27502 via Saratoga, Capo beach $2,450,000

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5 Things to Do Before You Buy

1. Build up your savings.

Aside from the obvious savings for a down payment, you also need to consider other costs associated with a home purchase like closing costs, appraisal fees, and home inspection fees. Closing costs generally run between 2 percent and 5 percent of your loan amount. Appraisal and home inspection fees vary but usually range from $200 to $600 for each.

2. Don’t open any new credit card accounts or loans—or close any old ones!

If you are thinking about buying a new car or opening an account at a department store so you can save that extra 15 percent on your next purchase, don’t do it! Opening a new credit account or a taking out a new car loan will negatively affect your credit score and, thus, affect your buying power. Lenders will look at your credit score to determine what kind of interest rate they can offer, and a lower score might mean that you will have to make a higher down payment or pay additional fees. On the flip side, you also don’t want to close any credit card accounts. It is great if you can pay down or pay off some of your debt, but the total amount of credit available to you will be used to calculate your debt-to-income ratio. Having a low debt-to-income ratio will help you qualify for the lowest interest rate and the best loan terms.

3. Get preapproved.

Before you start spending your weekends at open houses, get a preapproval from a mortgage lender. A preapproval will not only help you if you want to make an offer on a house but also keep you from looking at houses outside your price range. Don’t set yourself up for disappointment! Find out before you look how much house you can afford to buy.

4. Make a budget.

After your lender has determined how much house you can afford, make sure that you can actually afford it! A lot of expenses come with homeownership beyond the obvious mortgage payment, which is why you should create a budget. Your budget should include all your monthly and yearly expenses. Items to consider would be your homeowners’ association dues (if applicable), homeowner’s insurance, property taxes, car payments, credit card minimums, plus all your utilities. Once you have estimated these costs, you may need to adjust your actual purchase price to fit your budget.

5. Find a REALTOR®.

Buying a home is likely the biggest purchase you will make in your life so don’t do it alone! A REALTOR® is a licensed real estate salesperson who belongs to the National Association of REALTORS® (NAR), must adhere to the NAR Code of Ethics, and is held to higher ethical standards than other licensed agents. Anyone who has bought a home will tell you how invaluable a good REALTOR® can be when it comes to doing business. REALTORS® are master negotiators, understand the ins and outs of the Residential Purchase Agreement, can hold your hand through inspections and appraisals, and will do so much more to smooth your road to homeownership!

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