As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. 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-primes may be history, but you’ll probably still 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.Used to be the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means 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—and given the current real estate market, you should—taking the points will save you money. Ask Sandy for her list of Mortgage Partners, who work closely with her to help you get the best financing possible.
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 by contacting your local real estate expert, Sandy Schiel. She will help you evaluate recent sales of similar homes. While Zillow can sometimes be helpful to see sold prices in the area, it should not be counted on for accurate estimates or even to sell to Zillow offers. This means you get no other bids and it will often be a low-ball offer. Unless you’re looking to lose money, it’s best to consult with a local expert Realtor.