It’s a tremendous financial responsibility to purchase a home. Make wise financial decisions with these three tips for dealing with financing.
The pre-approval process is done by a lender and is based on your actual income, debt, and credit history. If you get pre-approved as a first step, it will save you the grief of looking at homes you can’t afford. It also puts you in a better position to quickly make a serious offer.
Choose your mortgage carefully
Today, personal debt from credit cards and student loans has resulted in many home buyers opting for a 30-year mortgage. 30-year mortgages offer a lower monthly payment and the option to pay additional principal later. Some lenders provide the option of paying additional points at closing in exchange for a lower interest rate. Given the current real estate market, if you plan to stay in the house for a long time, this option could save you money.
Do your homework before bidding
Before you make an offer, research the sales trends of similar homes in the neighborhood using a site like Zillow. Consider sales of similar homes in the last three months. If homes recently sold for five percent less than the asking price, your opening bid should be about eight to ten percent lower.