Buy A Foreclosure: 5 Simple Tips To Get A Good Deal On A Home
Buying a first home is often an overwhelming endeavor. Consumers get the feeling that their financial situation is rapidly getting out of control. Buying real estate is something most people have very little experience with or knowledge about. However, buying a home can be a simple and orderly process when you break it down to the basics. The following steps can help.
1. It is vital to get pre-approved for a mortgage as early as possible. Mortgage programs and their complicated paperwork can be confusing. An early head start gives you more time to fully understand what your are doing. An additional benefit is that potential sellers know that a pre-approved buyer is a serious buyer. This will give you a negotiating edge which is extremely beneficial if more than one buyer is interested in the home you want. Mortgage pre-approval can also save a great deal of time and effort. If you cannot be approved for a mortgage presently, you shouldn't waste your time looking at homes until you have overcome your mortgage obstacles.
2. The next thing you should do is beware of any prepayment penalties in the mortgage options you are presented with. A prepayment penalty means that you will be required to pay thousands extra if you sell or refinance the home during the first few years. There are many great loan programs, even available to borrowers with bad credit, that do not include prepayment penalties. If your loan officer presents you with a loan program which includes a prepayment penalty, you should strongly question why and usually turn it down and look for another loan. However, if your credit is bad enough that you know you will not qualify for a better loan any time soon, you may get a better interest rate if you accept a "soft prepayment penalty" in order to get a lower interest rate. What this means is that you will not be require to pay a penalty if you sell the home. Only if you refinance.
3. As the interest rate markets change over the next year or so, you should also be on the lookout for good adjustable rate mortgages. I know that you have heard many horror stories about adjustable rate mortgages, but there are some that have strict adjustment limits and easy refinancing terms and could save you thousands over a couple of years. An example of a good ARM would be an FHA adjustable rate mortgage. FHA ARM mortgages have strict adjustment limits, no negative amortization (your loan balance only goes down and never up), and a streamlined refinance process.
4. Before buying a home, make certain you know how much you can comfortably afford. Review the details of your family budget and determine how much you are realistically very comfortable paying on a home. If you already an efficient financial manager, this will be a quick process. It will surely take much longer if your finances are disorganized, but the effort will prove very rewarding. Your finances should be in order before buying a home anyway. At any rate, you should never rely on your loan officer and real estate agent to tell you how much qualify for. It is very easy for them to get you approved for a home you cannot comfortably afford. Both get paid more when you buy a higher priced home. However, they will not be there to help you make the payments later.
5. Once you have your finances in order, the first thing that you should do is to familiarize yourself with home prices in the area in which you want to live. Do not make a great effort to match yourself up with a home at this time. Check prices in the area online so that you know what people are asking for homes, but then be sure to check for foreclosed homes to take advantage of today's difficult housing market. It is a buyer's real estate market. For your first home, you are better off choosing a home for investment value than trying to get the perfect dream house. You want to buy a home for at least 10% to 20% less than similar homes which have sold. This way you are primed to take advantage of buying in a down market with little risk and making out like a bandit a couple of years later when you are ready to move up. Don't expect to pay full market value for a home even when prices are depressed and then benefit from inflation to build your equity. The other homes you will want to buy will be going up too. You make your money when you buy at the right price.
The above are just a few basic tips and there are many other things you'll need to know before you buy your very first house. The key is to educate yourself before you take action. Most first time homebuyers fail to operate from a position of strength. Many are paying the price for that in today's market. Don't let that scare you. If you concentrate on the learning the basics, you can control your destiny.
Article Source: http://www.search-raven.com
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FHA loans are the smartest choice of first time homebuyers in Georgia who want to profit from todays declining housing market
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