Buyer Groundwork
The prospect of buying your first home, or a new home is exciting. But when is the best time of year to buy? Most listings come on the market in early spring and into the summer months, and the increased home inventory spurs many buyers to act. Spring and summer is a more competitive time for buyers than winter and fall.
Laying groundwork as a buyer can help you be ready when the right home comes along at any time of year. Simply deciding what type of home you would like to own and how much you can afford gives a buyer a lot to consider.
The list price of a home is the primary consideration for most buyers, especially first-time home buyers. A good starting point is to ask your Realtor or lender, at the current interest rates, how much your payment would be for each $10,000 on your mortgage. This is an easy formula, using amortization based on a 30-year term, and it is unique to a buyer’s credit score and income.
For example, maybe rates would allow you to purchase at $62 per month for every $10,000. So, on a mortgage of $250,000 your payment would be $1,550. By using this system, that is unique to you, as you look at homes of varying prices, you can estimate what your payment will be. You then add the monthly tax and insurance amount, any applicable homeowner’s association fees and calculate your monthly total. Your total monthly payment consists of Principal, Interest, Taxes and Insurance (PITI).
Additionally, buyers need to understand what their closing costs are to eliminate surprises. Closing costs include your down payment, tax impound (one-year’s taxes) insurance impound (one-year’s insurance), loan fees, appraisal and miscellaneous fees. I can recommend a lender who can outline these requirements and walk you through the process.
I strongly encourage buyers to get pre-approved with a lender prior to looking at homes. Firm down your budget; decide what you can really afford. Get in touch with the activity of interest rates; are they going up or down? What are the property taxes? Some areas are high and some are low.
Identifying your budget and needs saves you time and effort. It isn’t productive to look at properties beyond your price range or consider homes that don’t meet your needs in size or location.
I always tell buyers to look first for the newest listings that meet their basic criteria and then look at the next best choices available. As we exhaust the current inventory, new and old, we may be on a daily watch to act on new listings the minute they come on the market.
By laying buyer groundwork, you will get your best real estate value and be able to make a purchase with confidence that you found the best home.
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