching the Numbers

Here are some things to consider when you’re getting your finances in order for your next move.

1.) Understand Your Buying Power

• Use a Mortgage Calculator: Tools like mortgage calculators help determine a comfortable price range based on your income and expenses. Get a good understanding of the budget you can afford when searching for your next home, what monthly payments could look like and compare 15 vs. 30-year terms.
• Debt-to-Income Ratio: Lenders assess your financial health by looking at your debt-to-income ratio (DTI). While DTI might sound like mortgage jargon, it’s really just a way for lenders to gauge if you can afford a new loan. Debt typically encompasses auto loans, student loans, credit card payments, personal loans and existing mortgage or rent. Lenders aren’t typically including other expenses such as groceries, utilities, childcare and medical bills in your debt calculations. However, you might want to keep those factors in mind to ensure you can comfortably make your monthly mortgage payments.
• Talk to a Loan Officer: Landmark approves applicants based on their full credit profile. Your loan officer will help you evaluate your complete financial picture, including income stability and savings, to find an affordable loan option that fits your financial goals.

2.) Plan for Transaction Costs

• Down Payment: After receiving an estimate for how much your home will sell for, can you make at least a 3-5% down payment on a new property? Keep in mind, you may be able to use the equity in your current home toward the down payment on your next home. Work with your mortgage loan officer to explore your options.
• Closing Costs: Both buyers and sellers will share a portion of the closing costs. These costs might include loan origination fees, title insurance, appraisal fees and escrow charges, real estate commission and transfer taxes.
• Seller’s Concessions: These are costs that the seller agrees to cover on behalf of the buyer to help reduce the buyer’s out-of-pocket expenses at closing. Seller concessions can include a variety of fees, such as loan origination fees, appraisal costs, title insurance or prepaid property taxes.

3.) Preparing for Selling and Moving

• Home Preparations: Small updates like painting or minor repairs can make your home more appealing to buyers. Check out these ideas for cost-effective home projects that make a big impact, a nd consult with your real estate agent.
• Moving Costs: Factor in moving expenses such as hiring a moving company, renting a moving truck, storage fees and utility setup in your new home.
• Savings Cushion: A healthy emergency fund can give you a nice buffer to cover any unexpected expenses in your new home.

Getting an idea of these numbers is a great start. Remember to connect with your loan officer and real estate agent to create a personalized financial strategy for your move.

Organizing Important Paperwork

Your mortgage loan officer and real estate agent will guide you through the necessary paperwork, but having your documents ahead of time can help streamline the process and support a smooth, on-time closing. Here is a handy list of the paperwork you might need to secure your next mortgage:

• Pre-Approval & Loan Application:
  • W-2 statements from the past two years
  • Statements from the past two months (checking, savings, investment account information, documentation for 401(k) loans.
• Current Home Information:
  • Current mortgage statement
  • Tax bill
  • Homeowners insurance
  • HOA dues (if applicable) for any properties owned
• Self-Employed:
  • Year-to-date profit and loss statement
  • Two years of business and personal tax returns

Download the Mortgage Checklist
 

Planning Your Timeline

Here are some factors to consider once you’ve got an accepted offer on your new home.

• Maintain Good Credit: Lenders will check your credit before closing. Avoid making large purchases, opening new credit lines or switching jobs during this time, if possible.
• Flexible Move-Out Plan: If you need extra time between transactions, you could consider negotiating a lease-back agreement with the buyer of your current home.

Additional Tips for Successfully Selling and Buying

• Understand Home Inspection Contingencies: After a home inspection, buyers may request repairs. Your real estate agent will help you navigate these conversations and find a solution that works for both parties.
• Stay Organized: Staying organized with documents, deadlines and financial details can help keep things running smoothly and give you greater peace of mind throughout the process.
• Create a Welcoming Space: When preparing to sell your home, remove personal items like family photos and unique décor to help buyers imagine themselves in the space. A clean, neutral environment will help highlight the home’s features and allows for a stronger emotional connection.

We’re Here to Help!

Buying and selling a home at the same time is a meaningful milestone and with the right guidance, it can be a smooth and exciting transition. Consulting with a mortgage loan officer can help you navigate this process, ensuring you’re financially prepared.

If you're ready to start your next chapter, contact a Landmark mortgage loan officer today. We’ll help you explore mortgage options and help you finance the move from one home to the next.

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