How to Get the Best Deal When Buying a New Home
The home buying process can be exciting, but stressful, too. Before you start making offers on homes that interest you, arm yourself with the research and know-how to find the best deal. With these tips and tricks, you should be able to find a home you love without overpaying.
Check out your credit report
Before you apply for home financing, get a free copy of your credit report. Look for any errors in the report and get them corrected before applying for a mortgage loan. If your credit score isn't up to snuff, consider delaying buying a home until you pay off outstanding debts and improve your credit score. Also, after you apply for a mortgage, don't apply for any other loans or credit card accounts until your loan closes, or your credit score could go down (and your interest rate can go up).
Determine your down payment
You might think you need to put 20 percent down, but that’s not always the case. In fact, according to Forbes, down payments vary from 5 to 20 percent of the home’s purchase price depending on the type of property, and you can find loans with no money or very little money down at all. The First-Time Home Buyer Incentive, for example, helps people purchase their first home by offering 5 or 10 percent of the home’s purchase price to be used towards a down payment. Keep in mind if you don’t put down 20 percent, you may need to pay private mortgage insurance (PMI), depending on your situation.
Shop around for lenders
When applying for a home loan, don't just get one interest rate quote and jump on it. Research from Freddie Mac indicates that shopping around and getting a second rate quote saves the average borrower $1,500. If you get five quotes, it could save $3,000. When you are shopping interest rates, you can also gather information about the lender's origination fees, points, and any additional fees. You can also ask questions, get a feel for how they handle customers and find out how long they typically take to close a loan.
Get a pre-approval letter from your chosen lender that spells out how much they'll lend you and under what specific terms. A pre-approved mortgage loan will put you in a stronger position when making offers on homes.
Choose the right real estate agent
Ask friends, family members, and co-workers to get personal recommendations for an agent. A skilled and experienced real estate professional like Ziggy Zolotenko will be closely familiar with your target area and know what homes are currently on the market in your price range.
When first talking with your agent, ask about whether it’s a smart choice for you to buy a house as-is. Of course, this negates your ability to ask the seller to make repairs; on the other hand, it gives you the opportunity to drive down the asking price during negotiations, depending on what’s found on the home inspection.
Buy in the offseason
In most areas, houses sell quickly in the spring and summer, while homes linger on the market in the wintertime. Though there will be a smaller inventory of available homes in the winter, you may be able to find a home you love at a discounted rate.
Negotiate on more than the sales price
Everyone knows you should haggle about the sales price, but you may also be able to get some extras in the deal. That could mean a flooring allowance, some of the furniture, or all the appliances included in the sale. You can also save quite a bit of money by asking the seller to pay some of the closing costs.
Whether you are a first-time home buyer, someone looking for their dream home, or a senior who is downsizing, you should always be willing to learn more about the home buying process as well as the trends in your housing market. By choosing the right lender and broker, and doing a bit of legwork yourself, you’ll be able to secure home financing and purchase the ideal home for you once stay-at-home orders are lifted.
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