Most Moms I know have a mental checklist they run through with military precision before they leave the house to take the kids to school:
- Teeth and hair – check
- Homework in backpacks – check
- Jackets zipped – check
- Lunch handled – check
- Sports gear, musical instruments or (in my Mom’s case) oratorical soliloquies, drum major regalia and History Day accouterments – check, check, check, check and check.
But never did I realize that this maternal preparation drill was a cross-species instinct until one day last Spring, at the lake near my home. I was bopping along, walking my pugs when they both stopped still and began looking quizzically from the shore to me, back and forth, heads on rotation. Finally I saw what had them completely barkless: a Mama duck, literally putting her ducklings in a row. These baby ducks, which looked something like what a loosely-packed cotton ball might resemble if it had legs, were being nudged and jostled into a surprisingly straight line by their Mom, who then led the whole adorable crew on a little promenade into the reeds.
Now, when it comes to putting your own ducks in a row in advance of buying a home, a few things are key. First, start early. Whenever you think you should get started doing the actual prep steps, work backwards about 3 or 6 months before that on the calendar and start then.
Secondly, be bold. I find that many buyers-to-be hesitate to get into the not-so-adorable territory of credit and savings, out of a fear that they’ll learn something that will kill their dreams. The bolder you are about going into scary territory, the faster you’ll learn the truth of what work lies ahead of you – and the more time you’ll have to do what it’ll take to overcome any challenges. Also, just the knowing will make anything scary less so. Here are four ducks you’ll want to start getting lined up and comfortable with now if you hope to buy a home in 2014.
1. Get a vision. The real estate market is a complex system of constantly evolving dynamics, information and realities. Going in with a clear vision for the outcome you want to create is essential to helping you stay moving in the right direction, especially given that you’ll need to be flexible and make some compromises throughout the process. I encourage you to take a time-out from the busyness of your day-to-day life and devote an hour or an evening to putting, in writing, all the elements of your vision for the life you’ll have – and your family will have – once you move into your next home.
At this stage, don’t be too narrowly focused on what the house itself will look like. Instead, deal with everything you can think of in terms of how you want to experience your daily life, including things like where you work, how you get there, and how much you work – and how you would like this to change over time, and what you want to do with your spare time and money. Getting a vision for this will help you drill down into the more granular details of the specifications for a home that will successfully, sustainably serve as the backdrop for the life you’re trying to create, while allowing you to flex and flow with the realities of the real estate market.
2. Put your team in place. I believe that the agent and mortgage broker you select are two of the most important decisions you’ll make in the course of buying a home. The right agent can create a transcendent experience in which you not only buy a home, but are exposed to possibilities for your life you would otherwise never have even considered. A great agent can coach you, advise you, mediate disputes for you and execute on your action plan with you. A great mortgage broker, similarly, can surface options and issues you would otherwise not have appreciated.
And the opposite is true: being represented by professionals who don’t get you or don’t have the expertise you need can really sour your experience of buying a home.
So, work now – way in advance – to get your team in place. Ask your friends and family members if they have an agent or broker they just loved, and when someone says “yes!” ask for an intro. Check out your list of agent suggestions online: check their Trulia reviews and profiles, review any answers or blog posts they’ve put up on Trulia or elsewhere, follow them on Facebook to get a sense for their approach and personality flavor, and reach out to them via whatever communication medium you prefer (e.g., phone or email). Then book a few meetings and, while you have the luxury of time, get to know them each a bit better, essentially interviewing them for the position of your personal real estate or mortgage advisor. While you’re talking, look for a fit in terms of: the types of buyers they have served in the past, the types of recent successes they have had in representing buyers like you, the areas and property categories in which they have experience, and whether their approach to giving advice and education works well for you. It’s not overkill to check references, either, so ask your interviewees for a few recent references of buyers they have worked with.
3. Credit check yourself before you wreck yourself. I know, I know, you’ve heard it a million times – go toAnnualCreditReport.com (the government-mandated free credit report site) and pull your credit at least a year before you buy. This gives you a chance to review all 3 reports, flag any inaccuracies, dispute them and get them corrected way before your home loan weighs in the balance. It also gives you the opportunity to have your mortgage broker flag any issues that might make it difficult for you to get a loan, so you can work on them with ample time to correct the situation. That might mean paying down some bills, resolving any outstanding collections, making sure you don’t create any new bills and even, in some cases, establishing credit lines.
The challenge here is that we’ve all heard it so much, it’s quite easy to simply ignore this advice. Let me urge you not to do this. I’m not even in the market for a home, but I just ordered my own credit reports just to review them and follow my own advice. I was stunned – stunned! – to see about 7 – SEVEN – glaring inaccuracies. Multiple accounts that had long been paid off were still being reported as open and having balances due, and there was even one account I had never even heard of before! A woman in my office just did the same and realized that someone has been committing identity fraud in her name, opening accounts of which she was totally unaware.
These sorts of findings are concerning no matter when you find them. But if you don’t find out about them until you’re already in love with a home, the 30 days it can take to resolve them can seem like an eternity – and can even be the deal-killer on allowing you to actually close on your dream home. The reality is that sometimes it can take much longer than that to resolve inaccuracies – and it will almost certainly take much longer than that to pay bills down and to execute on other line items on your mortgage pro’s action plan for you.
So, don’t wait until the last minute. Actually, do the reverse: pull your reports asap and spend your downtime over the holidays working through them, disputing anything you need to and calendaring a call with your mortgage pro to get a briefing on what you need to do to present yourself in the best light to lenders.
Side note: For small issues, some lenders can facilitate what is called a rapid rescore, which allows you to dispute and correct inaccuracies within a shorter time frame, for a fee – but you should not count on it eliminating every inaccurate report in a couple of days. Sometimes it takes a couple of rounds of disputes.
4. Cash to Close. Coming up with all the cash you need to close a home purchase simply takes time. And sometimes, it’s hard to know whether you’re truly ready to start your house hunt in earnest without knowing with some precision how much you’ll really need. You might be trying to save up 10% of your target purchase price, which is great, but that strategy overlooks the fact that you might also need to be stockpiling funds for additional fees and costs of closing the deal, like: inspections, appraisals, title insurance, escrow fees, mortgage closing costs and property transfer taxes, to name a few. When you pick your mortgage broker, work with them to get a better understanding of what your savings target should be for cash to close, given what sort of property you’re aiming to purchase and what you can afford to spend on it, from a purchase price perspective.