Posted by admin on December 12, 2012
Whether you’re buying a home to live in or you want a fixer-upper that you can flip, everyone views a home purchase as an investment. But that doesn’t always mean it’s a good investment.
Have you heard the expression: “You make your money when you buy a house, not when you sell it”? When you sell your home you can be pretty sure that you’ll get a fair market value for it, and while there are some steps you can take to maximize that value (i.e. home staging, professional photography, effective marketing, etc.), the amount that you’ll profit is more accurately reflected in how much you paid for it.
Buying is the time when you can negotiate the hardest. Getting $20,000 knocked off the price will not only save you that amount, but also the interest that you would have paid on that amount for the life of your mortgage.
Here are some steps you can take to get the most bang for your buck when buying your home:
A House Is A House
Many of us also assume that we deserve to live in our dream home, regardless of whether we can afford it or not. If you approach your purchase with this mindset, you’re probably going to get sucked into a bidding war and end up paying much more than you should.
See your house as an opportunity, and learn to love it with all its wrinkles. By not buying with emotion, you’ll be much more likely to walk away from bad deals and find the diamonds in the rough that represent true money-making potential.
Negotiate Like A Pro
The keys to successful negotiating are knowledge and determination. Learn everything you can about the property, through your agent, a home inspector, and anyone else. Learn about the neighborhood and everything else. Anything you learn that counts as a negative is a tool you can use to drive down the price. An old furnace, rusty fence, bad schools, crime rates – anything you find can be used to justify lowering the price.
Similarly, you want to make it as easy as possible for the seller to say ‘yes’ to you. Avoid having conditions on your offer, so do a home inspection prior to placing the offer and already be approved for the loan amount.
Negotiate With The Bank
Once you’ve found the right house, it’s time to negotiate your mortgage terms. Remember even a fraction of a point off your interest rate can greatly affect how much you pay in interest. Always search for cheap mortgage rates, and use these as leverage to negotiate with your favored lender.
Along with the lowest rate, you also want to look into pre-payment options. Every lender offers different types of flexible payback options, such as monthly payment increasing/decreasing, lump-sum payments, etc. Decide what’s best based on your goals, your strategy, and your timeline.
Sites like www.mortgagerates.ca/ offer a ton of tools and calculators to ensure you’re getting the best possible deal.