Buying a new home can be an arduous process. However, with some research and a good realtor on your side, you can find the right house and maybe even save a little money along the way. With these home buying tricks, you’ll be on the road to locating the ideal home for you.
Explore Your Down Payment Options
It used to be that the standard down payment was 20 percent of the purchase price, but those days seem to be behind us. A 2018 report from the National Association of Realtors indicates that of the home buyers who took out a mortgage, 55 percent made a down payment of 6 percent or less. Do some research to find out the average down payment in your area. You may even be able to find down payment assistance grants that you do not have to repay.
Conventional loans from private lenders typically require a 5 to 20 percent down payment. Conventional loans aren’t the only way to go, however. You may be eligible for a VA home loan or USDA loan without any down payment at all. There are also conventional 97 mortgages, which require only 3 percent down payment. While government-backed FHA home loans can be acquired with as little as 3.5 percent down.
Remember that the lower your down payment, the bigger your home loan will be. Also, the benefit of putting 20 percent or more down is that private mortgage insurance (PMI) will not be required. Weigh your options and figure out which type of loan is most suitable for your financial situation, which may involve doing some research into the local market.
Get a Pre-Approved Mortgage Loan
Once you have decided on a down payment amount, you’ll want to get a pre-approved mortgage loan. With pre-approval, the lender looks at your credit, verifies your income, checks out your assets, and explores other details about you. Then, they provide a pre-approval letter that says you’re able to borrow up to a certain amount at a set interest rate — as long as you meet certain requirements. When attempting to buy a home, your offer will look much stronger if you’ve been pre-approved for a mortgage loan.
Pick the Right Realtor
Enlist the services of a real estate professional who is very familiar with your preferred area. Ideally, it would be someone so entrenched in the community that they have connections to find out which homes are about to hit the market. Ask friends, family, and co-workers for recommendations, and talk directly to several people who have used the agent personally. Also, check out the agent’s track record — not the number of homes they have listed, but the number they have actually closed on in recent months.
Look at Homes That Are Getting Passed Over
Although your realtor will do much of the legwork for you, you should also research homes yourself. Instead of just searching the newest listings, take a look at the oldest ones. Sometimes homes are on the market for many, many months, and this is where you may be able to get a significant discount. Some homes are passed over for inconsequential reasons — the landscaping is awful, the house is too dark, there’s too much clutter, and so on. If the home is without major issues but has been for sale for quite some time, make an offer well below the asking price. Of course, as with any other home, you should get an inspection.
Be Flexible (But Not Too Flexible) About Location
Everyone has their favorite neighborhoods and subdivisions, but by being a little flexible, you can snag a deal. Look right outside your favorite areas, a few blocks can often make a difference in home prices. Don’t stray too far from your target locations; you don’t want to compromise to the point you won’t be happy with the home, you won’t like the school district, or there will be crime issues. You can change everything about a home except its location.
Shopping for a home can be a time-consuming and nerve-wracking experience. However, armed with plenty of research and an awareness about your financial situation, you can be in the position to make a great deal on a terrific home.