If you don’t own a house, this may be the perfect time to consider one, as the real estate market has just about bottomed out in certain markets. Between foreclosures, people upside down on their mortgages, and a glut of homes on the market, you have your pick of properties too. Add to that the historically low interest rates, and you can see why buying now may save you a lot of money.
Know Your Market
The first step to getting a good deal is to know your market. Certain areas are not as heavily affected by the downturn in the economic climate. For example, I live in a highly military town. With officers moving in and out constantly on a 2-3 year rotation, good properties don’t sit long. There has been very little change in home prices thus far. Fifty miles away, the story is quite different though, so make sure you do your homework.
Pick the Right Mortgage
Buying a home involves all sorts of legalities and paperwork. The basics remain the same nevertheless. A fixed mortgage is your best option if you can get one. That way your payments won’t increase over the life of the loan. After a few years you can toss in a few extra dollars of principal each month, and pay off the loan faster.
Closing costs are always negotiable in some form or another. Mailing fees, title search fees, points, and commissions are all open to debate. In a market where sellers are desperate and banks are sitting on homes for months, you will find it quite easy to convince a lender to forgo some fees just to unload a property.
Due Diligence Counts Even More
Because people are eager to get out of their homes, you need to be particularly careful when negotiating a purchase. Spend the extra money to have an independent home inspector. Make sure to schedule a walk-through before closing and then follow through. This is especially important if you are purchasing a property that is being auctioned.
Look for Deals on Auction
When a bank forecloses on a house it wants to get rid of it as soon as possible, they usually offer the homes for the price of the remaining mortgage. The longer they have it on the books, the more it costs them. Foreclosure auctions are an unfortunate reality today, but you stand to save a lot of money if you can get your home this way.
With auctions, you also need to bring cashiers check and be willing to pay on the spot, so you will need to have your financing in place before you make bids.
Buy Only What You Need
One of the most expensive mistakes you can make when purchasing real estate is to buy more than what you need. It can be very tempting to get a larger house when you can get a great price on it, but consider the future implications.
Larger homes have more maintenance, higher property taxes, increased heating and cooling costs, and more cleaning to do. The mortgage, even a reduced one that results from buying a home that is in foreclosure, will be larger than that of a smaller home, and it can add up over 30 years.
Getting a house is expensive, so take the time to make sure you are comfortable with ownership before you decide.
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