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Getting financing to buy that house
Getting financing to buy that house-the Does and Don'ts
In today's real estate market, I have seen many mistakes that are being made when it comes to buying property. Whether it is borrowers buying houses they really can not afford or just plain choosing the wrong mortgage, or a combination of both. Here are some very simple steps that all home shoppers can use. - Always buy a house on what you can you afford using a 30year fixed mortgage. The reason for this is simple. This is the absolute max that you can afford. Don't use an alternative mortgage product to buy a bigger more expensive. - Consider your other expenses such as day care, household items. Just because the bank says you can afford it, doesn't mean that you can actually can. The bank approves on Gross income not what you take home. - Speak to a CPA about changing your withholdings; on average a $2000 dollar a month mortgage payment in 25% tax bracket will have a $400 dollar tax break every month. Your CPA can set it up so you see it in your paycheck, and not giving Uncle Sam a $4800 dollar loan every year. - Only use alternative loan products such as arms or interest only features if you plan on saving the difference from the 30 year fixed and alternate program in a tax free safe investment vehicle. Such has a bond, VUL (variable universal life policy), or a conservative mutual fund. - Always use a broker that can provide you at least 5 references and that has been in business for longer than 4 years. Individual banks are limited on the different loan programs. - Never pay origination points. It takes the average person 8-9 years to recoup that point - Always have yourself completely approved before you even think of putting an offer in on a house. By being fully approved you become a cash buyer, which puts you in a much stronger position to negotiate. On average you can save an additionally 2-5%. - Make sure you hire a good home inspector. You want to find those costly repairs before you take ownership of the property. - Spend the money for a good attorney to do your P & S work. I have heard Realtors and lenders tell clients that they don't need it; there all the same, I say bull. A good attorney can make sure that all your ducks are in a row and you won't get burned. Lastly for this lesson, make sure you read what you're signing. I can not tell you how many clients say later on, I didn't have that for a loan; I thought it was something else. Make sure you get qualified people to work with, and remember if it sounds to good to be true it probably is. |
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