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.

The emphasis used to be on paying off your mortgage as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means times have changed and things are different and it’s better to opt for the 30-year mortgage instead of the 15-year term. 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 consider paying the points as they will save you money.

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 and feel free to start with sites like Zillow.com, Trulia.com, and Realtor.com or similar if you so desire. Consider especially sales of similar homes that have sold recently and in the last three months would be most ideal for sound comparisons. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid might possibly need to be about 5-10 percent lower than what the seller is asking.

 

Contact me today @ (970) 381-2477 and let’s get started on making your real estate dreams a reality!