Are you planning to move up? Consider foreclosure stratetgies…
Tuesday, May 19, 2009
Are you a homeowner planning on moving up to a bigger or more expensive home? Here’s a guide for planning the transition in today’s foreclosure heavy market.
Figure out how much your current home is likely to sell for.
Have your real estate professional conduct a comparative market analysis. “Be realistic about pricing the home so it moves quickly,” adds Sandy Guralnik, a broker with Coldwell Banker United in Charlotte, N.C. This will help you avoid a long gap between when you buy your new home and sell your old one.
Consider the market.
If you have only been in the home two or three years and made little or no down payment, you probably do not have have enough equity to sell at a profit in today’s soft market. You might even owe more on the mortgage than the home is worth. This is far to common in the current foreclosure heavy market. On the other hand, if your home has appreciated well, it might be easier to move up to a bigger and better home than ever before! Especially in Cambrian Park, Los Gatos, and Saratoga. Cupertino has consistantly bucked the market recently.
Consider your finances.
Your overall debt picture is important if you plan to move into a larger, more expensive home. In addition to a higher mortgage, you’ll likely have higher utility, insurance and property taxes as well. If you owe money on a home equity loan, you’ll have to pay that back when you sell the home, which will eat into your profit.
Get preapproved by a reputable lender.
The lender will tell you how much money they’re willing to lend you, which will tell you how much house you can afford. Then, figure out how much you’re comfortable spending. The two numbers are not necessarily the same. Your comfort zone should be your guide here.
Determine your long-term housing needs.
Will you be starting or expanding your family in a few years? Will the larger home be as teen-friendly as it is toddler-friendly? Is there a place for a home office if one of you eventually works from home? With the many economy issues this should play a large part in your decision process. Not to speak of the inventory that is available today.
Be realistic.
Most people will not be able to move up from a starter home into their dream home. It’s a long-term process that occurs over several moves, says Debbie Wong, a certified residential specialist with Prudential California Realty in San Mateo, Calif. Plus, it’s harder to qualify for a loan if the jump in monthly payments is too big, she says. Not to speak of all the hoops many lenders are expecting you to jump through now.
Preview properties in your target price range and location.
Most importantly does that “Super Foreclosure Deal” really translate into a home. Look to see whether the homes match your trade-up goals.
Get your home on the market.
Moving up will go more smoothly if you are able to sell your home before trying to buy another. For one thing, many Sellers are leery of contracts in which the sale is contingent on the Buyer selling their current home. Foreclosures are held by Banks that are not willing to diminish there pool of potential buyers. If they accept your offer they will be required to place the home on a pending status and other buyers will be considering it. Finances also are an issue. Bridge loans to carry you from your current home to the next are almost impossible to get today.
Determine the best time for your move.
If you want to move in the summertime, start your other preparations early enough to meet that goal.
