Qualify the Buyer

Before you formally take your home "off the market" and prepare to move, it is prudent to thoroughly qualify the buyer. Are they both financially and emotionally ready to move forward in this transaction? Are they reasonable in their expectations of a used home?

Down Payment

Nearly every lender will require some down payment, the means to pay closing costs, and a first payment. To acquire the needed funds, some buyers are waiting for a lawsuit, bonus, or a gift from a relative that could tie up your property on a very "iffy" thing. Ask for either a lender's pre-approval (verified) letter if proof of deposit.

Credit And Payment Ability

The ability to obtain financing will rely heavily on the buyer's willingness and ability to pay back the loan. Lenders judge this by the buyer's credit report, length of employment, and income. If these have not been verified by a reputable lender, then it is up to you to do so to protect your interests.

Emotional Readiness

It is wise to review the buyer's motivation for purchasing your home in order to ascertain their readiness to be a homeowner. Some will "nickel and dime" you to death as the transaction progresses as they repeatedly view your home, each time discovering "deficiencies". Others suffer buyer remorse and pull out after you've made other commitments.

Debt to Income Ratio

Conventional loan debt limits are often referred to as a qualifying ratios. This pair of numbers refers to percentages that are used to examine your debt load. For this example, we'll use the 28/36 ratio.

The First Number, 28

This number indicates the maximum percentage of your monthly gross income that the lender allows for housing expenses. The total includes payments on the loan principle and interest, private mortgage insurance, hazard insurance, and property taxes.

The Second Number, 36

This number refers to the maximum percentage of your monthly gross income that the lender allows for housing expenses plus recurring debts. Recurring debt includes credit card payments, car loans, and other obligations that will not be paid off within a relatively short period of time (6-10 months).