It’s about a month late, but it’s still January, right? So with the new year upon us, I thought it might be a good opportunity to list five New Year’s resolutions for home buyers. Sure, we focus on Wilmington, Leland and the southeastern portion of North Carolina, but these homebuying New Year’s resolutions are pertinent to anyone who has been working on or is planning to buy a home.
Homebuying Resolution #1: Make a significant downpayment.
There are reasons to make a significant downpayment when buying a home, the most obvious of which is that the more you put down up front, the more you’ll save in the long run. Let’s take a look at some numbers.
You’re looking at a $250,000 house. If you were able to put nothing down on it with current (as of this writing) interest rates, a 30 year fixed mortgage payment (with taxes, insurance and all that fun stuff) would be $1774. If you were able to save up and make a 20% downpayment, you’d instead be looking at $1319. That’s a savings of $5460 a year. To put it in more impressive terms, that’s a savings of $163,800 over the life of the mortgage.
Of course, not everyone can realistically make a 20% downpayment. However, even a 5% downpayment under the same conditions could save you over $74,500 over the years. So if you’re looking to buy a home, try to put as many pennies as you can into that initial downpayment.
Homebuying Resolution #2: Get your credit in order.
Unless you are planning to buy your home with cash, which, let’s face it, very few of us can do, you’re going to need a loan, and your loan will be determined by you credit score. To get a good loan, you’re going to need to get your credit score above 700 in order to get the best possible interest rate. Some lenders even want to see a score of 720 or more. So what can you do to help get your credit up there?
The best way to do it is to pay all your bills in full on time. And while some people are tempted to cut up their credit cards after taking care of any outstanding issues, that’s actually not the best thing to do to keep your score up. You should have several open and active lines of credit at any time. You don’t need to max them out; in fact you should probably not use more than 20% of what’s available to you. Just remember the first part of this resolution: Pay everything off in full every month.
Homebuying Resolution #3: Get the best loan you can.
You’ve saved up your money for a nice, large downpayment and you’ve got that credit score above 700. What do you do now? Now you go out and get a home loan. Don’t take the first loan you find though. Make sure to call around and talk to different lenders in order to get the best interest rate you can. It doesn’t end at interest rates though. You’ll want to ask about any other fees, whether there’s a prepayment penalty, points, mortgage insurance and so forth. You might want to seek the help of a professional once you have all your information together.
And that brings us to…
Homebuying Resolution #4: Use the best real estate professionals you can find.
Real estate is big business, and there are a lot of different people involved in real estate transactions. There are the buyers and sellers and real estate agents, of course, but then you’ve also got the mortgage company, appraisers and lawyers, at least. Purchasing a home is a big deal, so you want to make sure you’re surrounding yourself with the best, most competent real estate professionals you can.
How do you find those people?
A lot of people rely on word of mouth. If your parents or your friends bought a house not too long ago and raved about their lender, they might be someone good to talk to, right? The answer is “yes” with an asterisk. The footnote should be that you can start with people who were recommended to you, but you should also do some of your own research. Check out online reviews or sources like the Better Business Bureau to get more insight about the people who will be helping you move into your home.
Of course, if you’re looking for a real estate agent to help you buy or sell a home in Wilmington, Leland or the surrounding areas of southeastern North Carolina (especially if you’re looking at short sales), look no further than Nilesh Jethwa and Associates. Give us a call at 910-622-0319.
Homebuying Resolution #5: Do it for yourself.
One thing to remember is that YOU are buying this house. YOU are going to live in it. Friends and family sometimes think they know what you should do and apply pressure for you to settle or to live somewhere that might not be your first choice. They might have your best interests at heart, but remember that this is your house and your investment, so you need to be happy with where you end up.