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. With rates at historic lows, it’s best to lock in on a 15 year loan if you can fit the monthly payments in your budget. In fifteen years you could be living with a paid-off house. Think about living life with no house payments! That’s a lot of cash you could use to travel the world or give to the charity of your choice.
Do your homework before bidding. Before you make an offer on a home, work with your REALTOR® to do some research on the sales trends of similar homes in the neighborhood. Have your REALTOR® create a comparative analysis of home values to make the best purchase offer on your next dream house.