When you've found the home of your dreams and are ready to make an offer, it's time to get strategic. Use these tips to save money up front - and over the lifetime of your loan!
Don't be afraid to negotiate with the seller.How much can you negotiate? It ultimately depends on three factors: how badly the seller wants to sell, how tight the market is, and how the property is going to be financed. The more eager they are to sell, the more willing they'll be to negotiate. But things change a little bit when the market heavily favors sellers.
Paying sticker price or even above it is likely in very hot markets where the seller won't have trouble getting a cash buyer. No less, you shouldn't be afraid to negotiate, but be thoughtful about what you're asking for and make sure you're not risking the home. Keep in mind that everything's for sale; appliances, art, furnishings. If you see something you like, ask about it! Chances are, it has a price tag.
Decide on your must-have vs. nice-to-have lists.It's easy to be wowed by cosmetic details and modern fixtures. But don't let them lure you into overpaying for things that would cost you a fraction of the price to put in yourself. The home you end up buying needs to meet all your must-have needs. Whether that's a specific number of bedrooms, a target neighborhood, a big yard, or a combination of things. Don't compromise on must-haves because you find a home with pretty features. In the long run, you'll find yourself longing for the things you initially decided were necessities.
Comparison-shop lenders to get the possible rates for your mortgage and closing costs.
Once you've gotten your finances in order to the point that you're ready to go under contract, you should look at your options for financing your home. “Exotic” mortgages seem like they'll temporarily save some money, but you're best off with a 15- or 30-year fixed rate mortgage. Interest will vary by your credit score and other personal financial factors, and will also vary by lender. Get preapproved by multiple lenders, compare rates and finance terms, and choose your best option. Doing so can save you tons of money over the lifetime of your loan.
To summarize, when making an offer on your new home, don't be afraid to ask the seller to make concessions, but be mindful of the market. Also be aware of must-haves versus nice-to-haves, and don't overpay for cosmetics. Also, shop lenders, because even a quarter of a percent lower interest rate can save you tons of money over time.