With New Years right around the corner, there are millions of people who are either getting ready to purchase a home or who are at least thinking about it.
Getting a good deal on a home requires some preparation. Here are just a few tips that you can follow if you’re going to buy a home in the coming year.
1. Save Up for a Down Payment
Getting enough money for a down payment can often be one of the most difficult parts of buying a home. However, don’t despair if you are unable to afford that much for a down payment. There are down payment assistance programs for qualified borrowers. Moreover, FHA loans can often come with very low down payment requirements.
Home buyers who put enough money down can even avoid having to pay for private mortgage insurance. In order to avoid paying for private mortgage insurance on a conventional loan, you only need to put down 20% of what the house is worth.
2. Buy Early Rather Than Later
Once you have the money necessary for a down payment and a home picked out, move as quickly as possible. Interest rates are expected to continue to rise over the coming year perhaps past 5%. The Federal Reserve has finally started to taper the support it has been providing to the U.S. economy. This has removed a significant barrier to rate increases.
Home prices are expected to rise as well, though not equally in all areas. In general urban areas have seen home prices rise more slowly than in densely populated metropolitan areas. In fact, in many parts of the country and in particular the South home prices have actually fallen from last year. For that reason, it would be beneficial to do a little bit of research on how home prices have been behaving in the area that you’re looking to buy.
3. Don’t Be Afraid That You’ll Offend A Seller with Your Offer
When you’ve found the right house, the next step that you’ll need to take is to make an offer. Don’t be afraid to offend the seller with a low offer. There is no magic formula for how to make an offer to a seller. Some realtors have suggested taking off 10% of the asking price, but this view doesn’t take into account a number of factors. Sellers can be emotionally attached to their homes and price them high. The best way to determine what a home is actually worth is to look at the value of similar homes in the area.
4. Get Pre-approved Before You Start Looking
The pre-approval process can often take as long as two weeks. By getting pre-approved before you start looking you’ll have a leg up on all other potential buyers that are also looking to purchase a house. In order to get pre-approved you must first meet with a loan officer. He or she will then review your credit files in order to determine if you’re eligible for pre-approval.