DEALING WITH FINANCING

Dated: March 11 2021

Views: 20

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.

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 with sites like Zillow. Consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.

Blog author image

Matt Evans

As a Northwest Indiana region native of Valparaiso, I really enjoy introducing buyers to all our fantastic communities near Chicago off the southern shores of Lake Michigan. As Broker/Owner of RE/MAX ....

Latest Blog Posts

The Pandemic and the Real Estate Market

“Stay home.”But where is home? Seemingly, many Indianans are looking for a house. Even with COVID-19, the Indiana housing market hasn’t slowed. Sellers enjoy a steady stream of

Read More

Homebuying 101: Getting Started

I still remember how nervous I felt throughout the entire process of buying our first house.  My husband and I had no idea what we were doing, like most things in our lives, and looking back on

Read More

Fun Things to Do in Valparaiso

Why move to a place like Valparaiso, Indiana? Yes, there are great schools, community, culture, and low crime rates. Another reason to move to Valpo is all the fun things to do! As a society, we

Read More

The Lifestyle of Giving Back

At RE/Max Lifestyles, we love finding the homes and properties of our customers’ dreams. It is rewarding work -- but it doesn’t stop there. The ‘lifestyle’ behind RE/MAX

Read More