How to Keep Your Stress Level Down When Dealing With Financing

 

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

 

Sub-primes may be history, but you’ll probably still be shown homes you can’t actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at Woodland homes you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of 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 spending power, you’ll be less likely to get in over your head.

 

It used to be that the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the substantial debt the average person accumulates due to credit cards, student loans, and other obligations means it’s often wiser to opt for a 30-year mortgage instead of a 15-year term. This choice secures a lower mandatory monthly payment, while still giving you the option to pay additional principal whenever cash flow is strong.

 

Additionally, when picking a mortgage, you usually have the option of paying additional points (often called discount points, where one point equals 1% of the loan amount) at closing in exchange for a lower interest rate. If you plan to stay in the house for a long time—and given the current real estate market, you should—taking the points can significantly lower your interest rate and save you money over the life of the loan.

 

Before you make an offer on a Woodland home, do some research on the sales trends of similar homes in the neighborhood using real estate databases like Zillow. Pay close attention to the final sale prices of comparable properties over the last three months to gauge the local market's temperature.

 

For instance, if homes in the immediate area have recently been closing for an average of 5% less than their initial asking prices, it indicates room for negotiation. In a softer market like that, targeting an opening bid roughly 8% to 10% lower than the seller's asking price can serve as a strong, data-backed starting point for negotiations.

 

Not sure where to start? Ask your local Woodland realty expert for guidance and keep these top Washington real estate tips in mind.