Never have property prices been as low in at least a decade as they are today. Not very good news for people selling homes, but for those who are buying homes, this couldn’t get better! If this is your first time to buy a home and you’re searching for some good prospects, heed the following tips for a low and smart purchase.
First and foremost, is buying really for you? Wouldn’t you rather rent if rentals are cheaper than purchase in your city? If you intend to move at least within the coming two years, or if things have gotten quite uncertain with your job, buying may not be an intelligent move. Remember that real estate as an investment has ceased to be as liquid as five or ten years ago.
Now look into your credit. Aside from cash, good credit is also crucial to getting and keeping for yourself a great bargain home. Prior to shopping around, be sure that you have enough cash to make a down payment, and also a mortgage provider that will give you a loan for a reasonable price.
Get preapproval by a lender or mortgage broker. This actually helps speed up the purchase-closing process which normally takes months, considering the current economic situation.
On the issue of down payments, consider your options. When you put down at 20 percent, that will instantly increase equity to the property, and you’ll even trim down your monthly payments. One way of ascertaining your readiness for a home purchase is if you’ve set aside cash that is sufficient to make a down payment. This down payment can also make it easier for you to enter a loan modification program if you ever need it.
Most first-time home-buyers, however, don’t have money to make the 20 percent down payment. The good news is the government offers a variety of home loan programs, such as those provided by the Federal Housing Administration, along with the Department of Veteran Affairs and the Department of Agriculture.
Note though that if you don’t put 20 percent down, you’ll be obliged to buy private mortgage insurance. PMI will set you back around 0.5 to 1 percent of the loan’s entire amount on an annual basis. This insurance serves to protect your lender in case you default on your payments, and is usually charged until you’ve paid at least half of your loan. What’s great is, for married couples who make up to $110,000 every year, PMI is tax deductible.
When it comes to how much you can afford to pay for a house, be brutally honest to yourself. Don’t get a house that will eat up most of your monthly income. Besides mortgage and principal payments, you also have real estate taxes, maintenance and insurance as your other vital costs. When buying a home, also think about leaving yourself enough money.
Finally, do not take shortcuts with inspections. This is critical to determining the condition of the property you’re planning to purchase, especially if it is a foreclosed home.
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