Three Tips for Buying Your New Home

By: Kari Shea

Today's shifting home market gives many prospective home buyers the heebie-jeebies. Keep in mind you are not alone. Many other people are in the same situation right now, and lots of them are getting great prices on the homes of their dreams. Falling prices in the current market gives buyers the opportunity to find a real deal on a home they will love for years to come. If you remember a few key points, the process will be painless.

First off, make sure you're not biting off more mortgage than your income can chew. If you intend to stay in your home for more than a few years, you'll want to look at the big picture. Is your income stable? Assuming you're going with a fixed-interest loan, your payment will be the same every month. Most people don't put down a twenty percent, so you'll likely want to include mortgage insurance into your calculations. If you are buying a condo or townhouse, remember to include homeowner's fees in your calculations. Also consider how much homeowner's insurance is going to cost you. Make sure you are comfortable with the cost of your mortgage and are able to make the payment on time every month for years to come.

Next, choose your mortgage options carefully. Many homeowners went for enticing adjustable rate mortgages a few years ago only to find that their interest rates ballooned so high that they ended up in foreclosure. Not good. That is one of the main causes of the current market fiasco. Sure, lower interest sounds enticing initially, but you need to think about the long term. Many people move into a home and think they will be moving in a few years. The future is uncertain, but your mortgage payment does not need to be.

Also, when you are negotiating the terms of your mortgage, choose carefully between points and rate. You will usually have the option of going with a lower interest rate in exchange for paying additional points on your property. Again, longevity is the key to this equation. If you're going to stay in your new home for more than five or six years, the money you will save on interest makes the points a good idea.

Lastly, in today's shifting market with home loans are getting harder to come by, it is wise to go get pre-approved for a mortgage before you initiate the buying process. You won't have to be disappointed if you get your heart set on a house that lenders think is out of your price range. You'll be better prepared to make an offer on a house with a pre-approval in your pocket and it will make the whole process go smoother for you.

Today's housing market is ever-changing, but certain fundamental principles will always apply to the process of buying a home. Especially in a shifting economy, it's good to approach the process as a savvy consumer with knowledge of your own finances. Understand your mortgage options before you buy. It makes the process of purchasing your dream home at a great price painless. Take advantage of today's low market prices when you understand what the best mortgage is for you.

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