Image Courtesy: Ken Shuman
There is a lot that goes into the purchasing of a home. Not only do you need to think about what you want today, but what you may need in the future. Having a one-on-one sit down with a housing specialist may be your next step, but first let us help educate you on some of the most basic aspects to being a smart first-time buyer.
Shop, Shop and Shop Some More
We cannot put enough emphasis on how important it is that you take a look at all of your options. Even if you think you’ve found ‘the one’, do yourself a favor and check out at least a few more properties. These days, there are many homes that have been on the market for a very long time and while they may require some fixing up, they could just be that perfect home that will keep you well within your budget and offer you a much less stressful future. For some of the best deals on the market, look into homes that have recently been foreclosed or auction houses.
Being Patient and Seeking Assistance
When it comes to foreclosed homes, don’t be afraid to try to lower the price. Oftentimes, banks are so desperate to gain profit from a home and get it sold that they will sell for much lower than their intended asking price. The longer a home has been empty, the more fixing up is required. If you can calculate about how much you are going to need to spend to make the home livable again, this could be a good start to negotiations. Keep in mind, purchasing both foreclosure or homes via auction can be a long and stressful process if you do not know what you’re doing, so you may want to work closely with a real estate agent who handles these types of homes regularly. It’s important that you know what you’re getting yourself into before signing any paperwork.
Be Cautious of Loans
Not all of us are lucky enough to be able to pay for a home outright. While the word ‘loan’ isn’t exactly something that sounds warm and fuzzy, loans are not the end of the world – as long as you know a few basic principles.
Types of Loans to Look Into
Ever heard the terms ‘fixed’ and ‘adjustable’ when pertaining to loans? Fixed rate loans offer an interest rate that stays the same during the duration of the loan. Adjustable rate loans have interest that varies depending on the market. Out of the two, adjustable is the cheaper way to go initially, however, this means taking a bit of a long-term risk. There are actually loans out there specifically offered from lenders for first-time home buyers. These types of loans, including graduated payment loans can offer as much as 97% borrow power. This will mean much more money to pay back but when money is tight, this may be the best solution for you and your family.
Be Aware of Predatory Lending
Whatever you decide to do, speak to a variety of lenders before making your final decision. If ever in doubt, spend some time getting to know the Federal Housing Administration, because a lot of the time, they will approve lenders to offer loans even if your debt to income ratio is a bit on the high side. Before you choose the loan that best fits your personal needs, beware of predatory lending. If a deal sounds too good to be true, it just may well be. Many families have lost their homes or gone deep into debt because they were approved for loans that they had next to no way of paying back.
Sit down with a financial advisor and figure out where you stand as far as your budget and how much of that budget you want to put into savings for unexpected expenses. You also want to take a look at your projected income over the next few years and what you think your monthly bills are going to look like. This way, you don’t find yourself in a situation where you are struggling to keep your head above water.
Carl Lewis is an estate agent and works for Abercrombys real estate, a property management firm in Melbourne. A simple man with simple tastes, he believes in helping people and puts his work ahead of all other activities. This attitude is beneficial for his work as he shows his clients various properties around the city and also gives them valuable suggestions.