We get it, you're excited about buying a place in the Catskills. It's natural. But before you set loose your imagination, you've got some basic finacial leg work to do to be sure that you can make this dream a reality.
1. Talk to a few lenders to determine how much you can borrow. While the logical place to ask is a mortgage specialist the institution with whom you bank, we always recommend that you contact a local bank as well. Occasionally they can match or even beat the larger banks and when it comes time for the appraisal, the local banks generally use appraisers that better understand the nuances of the second home market than the appraiser hired by big banks. Of course, we can recommend a number of experienced mortgage bankers in various of the local banks.
2. Get pre-approved, not pre-qualified. By getting pre-approved, you’ll be prepared to submit an offer with a pre-approval which indicates to the seller that you're a serious buyer. And unlike pre-qualification (which is based on a cursory review of your finances), pre-approval is based on your actual income, debt and credit history. By taking this step before you start your search, you’ll also get a fair idea of what you can actually afford. After all, buying a country place is meant to reduce your stress, not add to it.
3. Consider your mortgage options. As a general rule, most of the buyers we work with opt for a fixed 30-year mortgage. Rates are still historically low and the 30-year option will generally have a low monthly payment with the option of paying down the principal without penalty. You may also have the option to pay ‘points’ in exchange for a lower interest rate. This is a good option if you’re planning on having your house for a long time as it will save you money in the end.
4. Work with your broker to analyze the market. Before you actually make an offer, discuss the market with your broker. They should be able to share recent sales with you that reflect the current market conditions, details on price per square foot, the average discount from the listing price, and other variables that may impact what you look for.
None of this is sexy but it's necessary and it will better position you when you eventually find the place that says 'pick me'. Which, of course, you will.
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