Buying a home should be an exciting adventure. It can be, but it’s often accompanied by a good amount of confusion and a lot of stress. Home prices are still rising, inventory is limited, and finding the right agent is no easy task. Still, with the right “lifehacks,” you can put some of the fun and excitement back into searching for and buying a new house. That’s why we present these 6 “lifehacks” buyers can use when buying a house in Richmond.
1. Prepare Thoroughly
Thorough preparation always makes any undertaking go much more smoothly, and it’s no different for buying a house in Richmond. The many steps you should take before beginning your house search include:
ASSEMBLE FINANCIAL DOCUMENTS
This lifehack may the most important because your financing depends on it. Here’s what the financial experts recommend: “Get your financial documents in order. Bank statements, pay stubs, W-2s, tax returns — basically every financial document you have on yourself will be required whenever you apply for a loan or pre-approval letter. Get them in order now so you can make the necessary requests if you’re missing anything. If you have a bank in mind, ask them for their mortgage loan checklist so you know exactly which documents they’ll need.”
TUNE-UP CREDIT SCORE
Do everything you can to get your credit score up. The higher your score, the better the terms and rate you can get on your mortgage.
DETERMINE HOW MUCH HOUSE YOU CAN AFFORD
Before you begin shopping, you need to figure out exactly what you can afford. Ultimately, this will save you a lot of time and effort because you won’t be looking at houses beyond your reach.
PAY DOWN DEBT
Begin paying down your debt a soon as possible in order to improve your back-end ratio, your total debt-to-income ratio.
Pre-approval is a conditional commitment from your lender that they will give you a mortgage at or below the pre-approval amount. It requires a good bit of effort (because it involves a mortgage application and verification of your financial information), but a “pre-approval letter makes your offer stronger because the seller knows you are able to get a loan, thus removing one potential hurdle to the sale.”
2. Investigate Low Down Payment Options
For many people, a large portion of the stress of buying a house in Richmond comes from figuring out how to come up with that huge down payment. If you haven’t figured that out yet, don’t despair – there are several low down payment options you can investigate. In fact, there are dozens of these options, many of which are aimed specifically at helping first-time home buyers. Some of the programs even help with closing costs.
3. Buy Conservatively, Pay Down the Principal
Having a huge mortgage hanging over your head for 30 years is just no fun at all. But buying a house in Richmond doesn’t have to be that way. What you can do instead is buy conservatively (below your means) and then apply the money you’re saving each month on mortgage payments to the principal. That way you’ll pay off the mortgage much sooner and save a significant amount on what you’d pay in interest over the life of the loan. Then, if you choose, you can sell your current house and use the proceeds to upgrade.
4. Look into Assuming Seller’s Mortgage
Another lifehack and viable way to reduce stress and make buying a house in Richmond more affordable and achievable involve assuming the seller’s mortgage. This is a growing trend in which the buyer, if she qualifies, just assumes the seller’s mortgage terms. To make up the difference, the buyer either pays cash or takes out a second mortgage to cover it. Here’s where an assumable mortgage can be a real boon to you as a buyer . . .
“A few years back, the Fed’s bond-buying program enabled millions of homebuyers to refinance their mortgages at unheard of sub-4% interest rates and some are assumable. As mortgage rates are expected to rise over the coming years, a seller with an ultra-low rate that is assumable would be an extremely attractive opportunity for any buyer.”
5. Ask for Closing Concessions
Another lifehack buyers can use when buying a house in Richmond is that of asking for closing concessions. For example, the seller would pay some or all of the closing costs in exchange for a slightly higher sale price. When you’ve already used up all your available cash for the down payment, this presents a way for you to close the deal. Closing costs, for example, for a $200,000 house will amount to about $6,000. But rolling that cost into the mortgage would increase monthly payments by only about $30 over the life of a 30-year mortgage.
6. Use Your Agent
We realize this is a lot to take in, so our final lifehack buyers can use when buying a house in Richmond is this: use your agent to the fullest. A good real estate agent will be available to answer all your questions and provide the guidance you need. It’s an agent’s job to look out for your best interests.