When it comes to the largest purchase of your life- buying a house – you certainly don’t want to spend more than you have to. Working to avoid overspending is especially critical in today’s market with interest rates and home prices still rising, inventory improving but still low, and buyer competition keen. To help you out, then, we offer these 4 ways to stop overspending when buying a house in Atlanta.
1. Improve Your Credit Score
An important way to spend less when buying a house in Atlanta is simply to improve your credit score. In almost all cases, the better your credit score, the less you’ll ultimately pay.
A lower credit score will cause lenders to assess you as more of a risk. But with a higher score, you’ll get better terms on your mortgage loan and a lower interest rate. An interest rate just slightly lower could save you thousands over the life of your loan.
2. Understand That the Pre-approval Amount Isn’t Necessarily Your Budget
You can also avoid overspending when buying a house by understanding and keeping firmly in mind that the amount you are pre-approved to borrow isn’t necessarily within your home-buying budget. Just because you can borrow a certain amount doesn’t mean you should.
Keep in mind that your housing budget has to include much more than just the monthly mortgage payments. You will have other one-off expenses such as the down payment and closing costs, and there will also be recurring expenses such as insurance, taxes, and maintenance/repairs. And if you borrow the full amount your pre-approval allows, you may not have enough money to cover all the other costs. The result may be your having to take out other loans – which ultimately means overspending.
3. Know That the House Is Actually Worth
If you know what the house you’re considering is actually worth, you can easily avoid overspending. Anyone buying a house has to know what the market value is.
Home sellers typically overprice their homes owing to their emotional attachment. But what a seller thinks her home is worth actually has nothing to do with what its market value is – that is, what buyers would be willing to pay for such a home.
To find out the accurate market value of a Atlanta house, you can have your agent perform a comparative market analysis (CMA). With a CMA, your agent will examine what very similar houses in the same area have recently sold for to arrive at fair market value.
To discover more about this, consult a Atlanta agent at (404) 977-5054.
4. Include an Appraisal Contingency
You can also avoid overspending when buying a house by including an appraisal contingency in the purchase contract. This will provide financial protection in the case of the appraisal coming in too low.
When you put in an offer on a house, your lender will typically order an appraisal. If the appraisal turns out to be lower than the price you’ve agreed to pay, you’ll be stuck if you don’t have an appraisal contingency in place. In that case, you will likely lose your earnest money if you back out, or you’ll have to make up the difference out of your pocket – both scenarios that cost you more money.
And Work with an Experienced Atlanta Agent
One of the best things people can do to stop overspending when buying a house involves working closely with an experienced Atlanta agent. An agent can find properties that haven’t hit the market yet, which means you can get in ahead of other buyers and get a better deal. A good agent can also negotiate a better deal, which typically means a lower purchase price.
Ultimately, then, if you don’t want to overspend, you should work with a good agent. And we have agents who can help. If you’re planning on buying a house in Atlanta, contact us today at (404) 977-5054.