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Ponder to Purchase With Real Estate

We often think of getting pre-approved for a mortgage as the starting point in the search for a new home. That can be dangerous. Because what really matters isn’t what your bank says you can afford in real estate, but what you know you can handle. So sharpen your pencil – or your keyboard if that’s possible – and take a hard look at your income and expenses.

Sine your interest rate will have a huge bearing on the bottom line, make sure your credit rating is top notch. If it isn’t, clear up any problems immediately.

The down payment can also significantly impact your monthly payments and thus your ability to carry the mortgage on your real estate for the long term. “Zero down” may be the hot term at those investment seminars, but it will get a chilly reception from the bank and prospective sellers.

Budget for at least 5% as a starting point, and if you can manage 20%, you’ll avoid having to buy high ratio mortgage insurance and save yourself thousands of dollars in the process.

No, you’re not trying to decide who’s naughty and nice. That’s a whole other list. But like your child on Santa’s knee, you should be clear on your wants and needs before shopping for real estate to avoid disappointment.

For example, what are your preferred areas to live in? You may think the importance of location has been overstated, but there’s a reason that it tops many wish lists. Apart from contributing to quality of life, it’s a huge factor in determining re-sale value. That “house backing onto a green space” is a real selling point, but “conveniently located near a landfill”? Not so much.

Once you and your partner have completed your lists, compare notes and rank your criteria from most to least important. Then the real fun begins.

Trying to save a few bucks by choosing the generic pasta sauce over the name brand is one thing. But going it alone to bypass realtor fees so the seller can deduct them from the asking price is a classic case of short-term gain for long-term pain.

Since the best realtors know the industry inside and out, they’re well positioned to help you get the right real estate at the right price, with a minimum of stress. Ask your friends for recommendations, then interview a few agents and check their references. Next to your home itself, they’re the best investment you’ll ever make.