When Should I start shopping for a Home in Kansas City?
Picture this: you’re getting up on Sunday mornings, touring neighborhoods and open houses, envisioning backyard barbecues, cozy movie nights, and the joy of finally having a space to call yours. The prospect of buying a home is undeniably thrilling, igniting a spark of anticipation that’s hard to contain. But as with all great adventures, timing is key, and not being prepared can turn your exciting journey into a stressful sprint. Timing the perfect move can be a delicate balance between seizing the moment and avoiding the heartache of missed opportunities.
Your future is shaped by the decisions you make today. In the world of real estate, knowing when to start your search can mean the difference between finding your dream home and settling for less. So, what’s the secret formula? When should you hit the gas, and when should you exercise caution? Get ready to unravel the mysteries of the perfect timing for homebuyers.
The Disastrous Consequences of Waiting Too Long:
As the saying goes, “Timing is everything,” and nowhere is this more evident than in real estate. Waiting too long to begin your home-buying journey can limit your options, leading to the potentially disastrous consequences of “procrastinating in the pursuit of homeownership.”
Settling for Less: Limited Options and Compromises
When you wait too long to start searching for your dream home, you inadvertently limit your options. The properties you had your heart set on may have been snapped up by other eager buyers, leaving you with a reduced pool of choices. As inventory dwindles, you might find yourself faced with making compromises that you hadn’t initially planned for. That spacious backyard you dreamed of? It might now be just a cozy balcony. That man cave in the basement – will that be the project you say you’re still getting to – year after year.
Missing Out on Ideal Opportunities: Losing Your Dream Home to Other Buyers
Dream homes don’t wait for anyone. If you delay your search, you risk missing out on opportunities and choices that might check off all the boxes on your list. Other buyers who were quicker to the draw might snatch up that mid-century true ranch with the original woodwork you’ve been dreaming of – leaving you to hope and pray their contract falls through so you can have a second shot at it. The disappointment of watching your dream home slip through your fingers – well, it can be crushing.
Not Having Time to Make Adjustments and Improve Your Credit
Buying a home isn’t just about finding the right property; it also involves preparing yourself financially. Waiting too long might deny you the precious time needed to make adjustments to your financial situation. Whether it’s improving your credit score, saving for a larger down payment, or paying off existing debts, these changes can have a significant impact on the terms of your mortgage and overall affordability.
Not Getting Pre-Underwritten: Taking a Hit in a Competitive Market
In a competitive market, being pre-underwritten for a mortgage can give you a significant advantage. It shows sellers that you’re a serious buyer and have the financial backing to close the deal. However, waiting too long might mean you’re rushing through the mortgage process using a basic pre-approval and hoping and praying that what you claimed on your mortgage application actually lines up with what the underwriter discovers.
Benefits of Shopping Early:
In the exciting world of real estate, timing isn’t just about avoiding pitfalls—it’s also about seizing opportunities and setting the stage for success. Starting your home search early comes with a long list of advantages that can make a world of difference in your journey to finding your perfect place.
Expanding Your Choices: A Wider Range of Available Properties
Number one, you’re going to have more choices. When you start your home search early, you gain more chances to swing at the plate. When there are more buyers than there are sellers, like we’ve seen in the last few years, it’s a whole lot better to be able to have another “at-bat” if you get struck out. This also means you have the ability to be pickier and find your perfect pitch.
Seizing the Perfect Home: Increased Chances of Finding Your Ideal Match
Number 2, by starting early and knowing your true financial picture, you can actually be shopping in the price point you can afford. Imagine making an offer only to find out how much your actual mortgage will be a week before closing? That’s usually when the underwriter finally gets the full file if a buyer waits until the last minute to get pre-approved.
It’s often said that good things come to those who wait. By starting your home search early, you’re effectively giving yourself more time to find the home of your dreams. You won’t be rushed into making a decision, and you’ll have the luxury of thoroughly evaluating each property that catches your eye. This patient approach increases the likelihood of getting the right home the first time and not paying for the privilege of being unprepared.
So When is the Perfect Time to Buy a Home?
Let’s first talk about how long it takes to buy a home. The typical closing period for a home is 21-45 days, but most transactions here in Kansas City close in about 30 days. Knowing that, if you are trying to time a sale, I usually recommend starting your search no later than 120 days from the day you want to be moved in. That would give you 2-3 months to shop and 30-45 days to close. Let’s say you wanted to be moved right after school lets out, let’s say June 1. You would want to be under contract no later than May 1. As we mentioned earlier about mortgage payment dates, you could actually close on your property April 1, and your first payment would not be due until June 1 and late on the 16th.
If you went under contract any date prior to April 1, you would have two payments at the same time. Of course, two payments at the same time is not an ideal situation – Who wants to pay for a place that’s sitting empty? I get it, BUT I would recommend someone spend a little more money upfront to get the right house if the right house became available vs. waiting and risking buying the wrong house from what was left over on the shelves after the big sale. The average cost to resell a property in Kansas City is nearing $28,000! So to me, an extra month or two of rent on top of my mortgage is worth it. You may even be able to just buy out your existing lease! I’ve successfully negotiated those terms for my buyers before. There are lots of options in real estate if you have the time and leverage.
