Michael Corbett's House Hunting Tips: Don't Wait for a Lower Price
Best-selling author, real estate expert and "Extra's" Mansions and Millionaires host Michael Corbett gives you the hot tips on the best ways to buy a home -- from his new book, "Before You Buy!"
This week's tips:
#1: Waiting for a lower price could cost you more! As interest rates rise, even if the market is heading lower, waiting another three, six or twelve months will actually cost you in the long run. Case on point: If you buy a house for $450,000 with 20 percent down, you will have a $360,000 mortgage. With a low 5 percent interest rate your monthly payment of mortgage, principal, and interest would be $1,932.56. However, if you wait six months in hopes of getting the house for $10,000 less at $440,000, but the interest rates have climbed to 6 percent, your monthly payment is now $2,110.41 -- costing you an additional $72,157.82 over the course of the loan.
#2: Shop at the top of your price range in today's market. As prices are lower and sellers are desperate, you should always shop 20 percent higher than you really want to spend. Start at the top of your price range. If you feel you can afford a home that is $400,000, then look at homes priced at $440,000. The reasoning is that in a cold or buyer's market, you will probably end up paying slightly under the asking price. There may be room to negotiate down to bring it into your price range. So shop approximately 20 percent higher than what you are planning to pay.
For more tips and guidelines, check out Corbett's book "Before You Buy!" on Amazon.com.