How to Buy Smart in 2016
Four tips learned from the past crash…
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Don't bite off more than you can chew.
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Take the predictable path.
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Look at the long haul.
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Don't skimp on the down payment.
Don't bite off more than you can chew.
In the past, mortgages would be handed out as easy as candy, or so it seemed. Many learned the hard way that this wasn't a good recipe for success. Foreclosure filings skyrocketed by 225% between 2006 and 2008.
So, keep your mortgage payment to 25% or less of your monthly take-home pay. If you and your spouse bring in income, run the numbers to see if you could afford mortgage payments on just one income. This will provide a built in safety net for unexpected events like the loss of a job.
Take the predictable path.
Some mortgages are riskier than others. ARMs for example provide a lower payment in the beginning, but are subject to interest rate fluctuations that can turn into a huge burden in markets with rising rates.
On the other hand, fixed-rate mortgages provide greater stability. Predictability of payments can really ease your mind and budget in the long term.
Look at the long haul.
During the 2000 boom, many looked at real estate for quick turn-arounds. Reality set in though and many were locked into situations without an exit. Short-term turned into long-term for many unable to finance repairs through equity loans when the recession hit.
Ask yourself these questions:
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Will my family still fit in this home in five or 10 years?
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Am I happy with the neighborhood and local schools?
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Can I cash flow any repairs or renovations I want to tackle?
A real estate professional will help you look at all the angles and take the long-term view.
Don't skimp on the down payment.
Yes, a low down payment can be tempting, especially if high rents makes it tough to save. However, by waiting until you have enough cash to put at least 10–20% down on a home, you'll be in a better equity position should the market change.
If we learned anything from the past, keep this in mind: it helps to talk things through with an experienced professional who has been through the ups and downs of the market. Good solid advise is not always easy to find, but we believe that our clients stick with Skyrise Real Estate Group because of our commitment to quality service and the experience we bring to each transaction.
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