It’s important to understand the financial responsibility of purchasing a home. Here are a few tips for dealing with the dollar signs so that you can take down that “for sale” sign on your new home.
Get pre-approved. Sub-prime loans may be history, but without pre-approval you’re likely to be shown homes you can’t actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. By doing a thorough analysis of your actual spending power, you’ll be less likely to get in over your head.
Choose your mortgage carefully. The emphasis when it came to mortgages used to on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. could mean it’s better to opt for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in the house for a long time, taking the points will save you money.
Do your homework before bidding. Before you make an offer on a home, your agent will do some research on the sales trends of similar homes in the neighborhood through the MLS. We consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.
More Information for Home Buyers
Get our home buying guide & checklist, learn about the benefits of homeownership, and read more blog posts for buyers on our Buyer Resources page. {{ HERE }}
