How Potential Home Buyers Are Buying More With Less

There was a time when keeping up with appearances was a goal for many potential homeowners; no cares or worries about the price, as long as the home was spacious and worthy of the Joneses; the traps of a spending frenzy for big homes, nice cars and gadgets galore.

That thinking is long gone because potential homebuyers have learned that when you buy smart you can get more for less.

You want to approach buying your first house with a financially realistic point of view; the rules are Keep it simple. Buy smarter. Buy cheaper. Look for the Bargains.

Determine what you can afford. The days of easy money are over. Mortgage lenders have tightened their standards and are requiring larger down payments with strict credit criteria.

Typically, they want buyers to spend no more than 28% of their gross monthly income on mortgage payments, real-estate taxes and home insurance.

Know your market. Now more than ever, location is crucial, down to the neighborhood and street level. Focus on good school districts, crime statistics and any impending construction or public works that could increase or decrease the value of a home. But compare everything.

Make your dollars count. Although conditions vary by market, look for a home that is significantly lower than its 2008-2010 prices. Yes, there are homes still on the market from 2008 and most are in the “immediate move-in” category.

Haggle. Don't assume the seller is even in the right ballpark with his asking price. Take a lesson from property investors and check out prices from other angles as well. Consider what it would cost to buy land and build a comparable structure.

Compare your estimated monthly costs for the mortgage, taxes and other expenses with the cost of renting a similar place nearby. If you can rent virtually the same house for a much lower cost, the seller is asking too much.

Builders, sellers and banks are eager to unload unoccupied houses, giving the buyer more leverage to ask for lower prices or incentives. And don't overlook REOs "real estate owned" properties held by lenders.

Most first-time home buyers don't buy the house they're going to end up in. You should purchase a home only if you intend on living there for seven to ten years; its smarter to stay in a home and build equity and when you move, you’ll probably profit from it.