No matter how wise or experienced a person might be, dealers and agents can make a fool out of them on one of the many terms of buying a new home. If you want to stay away from such difficult situations, then you must read the entire blog to become a smarter and wiser home buyer.
Do not commit too early
More than often, home seekers start looking for a property without thinking about the mortgage they will bear. They fall for a home and trust agents over the financing issue. Eventually, they are stuck in paying toxic loans that could have been easily avoided.
Do not let your emotions take over logic, or you will make horrendous mistakes while buying a home. The property you survey is handsomely decorated to hit the right buttons and convince you in making a rash decision.
It is recommended that you should get in touch with at least three lenders. In this way, you will get a collective idea of the monthly payments you will be incurring. Deal with the most feasible option after acknowledging your paying capacity.
If you can, then try to stick to a local bank for your mortgage, they might just be able to provide you with top tier service. If your home is in Texas, then paying very high property taxes might eat into some of your budget. A local bank like SouthStar Bank might be able to provide you with the best interest rates to alleviate some of the burden of the high property taxes.
Do not devour your savings
Using the entire savings to pay the closing costs and down payment is a blunder. Majority of people are happy to use all of their savings to settle the down payment without realizing that they have just entered a phase of excess expenses.
People in defense of this practice will claim that this method eliminates the need for paying mortgage insurance. Well, it does lead to some savings on monthly mortgage payments, but the risk is not worth taking. A new house requires a lot of decoration, changes; maintenance, and the cost of moving into the house cannot be overlooked either. Plus, it might add to your food and traveling costs while increasing the utility bills.
You need extra cash to settle all the liabilities, but in the absence of your savings, you may not live peacefully. Instead, you should carry four to six months of living expenses just in case the new home outshines your budget.
Don’t shy away from the negotiation
Sometimes, we are just too lazy or shy to confront the dealer over negotiation. On the other hand, some people compare home prizes with other properties they might have seen. This is a big mistake as you can never compare two homes and the dealer is more than happy to declare an over heightened price.
You can ask the dealer to provide you the list of comparable sales of the area. It is the data of the houses sold in the locality within the past three months. If you are dealing for a hot property, then the chances are that your lender is asking more than the legitimate price whereas if the property is undesirable, then you can lower the cost dramatically through deliberate negotiation. Remember, negotiation is an art, and if you can utilize this skill well then you can definitely save some money.