How much home can I afford?
Whether you’re looking to buy a house for the first time, or are looking to upsize, it is very important to know exactly how much home you can realistically afford. Having a figure in your head to start with will ensure that your home buying process is not drawn out, and you do not end up buying a house that you cannot afford long-term. As humans, once we start looking, we tend to be able to justify almost anything, including getting in over our heads in a house that we cannot afford.
Mortgages: Unique Opportunities
Recent real estate booms have led to the creation of many different types of unique mortgage options for Greenville area Real Estate buyers. While the mortgage industry used to be pretty much centered around the 30 or 15 year fixed loan, the options available to you as a modern-day homebuyer are pretty wide. In order to get the correct mortgage, you need to have some idea of your long-term goals.
For example, if you’re buying a home that you feel like you will not be moving out of anytime soon, getting that 15 or 30 year fixed-rate mortgage is probably the best option. Conversely, if you’re planning on moving in the next two years, getting a 30 year long-term fixed-rate mortgage would probably not be in your best interest, pardon the pun. Much of the difference between short and long-term loans has to do with the interest rate and the risk associated with longer-term loans. If you are sure that you will not need to own the home for more than a short period of time, why be penalized by paying higher long-term interest rates?
We Will Help You Determine What’s Best
During one of our first meetings with potential home buyers, we as real estate agents will talk with you and find out exactly what your long-term goals are. We are familiar with most of the mortgage options out there, and we’ll be able to steer you in the right direction. One thing we pride ourselves in is being unbiased and providing objective advice on mortgage and loan options, with no kickbacks coming to us for referring your business to the proper banker or broker – this process is unethical and illegal under RESPA rules. Many buyers would be surprised to know that their real estate agent is actually receiving a referral fee for their mortgage business as well. Remember, your real estate agent needs to have your best interests in mind, and not a profit incentive.
Having a large down payment can certainly help the banks make a decision about giving you a mortgage. They can also significantly lower your monthly mortgage payments. We understand that many homebuyers are not in a position to have a large down payment – of course we all have to start somewhere! We do recommend, however, that you save up for a few months and have as large a down payment as possible. The magic number varies from house to house, but having 10% down is probably a good rule of thumb for almost any home purchase. When we first meet with you, we’ll go more in depth about the down payment options.
Terms Matter as Much as Rate
When you are financing a home, it is easy to focus solely on the interest rate that you’re getting on a loan. There are other terms that are just as important, and once again your long-term goals can make a difference in which terms are better or worse for your particular situation. You may be able to “buy down” to a better interest rate by paying some points upfront. The decision to buy down your interest rate does not make sense in all cases. Let us professionally evaluate your situation and your long-term goals to help you in making the right decision on which terms are best for your particular case. The main thing is to be aware that the terms can make a huge difference when you’re getting that home loan.
Adjustable rate mortgages are offered typically when interest rates are low. As interest rates rise, you will not see as many offers for adjustable-rate mortgages, because they don’t make sense for most buyers when interest rates are indeed high. Because you’re about to go into the mortgage process, being aware of the opportunities and pitfalls of adjustable rate mortgages is probably a good idea. Be sure to ask your mortgage broker or your real estate agent in order to learn more.