We recently spoke with Kevin Kuechler, a senior loan officer from Guaranteed Rate, about how to solve common obstacles in the mortgage process. Here are his top tips to make the buying and selling process easier.
- Keep an eye on your credit score
To avoid any unwelcome surprises, have your credit checked well in advance. Do this as soon as you have the notion that you want to buy a home. Make sure you check your credit with all three bureaus: Experian, Equifax, and TransUnion.
- Find three years’ worth of tax returns for your mortgage pre-approval
Don’t expect your accountant to keep this information on file. You should also consolidate old mortgage documentation, discharges and deeds in one folder so you can put your hands on it during the approval process.
- Make sure you have liquid cash on hand
When putting money down toward a new home, the funds have to be traceable. In other words, you can’t use equity in your home or a credit card. If you don’t have cash ready, talk to your broker about the best way to get funds, whether it’s a loan against a 401k or a home equity line of credit. Money must be tied to a real asset.
- Minimize risk whenever possible
Many people need to sell before they buy. Set a commitment date with your buyer—the date by which they need to line up financing. You don’t want things to fall through at the last moment, therefore stalling your own buying process.
- Stick with only one attorney
When selling and buying, cash flow is also a hurdle. Use the same attorney for your sale and purchase, as they can hold the funds in escrow and transfer them seamlessly.
- Have a rent-back plan ready
Work with your realtor to pre-negotiate a rent-back plan from your buyer if you can’t move out of your home and into your new one right away.
- Be nice to your buyers
If they ask you for a favor, don’t say no. Treat them the way you want to be treated; you never know when you might need them to be flexible, too.