Buying a House? Before the Down Payment, Here’s the Lowdown

If you’re in the market for a new house, you've obviously gotten wind of the upturn in the American real estate market. What just a couple of years ago might have taken an inconceivable amount of risk is now finally not only for the daredevils: with the housing bubble now firmly in our rearview mirror, becoming a homeowner is a definite possibility... if you’re ready, that is.

Pre-Purchase Step 1: Know Your Facts

The Internet is full of tips-and-tricks articles about what to look out for when buying a home and more articles emerge daily that can shed light on the subject of financing your goal of a dream home. In a market still prone to out-of-the-blue sea changes, be sure to read up on the status of mortgage rates, home price hikes, and so on. 

Then, narrow your focus and hone in on the trends in evidence throughout the actual neighborhood you’re trying to buy into: find out how much houses have been going for in the past few months, so as to lower your bid against the asking price accordingly. Also, consider the quality of the schools in the vicinity of your desired school, as these kinds of details will drive your property price up in case you ever want to sell.

Pre-Purchase Step 2: If You Intend to Flip It...

… think again. Since the real estate market crashed, the Fed has been helping it rebound and we are now seeing the first signs of progress. It was slow to reach this stage, but, as it’s now being reported, the demand for houses is inching itself up to not only healthier levels, but as close to a full recovery as one can expect at this stage. As things are looking up and a so-called seller’s market is even gaining ground, the prices for real estate are nevertheless significantly lower than they were in 2007. It might actually be the right time to consider shelling out the pretty penny required for a new home - that doesn't mean that you’re guaranteed to get a return on your investment should you decide to sell in even a few month’s time...

Pre-Purchase Step 3: Enlist the Help of a Professional Lender

With some outlets tentatively putting the word of a new bubble in the making, you’re probably in a bit of a hurry to get a bid in. It’s not, however, advisable that you go through this list at full pelt and gallop toward your dream-home finish line. Skipping steps or rushing through the procedure won’t save you time - to the contrary, it can only cause you more hassle in the long run. 

A professional agent is uniquely placed to treat you fairly and take the time to explain all that’s needed for you to make an informed choice. A lender’s role is also of paramount importance: seek one out for pre-approval as soon as possible. Given the right lender, you will be counseled on how to go about the buying process, you will be informed of the price range you can actually afford (commonly 2 ½ times your yearly salary) and you will get an appraisal of both your financial history and the house you’re planning on buying.

All of this is to say, simply put, caveat emptor! For most prospective homeowners out there, this will probably be the most important purchase of their lives. The thing to remember, though, is that it needn't also be the most taxing one, on your finances or your state of mind.