The "Mise en Place" of Homebuying

The Hancock Group

02/14/22

In the culinary world, "mise en place" is a phrase that describes having all of your ingredients measured and prepared (cut, peeled, sliced, grated, etc.) as well as dishes and utensils ready to use before you begin cooking a meal. Doing this as your first step ensures that everything you'll need for the recipe is accounted for. You are less likely to leave out an ingredient or miss a step while you're cooking, because everything is already set up and ready to use. Funny enough, a similar approach can be used in the home buying process, especially in today's highly competitive environment, where multiple offers and bidding wars are commonplace.
 
So, what "ingredients" do potential buyers need to prepare before they begin looking to buy their next home? Here's what we recommend:
 
Check your credit. Your credit score not only determines whether or not you'll be approved for a mortgage but also the interest rate that you'll pay. Naturally, a higher credit score will result in a lower interest rate because it represents less risk to the lender.
 
Determine your budget. First and foremost, knowing your income and immediate living expenses will give you a fairly comprehensive feel for what you can afford, but it also helps to be aware of any big-ticket expenses in the future and how much you should be saving for them. Lenders use your debt-to-income ratio to determine the maximum amount that they are willing to lend you, but that amount may be more than you're comfortable with.  It's important to discuss this with a mortgage professional.
 
Meet with a mortgage banker. A free online calculator won't cut it. A trusted, experienced mortgage professional can look at your credit, make suggestions if it can be improved, run verifications on income/assets/liabilities, and suggest specific loan programs to benefit your specific situation.  They can even provide a pre-approval letter and phone verification that may be the tipping point to negotiating a successful contract with a seller.
 
Understand the Initial investment. The two main factors that comprise your initial investment in a home are 1) the down payment and 2) closing costs. Down payments can range from 0-100% based on a number of factors, like the type of loan or location of the property, but 20% is the number to look out for. Any down payment of less than 20% will require you to have mortgage insurance, which will affect your monthly payment. The buyer's closing costs typically range between two to five percent of the mortgage amount.
 
Know the Costs of homeownership. The total monthly payment (principal/interest, property taxes, insurance, etc.) can add up, but it's important to remember that they don't represent all of the expenses associated with homeownership. HOA dues, utilities, and maintenance costs should also be taken into account.
 
Establish a timeline. People tend to feel more comfortable when they understand the process of buying a home and the amount of time it takes for the different steps.  Your real estate agent will be able to provide this information to you based on the type of mortgage and local market conditions.
 
Watch the Market. Being familiar with the basic statistics makes planning (and negotiation) easier to predict.  Important statistics for the type of property you are buying can include 1) the current supply of homes for sale, 2) average days on market, 3) sales price to list price ratio, and  4) percent of cash sales in your price range. This is another area that your Realtor can be very helpful.
 
Pick your Must-have features. The concept of a "dream home" is more myth than reality. People rarely get everything they want, even when building a brand new home. One way to better prepare yourself for the process and get the most out of a showing is to create a list of your "must-have" and "nice to have" features and amenities. This can be helpful when you are determining whether to write an offer on a home.
 
Build your team. These days, it takes a village to sell a home. By selecting the best "players" for each position, you will have a much better chance for a successful sale and a smooth transaction.  Your Realtor is in a unique position to guide you through the entire process and recommend trusted professionals for each job that needs to be done. 
 
Whether you're cooking a five-star meal or looking to buy your next home, preparation is key. Having the right people in your corner, knowing the ins and outs of the market, and having a cohesive plan can make or break your next transaction.
 
Looking to build your team? The Hancock Group is a team of experienced, full-time Real Estate Agents with demonstrated success across the board. Our clients consistently sell their homes for more than the competition and receive accepted offers in competitive situations. Contact Us to see how our proven formula can help you achieve your homeownership dreams!
 
We look forward to hearing from you!
 
 

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