Special Programs for Seamless Transitions:
So how do you exactly buy a house while you still own a house? In the intricate dance of real estate transactions, transitions can be both exciting and nerve-wracking. But fear not – there are specialized programs designed to make your move smoother and more manageable. These programs offer innovative solutions to bridge financial gaps and minimize disruptions during your transition from one property to another. Let’s dive into these lesser-known options that can make your transition smoother.
Bridge Loans: Temporary Financing to Bridge the Gap
Imagine this scenario: you’ve found your dream home and want to make an offer, but your current property hasn’t sold yet. This is where bridge loans come into play. A bridge loan provides temporary financing that “bridges the gap” between the purchase of your new home and the sale of your current one. With this short-term financing, you can secure your new property without the stress of selling your existing one immediately. Once your current property sells, you can use the proceeds to pay off the bridge loan. This option offers peace of mind and the ability to move forward confidently without timing constraints.
Blanket Loans: Leveraging Existing Equity to Acquire a New Property
Blanket loans are a game-changing tool for those who are already homeowners and wish to expand their real estate portfolio. With a blanket loan, you can leverage the equity you’ve built in your current property to secure financing for a new one. This means that instead of securing separate loans for each property, you can use the equity in one property as collateral for a larger loan that covers multiple properties. This method simplifies financing, streamlines payments, and provides the flexibility needed to expand your real estate investments without the hassle of juggling multiple loans. This is a great solution for someone wanting to keep their existing home and turn it into a rental home.
Tapping into Your Assets: Smart Strategies for Minimizing Disruptions
When it comes to making a seamless transition between properties, creative solutions are at your fingertips. One such strategy involves tapping into your assets, such as retirement accounts or investments, to provide a cushion during the transition. By using these funds strategically, you can cover down payments, moving costs, or even temporary housing expenses. This approach offers flexibility and ensures that you’re not rushed into decisions due to financial constraints. Some programs you can even borrow against these assets without actually touching them – avoiding penalties and taxes as they’re only borrowed against, not cashed out.
Recasting: Fine-Tuning Your Mortgage After a Well-Timed Sale
This is an option very few know about but we use it all the time. Most lenders don’t really advertise this because they would rather refinance you, but this is a much more affordable way to acquire your next home before you sell your current one. Recasting isn’t just a financial tool; it’s a strategic maneuver that can help you acquire that home you are in love with while allowing you to smoothly transition and even maximize the sale of your current home. Imagine a scenario where you put down a smaller down payment on your new property, sell your current home at a higher price after updating it, and then recalibrate your mortgage payments to reflect the adjusted equity. This approach gives you the power to keep a rainy day fund without worrying that you should have put more money down. Most loans allow a one-time recast, and while lender fees can vary, $500 is a typical cost to re-amortize your mortgage.
The Recasting Process Unveiled:
Initial Move: Begin by acquiring your new property with a smaller down payment, allowing you to preserve liquidity for potential updates, renovations, or other needs.
Selling Your Current Home: With the flexibility of recasting, you can avoid a rushed move, giving you ample time to prepare your current home for sale while comfortably residing in your new property. This strategic approach often results in higher selling prices, as you’ve had the opportunity to enhance the property’s appeal.
Applying Equity: After selling your current home at an improved price, you have a lump sum from the sale. Apply this to your new property’s mortgage principal, significantly reducing the outstanding loan amount.
Recasting Your Mortgage: Here’s where the magic happens. Work with your lender to recast your mortgage. With the reduced principal balance, your monthly payments are readjusted to reflect the new, lower loan amount. This means lower monthly payments moving forward.
The Benefits of Recasting in Practice:
Controlled Transition: Recasting allows you to avoid a rushed move, giving you ample time to prepare your current home for sale while comfortably residing in your new property.
Maximized Sale: With the luxury of time, you can update your current home and present it at its best, often resulting in a higher selling price.
Lower Monthly Payments: Once you recast your mortgage after applying your equity, your monthly payments decrease. This financial relief supports your transition and enhances your overall stability.
Recasting, when applied strategically, can provide you with unmatched control and financial freedom during a transition. By leveraging this tool, you can make informed decisions, enhance your home-selling experience, and ensure a smoother shift to your new property. As you embark on your journey, remember that recasting is your ally, enabling you to orchestrate your transition at your pace while optimizing your financial standing.
Factors to Determine the Right Time:
Determining the right time for you to move is, of course, a case-by-case assessment. No two people have the same situation, and therefore it’s a good idea to have as much time as you can so that you can acquire the knowledge and learn what the pieces on the chessboard do. By knowing these options, you’ll be in a better position to take advantage of an opportunity versus having the market take advantage of you. In fact, we love it when we have lots of lead time to start finding houses for our buyers. Given the time to do that, we have a very high track record of finding homes for our clients before they even come on the market.
If you’re thinking of buying a home in the Kansas City area and could use an expert in your corner finding homes for you, reach out to me or my team immediately at (816) 439-8705 – call, text, whatever is best for you. We’re here to help you make smart moves in real estate.
Conclusion:
The art of perfect timing in the world of home shopping is a delicate dance, but with the right knowledge and strategies, you can master it. Whether you choose to start early, explore special programs, or recast your mortgage, the key is to be proactive and make decisions that align with your goals and circumstances. Don’t let the fear of missed opportunities or settling for less hold you back. When it comes to finding your dream home, the right time is when you’re ready to take the leap, armed with the insights and tools to make it a seamless journey.
