One of the smartest, and easiest, ways to make life easier is obtaining a solid mortgage approval before shopping for a home. Low housing inventory in many markets means that clients are competing with multiple offers. Having a mortgage approval before starting the hunt for a home allows the client to make a stronger offer when they find a home. And this places a client in a much better negotiating position, and it could possibly save the deal.
The cost of selling a house (roughly 8%) must be considered. When an owner sells their house in the future, they will most likely need to sell the house for at least 8% - 10% more than what they paid for it just to break even and cover the real estate commissions and transfer taxes on the sale. If a house goes up in value by the long-term average of 3% per year, the new owner would likely break even in 2-3 years.
JMAC’s experienced brokers remind clients to consider the costs of improvements, utilities, and maintenance. Has the client considered the costs of improvements, utilities and ongoing maintenance expenses? Clients are told to have their home properly inspected before the closing. Investigate the cost of utilities, and make sure to budget for them, and to budget 1%-2% of the home's value for annual maintenance expenses.
Choosing the wrong down payment strategy is something our brokers work to avoid. A study was recently conducted by the Federal Reserve showing that a home buyer's down payment strategy is eight times more impactful on housing affordability than the mortgage interest rate.
And our brokers tell clients that the right mortgage professional can help them consider things that they may otherwise overlook during the home buying process. Their client’s mortgage is most likely going to be their single largest debt and their home is most likely going to be their single largest investment. That’s why it's important to work with a qualified mortgage professional.