Shopping for a Mortgage

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As the events of the last few years in the real estate industryshow, people forget about the tremendous financial responsibility of purchasinga home at their peril. Here are a few tips for dealing with the dollar signs sothat you can take down that “for sale” sign on your new home.

Getpre-approved. Sub-primes may be history, but you’ll probably still be shownhomes you can’t actually afford. By getting pre-approved as a buyer, you cansave yourself the grief of looking at houses you can’t afford.  You canalso put yourself in a better position to make a serious offer when you do findthe right house. Unlike pre-qualification, which is based on a cursory reviewof your finances, pre-approval from a lender is based on your actual income,debt and credit history. By doing a thorough analysis of your actual spendingpower, you’ll be less likely to get in over your head.

 Choose your mortgagecarefully. Used to be the emphasis when it came tomortgages was on paying them off as soon as possible. Today, the debt theaverage person will accumulate due to credit cards, student loans, etc. meansit’s better to opt for the 30-year mortgage instead of the 15-year. This way,you have a lower monthly payment, with the option of paying an additionalprincipal when money is good. Additionally, when picking a mortgage, youusually have the option of paying additional points (a portion of the interestthat you pay at closing) in exchange for a lower interest rate. If you plan tostay in the house for a long time—and given the current real estate market, youshould—taking the points will save you money.

Doyour homework before bidding. Before you make an offer ona home, do some research on the sales trends of similar homes in theneighborhood with sites like Zillow. Consider especially sales of similar homesin the last three months. For instance, if homes have recently sold for 5percent less than the asking price, your opening bid should probably be about 8to 10 percent lower than what the seller is asking.

Happy House Hunting!!