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 you can move into your new home.
Get pre-approved. 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. And your offer is stronger when it includes a pre-approval from your lender.
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 may be 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, do some research on the sales trends of similar homes in the neighborhood. As a licensed Oregon real estate broker and Realtor, I can do the research and guide you in making an offer on your new home.