Of all the purchases you make during your lifetime, homes are among the most valuable items you pay for. In fact, a person’s home often represents a once in a lifetime purchase accounting for a lion’s share of his or her net worth. As a result, managing your home purchase correctly is one of the most important financial considerations you’ll ever face.
Most consumers only buy a few homes during their lives – if that. The ins and outs of home buying are difficult to master, because you only pay attention to the subtleties occasionally, when you are actively involved in the process. And though repeat buyers have more experience than first-timers, navigating the real estate market can be a costly proposition for uninformed home buyers.
To make the most of your home purchase, strive to account for all the cost considerations tied to your real estate deal, leaning on personal knowledge and expert consultation to land the best terms. And as you move your dream of home ownership forward, remember purchase price isn’t your only concern.
Asking Price is a Starting Point
Each home buyer comes to the table with his or her own set of requirements. In addition to a home buyer’s budget, for example, location and other factors influence the decision to move forward buying a particular home. For the best results, prioritize your family’s needs before striking out on a home-buying mission. Is price your most important consideration? Or are the features and appointments your family needs the primary focus of your quest?
Once you’ve defined some of the parameters of your home search, it becomes easier to begin negotiating the financial aspects of your purchase. You may find some expensive features can be sacrificed for the sake of securing the best possible purchase price. On the other hand, you may be willing to pay extra for the particular amenities you place value on. Sketching out a profile puts you, your bank, and your realtor on the same page as you work together crafting a home purchase within your budget.
Use your profile to follow real estate trends in the neighborhoods you’d like to live, tracking prices and turnover times as you do. The wealth of data gleaned from these observations helps refine your search, and prepares you to recognize good values when they appear on the market. Pre-qualified financing also supports your search, establishing firm limits on what you can and cannot afford. By accounting for these specific details, your realtor is better-able to highlight homes suitable for you and your family.
Financing Rates are the Other Half of the Home-Buying Equation
Beyond what you actually pay for your home, its total cost ultimately reflects the financing conditions tied to your deal. Interest rates operate according to general prevailing economic conditions and they also reflect your personal creditworthiness. In order to secure the most favorable financing on your home purchase, strive to buy when interest rates are low and to maintain the best possible credit rating.
Working with a bank or credit union familiar with your financial situation helps track interest rates and affordability, supporting your own research and awareness of financing trends. Together, you and your trusted lender position your buying effort properly, preparing you to pounce on housing bargains when they emerge.
Once you’ve identified a desirable home and have an accepted offer, the deal will require closing, which adds costs associated with the transfer of the property. Working alongside the interest payments you’ll make over the life of your loan, closing costs add to the overall cost of financing your purchase. It is important to compare the cost of closing between various lenders, ensuring you choose the bank or credit union offering the best terms. In some cases, you may be able to save money by passing some of the closing costs to the seller.