As we move forward from the recent housing market crash, we need to remember the tremendous financial undertaking of purchasing a new home. Here are 3 tips for dealing with financing to help you close on your next home. Pre-Approval Is Important. The first and most important thing to know is the difference between pre-approval and pre-qualification. If you as a buyer are pre-qualified for an amount of money, this means you “may be” qualified to loan x amount of money passed on a superficial look at your finances. When you are pre-approved, the lender has taken a more in-depth look at your actual income, credit history and debt. The pre-approval information allows you to have a realistic price point for a house you can afford and prevent getting in over your head with a house you cannot afford. Mortgage Selection. In this category it is best to consult a professional mortgage lender. Depending on your situation (credit card debt, student loans, etc.) you may opt for the 30-year mortgage to lower your monthly payment. If you are financial sound and have minimal debt, you will likely decide to go with a 15-year or 20-year mortgage to lower the interest rate and ultimately pay of your house in a shorter amount of time. A few bullet points to consider when choosing the mortgage that best fits your situation.
- APR (Annual Percentage Rate)
- Interest rate
- Monthly payment
- Lender fees
- Loan type, such as an Adjustable Rate Mortgage (ARM) or 30-year fixed mortgage rate
- Lender’s reviews and ratings
- Lowest cost over an amount of time
Research the Home You Want. It does not cost anything for a buyer to use a local real estate professional to assist with their search. A realtor can perform what is known as a Comparative Market Analysis (CMA) to help you decide what is a fair price for the home you want. If homes in the neighborhood have sold for 5% less than asking price, you should start your offer about 8-10% below the sellers asking price. Beth Sterner is a Real Estate Agent and Realtor® in Mooresville, North Carolina. Beth practices real estate in Mooresville, Troutman, Davidson, Cornelius, Huntersville, Denver, Sherrills Ford, Terrell, Charlotte and the surrounding areas.