How to Keep Your Stress Level Down When Dealing With Financing


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 $$$ so that you can take down that “for sale” sign on your new home.

Get pre-approved

By getting pre-approved by your lender, you will save yourself the effort of looking at homes 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

It used to be, the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt an average person will accumulate due to credit cards, student loans, etc. means it may be 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 your budget allows. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay upfront at closing) in exchange for a lower interest rate. If you plan to stay in your new home for a long time, paying 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 the help of your Realtor®. Consider sales of similar homes in the last three months. For instance, if homes have recently sold for more than the asking price, your opening bid should probably be close to what the seller is asking if the listing is rather new to the market.

Not sure where to start? Ask me for guidance and keep these top real estate tips in mind.