Purchasing a home is a monumental moment. However, it can also become a financial burden. 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.
1. Get pre-approved.
Sub-primes may be history, but you’ll probably still be shown homes outside your price range. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses that are out of your budget. 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 spending power, you’ll be less likely to get in over your head.
2. Choose your mortgage carefully.
Today, the debt the average person will accumulate due to credit cards, student loans, etc. has many opting for the 30-year mortgage instead of the 15-year. With the longer mortgage, you have a lower monthly payment, with the option of paying an additional principal when extra income is on hand.
When choosing 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 in the long run.
3. Do your homework before bidding.
Before you make an offer on a home, do some research on the sales trends of similar homes in the neighborhood with sites like Zillow. Consider 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. By hiring a Sazama Real Estate Agent, we do this work for you, presenting you with a comprehensive overview of the market and where you stand.