So you’ve decided that it’s time to sell your Manchester home. But you love the Manchester neighborhoods and your kids are all students in the Manchester schools. You’re going to cash in the equity you have and upgrade to a new home while staying in Manchester. There is a number of reasons why you came to that decision but congratulations are in order. It can be an exciting time to open a new chapter in your family’s life!
Take a deep breath and get yourself ready, because in addition to all of the other work involved in a move like this, you’re also going to gather, sign, and store a lot of essential paperwork. So like many things in life, if you prepare and have a plan in place, you’ll be more relaxed and ready to make the move. Here is our quick primer on what documents to expect and how to keep them organized.
In today’s article, we’ll explain why organizing your paperwork and understanding the loan process are the first steps to successfully navigating through selling your home in Manchester in order to purchase a new one.
How Much Manchester House Can I Afford?
It’s likely you’ll be applying for a loan to purchase your new property in Manchester. This is where your paper trail begins! One of the first streams of paperwork comes from your research on how much mortgage you can afford. All lenders require documentation of your monthly income and expenses, savings and checking accounts, other assets you have, and tax returns—there’s just no way to avoid it. This is the foundation of how they will determine your ability to repay the mortgage loan you are requesting.
According to financial experts, there are four factors to consider as you determine the appropriate amount to spend on a home:
Lenders typically use your gross monthly income as a starting point. But if you are more conservative, you should consider using your net monthly income as the benchmark regarding whether you can truly afford a mortgage. (Your net income is obviously lower because this figure is calculated after your taxes and other deductions are taken for your gross income.)
2) Debt Load
It’s important to understand what lenders refer to as “debt load“. Again, some basic math and a bit of research are involved here. You’ll need to add up any credit card debt you have, any auto loans outstanding, and a host of other regular other debts, including child support, and divide the result with your gross monthly income. The answer is your debt-to-income ratio. Lenders prefer a DTI of 43 percent or lower. Many financial experts recommend a lower ratio. Here is a great explanation of DTI and how to figure out yours.
3) Credit Score
We all see the ads, from Credit Karma, Experian, and others—what‘s your credit score? There is a valid reason why people emphasize your FICO score. The higher your credit score, the better your mortgage options are. This is because lenders will consider you less of a risk, and give you more favorable loan terms. High credit scores save you money—big time! If you spend a year improving your score from average to good or excellent, you could get a lower interest and save quite a bit in the resulting payment plan.
4) Your Down Payment
This is another area where some preparation really pays off. Again, mortgage lenders hate risk and will always be happier the higher amount of money you put toward the purchase of your home. They want you to have “skin in the game”, as they say. If you have 20 percent of the mortgage saved for a down payment, you’ll get a better interest rate and avoid mortgage insurance costs. Another area you’ll want to research should include the current interest rates and the terms of the loan that area lenders are currently offering. Shopping around is a sound investment of time. Honestly, an interest rate of just ½ % lower than a competing loan can save you thousands of dollars over the life of your mortgage!
Phew! With all of this information, you should arrive at a fairly accurate idea of what you can afford in monthly payments. However, it’s very important that keep several other costs in mind, including property taxes, home insurance, and repairs and maintenance.
When Selling Your Manchester Home—Which Documents Should You Save?
Once you move forward with the selling and buying in Manchester, you’ll be responsible for keeping track of many documents. These include contracts with listing agents, home repair professionals, appraisers, and property inspectors. You may also have a mortgage pre-approval letter, the home appraisal, an energy audit, and the home inspection. There are also documents pertaining to home insurance and agent agreements.
As the sales process moves forward, you’ll sign a Purchase and Sale agreement to sell your house in Manchester. This valuable document includes all of the details and conditions, such as the agreed-upon price, closing date and costs, move-in date, and details regarding who is responsible for paying for any conditions of the sale. At this point, you’ll also have closing documents and, finally, the title deed.
Where Should Your Important Documents Go?
Your paperwork will begin stacking up very quickly, so you need an organizational system in place before you receive the very first estimate or receipt. Most people use a filing system in a cabinet or large binder. If you have access to a scanner, you can also keep digital copies of these documents.
Name these files accordingly and organize them in appropriate folders so you can access the information easily wherever you are. However, some documents must also be saved in paper forms. Pay attention to what can be thrown away and what you must keep. If you aren’t sure, discuss each page with your realtor, banker, or attorney.
From the moment you first start researching mortgages to finally signing the closing documents, you’ll have a lot of valuable information stored as paperwork. Ideally, your organization system should allow you to access that info within five minutes. Understanding the purpose and importance of each document is key to understanding your filing system.
We wish you the best of luck with the next chapter of your family’s life in Manchester! If you ever have questions about any of the information we’ve talked about in today’s post please feel free to call us. We always love to hear from people in Manchester and can give you unbiased advice based on all our years of experience helping Manchester homeowners just like you.
When selling or buying a house in Manchester, why not use Summit Buys Houses as your go-to information source? We can tell you the current value of your property in Manchester, and then do the typical number calculations with you so you can see exactly how much money you can receive using a traditional MLS listing, a FSBO, or a direct sale to a professional and trusted homebuyer like us.
How Can We Be Of Assistance To You?
We are “The Local Guys” who buy Manchester New Hampshire homes just like yours for cash.
Give our team a call if you have any questions or would like a free quote on your home. There are never any “high-pressure” sales tactics from us and everything is free of charge. We are here to help—what have you got to lose by giving us a call?
You’ll quickly see why the Better Business Bureau of Massachusetts. has awarded us their highest business rating. It’s an honor we’ve earned by helping homeowners like you sell their homes quickly and profitably in the shortest amount of time.
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We are the most trusted and reliable cash house buyers in Manchester. If your house is located in the Highlands neighborhood, in Wellington, Northwest, or any of the other fine neighborhoods in Manchester—we will buy it for cash no matter what condition it is in right now. So if you want to sell your house, condo, or apartment building situated anywhere in a Manchester neighborhood, contact us for a quick, confidential, no-obligation cash offer. There is never any cost to get our cash offer in writing and we’ll never pressure you to say “yes”. “Summit Buys Houses” is incorporated as Summit RE Group LLC, and is duly registered to operate in the states of Massachusetts, New Hampshire, and Nevada.