Buying a home in the Catskills is a milestone but there’s a reason why not everybody tries or succeeds. It’s time-consuming, it can be messy, and it involves a lot of things that aren’t part of your everyday experience. To demysitfy the process just a bit, it's a good idea to familiarize yourself with all of the things you’ll need to accomplish to get there. So here goes.
Understand Your Financial Footprint
Most financial advisors suggest that a household spend no more than 30% of its gross (take-home) income on housing. That’s fairly easy when you know what your rent costs and it doesn’t change significantly from year to year, but it’s a bit more complicated when you’re securing a mortgage loan to buy a house.
Your mortgage payment will include principal plus interest, taxes, and homeowners’ insurance. If your down payment is less than 10%, you may end up paying insurance on the mortgage itself (aka PMI).
So take the time to understand you monthly income and expenditures and put away some cash for the down payment. With your financial house in order, you’ll feel a lot more comfortable purchasing a house.
Polish Up Your Credit
You can make the biggest impact on your loan options by improving your credit score. A good credit score will get you a lower mortgage loan interest rate, which will lower your monthly payment (and possibly allow you to afford more house), so this is a step worth focusing on.
Here is a good article with helpful tips for improving your credit score.
Figure Out Financing
There are a ton of financing options for buyers. Whatever you do, don’t jump on the first mortgage loan you’re offered. A better strategy is to talk to local banks and mortgage brokers. You’re likely to get different rates and products so do a fair bit of shopping around and you'll likely find a better deal than what you were originally offered.
Find a Mortgage Broker or Bank
A mortgage broker or banker can explain your loan options and help you figure out what’s right for you, so ask for referrals. It’s never too early to approach a mortgage broker or banker as they can help you identify the price range for which you qualify which well help you align your expectations with reality.
Understand Your Price Range
Once your bank or mortgage broker helps you narrow down the price range for which you approved, keep in mind that, as a general rule, you should spend no more than one-third of take-home income on housing. And remember that this number will include insurance, interest, and taxes, and operating costs such as utilities (e.g. oil, gas, electric, cable/internet), occasional repairs (e.g. structural or systems) and services (e.g. lawn mowing, snow-plowing, cleaning, etc.). A good agent will be particularly useful in helping you understand monthly operating costs, a critical component in the total monthly cost of owning a home.
Houses that appeal to city dwellers move fairly quickly in the Catskills. And, in the current market, inventory is low and demand is at an all time high. Getting a pre-approval from a solid mortgage lender will give you an advantage over other buyers. With a pre-approval in hand, you can make an offer as soon as find that dream home. Being prepared can sometimes make the difference between beting the buyer that has an accepted offer the buyer that is sitting with the backup offer.
Find a Real Estate Agent
When it’s time to start seriously shopping, a real estate agent can be a real asset to any first-time buyer (read more about why using a buyer’s broker is a no-brainer). Good agents know where to find the hidden gems, how to negotiate a sale, and whether the asking price really makes sense given the location and the market.
Decide on an Area
The Catskills is an amorphous concept to many people and rightfully so, its a vast region. This is where we can be invaluable. We’ve spent the last eight years exploring many of the towns/areas and we can help you determine which areas best fit your needs, sensibilities and, importantly, your price range.
Assuming you’ve got a good idea of where you want to live, how much you can spend, and the size and type of place you’re looking for, it’s time to start searching in earnest.
Newsflash: agents and buyers have access to the same pool of listings. Sites like Zillow, Trulia, and Realtor pull listings from the same MLS that agents use. That said, a good agent will either set up a detailed search for you or help you set up your own search so you receive alerts as soon as new listings that fit your criteria hit the market.
We regularly encourage our clients to send us listings of interest so we can provide prompt feedback. Sometimes we can rule out a place based on our local knowledge of the location, neighborhood, etc. And other times, we can alert a buyer when its imperative that they quickly book an appointement to see a place.
Make a Competitive Offer
Let’s assume you’ve found a home you love. The next step is to craft an attractive offer at the right price with the appropriate contingencies or ‘outs’ (e.g. mortgage, inspection, appraisal, etc.). This is typically where using a buyer's broker can be worth his/her weight in gold as navigating this part of the process can be critical in getting to an accepted offer.
Should you intend on submitting a lowball offer, you’ll want an agent that can suss out whether this is a wise approach. Your agent will speak to the seller’s agent to get a sense of whether such an offer will be seriously considered or whether it will offend the seller and put you at risk of potentially burning the bridge to a potential sale.
Find and Attorney
Should you get to an accepted offer, the seller will ask for details about your attorney. Contracts will go out soon after the offer is accepted so its a good idea to have someone lined up. We regularly provide recommendations for a few attorneys that do good work in the area. Your attorney is an essential part of the team as they will ensure that there are no legal issues with the purchase.
Get an Inspection
Once the seller has accepted the offer, there area few more hoops to jump through. An inspection is done to ensure that there are no significant issues with the house (plumbing, structural, pests, etc.). You don’t want to unintentionally buy a fixer-upper when you thought the place was turnkey.
A good inspector will identify potential issues and red flags and will also provide you with a roadmap of potential future issues/repairs. It pays to do some research on your inspectors upfront to make sure they’re experienced, qualified, and familiar with most of the major home issues that are typical in the Catskills. We regularly recommend inspectors with very good reputations to our clients.
Be sure to make it a point to accompany the inspector during the inspection. The amount of information you'll learn about the house you may own is invaluable.
Get an Appraisal
The lender will order an appraisal to insure that the home is worth what you (and by proxy, the lender) is paying. The appraiser will verify the square footage, examine the home, compare similar homes that have recently sold nearby, and then generate a dollar value of the property’s worth.
Oftentimes that value aligns with the offer, but sometimes it’s higher or lower than the offer. A higher appraisal typically isn’t a huge problem, but if the appraisal is too low, the lender may decide to lend only the amount of the appraiser’s value instead of your full offer price. If that’s the case, you may need to bring in another appraiser for a second opinion, come up with additional cash, or talk about a price reduction with the seller.
There are a lot of reasons why you might need to hit the negotiation table again at this stage. Maybe the inspector found a material problem or maybe the appraisal was too low. Whatever the case, before the home changes ownership, you’ll need to hash out who is responsible for any repairs and how you will manage any appraisal snags.
This is another area where a buyer's agent is quite valuale. They will serve as your advocate and point person for negotiations in trying to get you the best possible deal.
You're almost there. But before you pack up the car, you’ll want to deal with a few logistical items. Figure out trash pickup, get cable, electric and gas switched to your name. It's also smart to have your agent ask if the seller is willing to provide a list of servicers that are familiar with the house. Continuity of electricians, plumbers, contractors, etc. can make a big difference if problems arise in the future.
This is the finish line! Usually, the buyers, sellers, both sets of lawyers and real estate agents, a bank representative and a title agent will attend the closing to help answer any questions or clear up any last-minute red tape.
Make sure you follow your attorney's instructions about how to deliver the down payment, and be ready to sit down for a few hours and sign your way through a pile of documents. It’s tedious, but necessary.
And voila, you own a home. Milestone achieved.
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