Laura gives 6 tips for smart ways to buy real estate.
The decision to become a homeowner should never be taken lightly. Not only is the mortgage a huge responsibility, but you have to factor in property taxes, insurance, private mortgage insurance (PMI), and ongoing maintenance into your budget.
Here are 6 tips to make sure buying real estate is a smart move for you:
Tip #1: Save a 10-20% Down Payment
Pay a larger down payment even if you can get approved to pay less. The more you pay upfront the lower your mortgage payment will be. But did you know that you might also be offered a lower interest rate as well?
Additionally, if you can swing at least 20% down you won’t have to pay private mortgage insurance premiums.
Tip #2: Monitor Your Credit Score
Make sure your credit score is healthy so you can get the cheapest mortgage possible. Even qualifying for a rate that’s half a percentage point lower could translate into massive savings. You can get your credit scores for free here.
Here’s an example: Paying 4.5% instead of 5% on a $200,000, 30-year mortgage would save you close to $22,000!
Tip #3: Get Pre-Approved
Always get pre-approved by a home lender before you go shopping.
Find out how much you can borrow before you fall in love with the home with the top-of-the-line chef’s kitchen.
Tip #4: Know What You Can Afford
Decide how much you can afford before you sign a purchase offer. Just because you can borrow a big chunk of change doesn’t mean you should.
Figure out if the total cost of owning a home fits into your budget and overall financial goals.
Tip #5: Work with a Pro
Find a real estate professional who is very familiar with the neighborhood where you want to buy a home. Many times they have the inside scoop on motivated sellers who might give you a great deal.
Tip #6: Negotiate
Negotiate with the seller to pay your closing costs so you have less to pay out of pocket at the closing table.
When it comes to buying real estate remember that just about everything is negotiable.