You have decided to you want to buy a home. You supply the lender with all your paperwork, and you know you can afford a mortgage even if it’s a little outside of your payment comfort, but for whatever reason you just can’t seem to get into a contract. The stars are not aligning, which, for some families, can be very discouraging. Here are some following things to consider as it relates to getting into contract to buy the family home…
Is the price that you are preapproved for supportive of the type of property you’re desiring to get? For example, if you’re looking for a home in Sonoma County, California and you’re preapproved up to $1 million, but you want a five-bedroom five bath home on five acres turnkey newly remodeled well that is incongruent with a $1 million price point that’s more of a 1.5 price point and above. The point here is to align where you are financially to what the market will support.
Are you taking the advice of your lender and your realtor? If your lender and your realtor are telling you based on their experience and what they’re seeing in the present marketplace that you need to go in on the property a little bit stronger, or whittle down your time frames on contingencies, take their advice, they know what they’re doing, and they’re there to help you be successful. Pushing back on their advice, making an offer, and then losing on the house, because you’re not willing to take their advice doesn’t add up for a successful situation. It might transition into an exceptionally long and hard road and during that long and hard road keep in mind interest rates are in flux. The longer it takes the more it might could cost you, in other words if you keep pushing back because you have to have the house that you want in a specific area and a specific bedrooms bathrooms, lot size square footage, then you find the house, then you push back on the realtor’s advice that can prolong the process. If interest rates are going up, it actually cost you more money to be resistant to the advice that you’re getting vs ripping off the band-aid, taking the advice of your realtor and lender, and preserving the integrity of your financial situation.
How far apart are you from what the realtor and the lender are telling you in relation to what it will take to get the home? For example, let’s say you’re targeting a house price at say $910,000. The realtor comes back after talking with the listing agent and tells you that to get the home you should be in say 925,000. Let’s say the payment difference between 910,000 and 9 125,000 $ is about $100 a month. You should be operating off of the $200-$300 month payment buffer anyway if you want to be a successful buyer but regardless of that $100 a month in the grand scheme of things, is it worth it to forgo the house and have the extra $100 a month and give up all the future happy memories that house is going to offer for you and your family for years to come? Is that not worth $100? When is take the advice of your realtor in your lender.
Can you be more flexible? If you could be more flexible on your payment, and bite off, a little bit more than you can chew just a little bit to make a financial justification for the right house in the right neighborhood and the right situation. You might want to give some strong consideration to conceding and here’s why -whatever interest rate you’re getting today is not going to be a great interest rate. It’s a rate for the market today, but we all know the market is going to change again in the future and interest rates will come down. Put another way the payment is temporary. Keep in mind lower interest rates drive borrowing power so lower rates also means you’re going to get the injection of home-equity (if you already bought a home) driving your loan to value lower, helping you potentially get rid of PMI while lowering rate the payment. More value for your home will result in getting you better terms because the loan to value on your loan is going to be less resulting in more favorable terms and better mortgage pricing, when that juicy refinance comes in the future, which we can all probably agree is inevitable.
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