Avoiding
Financial Stress
By asking the right questions, and knowing exactly what
your needs are, you can find the right loan for you. There
are certain approaches that you can take while mortgage
shopping that can cost or save you money.
It is still true that the better qualifications you have,
the lower your interest rate will be. However, there are
mortgages available for almost everyone; it's the interest
rates or the down payments that vary.
Before speaking with a lender, know what monthly dollar
amount you feel comfortable committing to. Then when you
discuss mortgage pre-approval with your lender, it is
easier for you to determine the monthly amount and what
value of home the monthly amount translates into.
Do your research on the types of mortgages available to you
and find the one that best suits your needs. There are a
number of considerations to be made in terms of finding the
best mortgage for each individual:
*What type of market are you in? Are the interest rates
falling or rising?
*Do you want a fixed mortgage rate, where you will always
know what your payment is going to be?
*What are your long-term goals? Do you intend to resell the
property? Do you only need the mortgage for a short time?
Hot,
Normal, and Cold Markets
Hot
Market
-
This is an extremely competitive market, one that is
advantageous to the seller. Sometimes, land will
sell as soon as they are listed or even before they are
listed. Typically, during a hot market, multiple offers
will be made on each property and more often than not,
properties will sell for more than their asking price. It
is even more crucial to be prepared and to be ready as a
buyer when the market is hot. It can be easy to get caught
up in the bid for a parcel, but if you are prepared
(pre-approved, solid in price range, realistic about your
needs), it is easier to remain focused on your needs and
price range.
Normal
Market
-
In a normal market, there is fairly a large number of
properties available and an average number of buyers. This
market does not necessarily favor the buyer or the seller.
A seller may not have as many offers on their land,
but he or she may not be desperate to sell either. Again,
it is the buyer's responsibility to be prepared. During a
normal market, the chances to negotiate are higher than in
a hot market. As a buyer, you can expect to make offers at
lower than the asking price and negotiate a price at least
somewhat less than what the sellers are asking.
Cold
Market
-
In a cold market, properties may be listed for more than a
year and the prices per acre listed may drop
considerably. This market is advantageous to the buyer. As
a buyer, you have the time to make an offer that works to
your best interest. It is not uncommon to low-ball and to
find that sellers are accommodating to meet your needs.
Finding
the Right Seller
The best seller is one who is highly motivated. A highly
motivated seller is more likely to sell for less than his
or her land or house is worth. And it matters that you find
out why; learning the reason why can help you get the price
you want and help the seller get what they want: a timely
sale.
When given the opportunity to meet with sellers, ask them
why they are selling. The reasons could be anything from
job change to a new location to financial problems. If you
can solve their problem, whether it is cash related or time
related, do so. For example, if the sellers are highly
motivated because they need to move quickly, give them a
fast sale - and a lower price. If you can make an offer,
even a low one, that gives them cash in a short time, they
are more likely to accept.
There are also some sellers that you should avoid. Not
every seller is as genuinely motivated as they make
themselves to be. Some possible hints:
*is unable to clear up liens against their property
*does not own 100% of their property
*they push back the move-out date
*does not have a replacement property or back up plan
etc. etc. etc.
It is impossible to find the perfect seller. But it is
possible to find out which sellers are legit, and which
ones aren't.
Why
You Should Not Make Any Major Credit
Purchases
Don't go on a spending spree using credit if you are
thinking about buying land, or in the process of
buying land, using a mortgage lender. Your
mortgage pre-approval is subject to a final evaluation of
your financial situation.
Every $100 you pay per month on a credit payment could cost
your about $10,000 in mortgage eligibility. For example, a
car payment of $300/month could mean that you qualify for
$30,000 less in a mortgage.
Even if you have accumulated enough savings, you should
consider not making any large purchases until after
closing. The last thing you want is to know that you could
have purchased land had you curbed the urge
to spend.
