The Mortgage Process – Shopping

The first thing most people do when they decide to shop for a home is search the internet. At sites like, you can obtain more data about homes and neighborhoods in an hour than you could ever discover on your own. While an actual newspaper is no longer the home-finding source it once was, your newspaper’s website should have many more listings.


Having access to all this information doesn’t mean you shouldn’t approach a real estate agent, however. When you choose a real estate agent, you’re getting a licensed professional, often with years of experience. He or she is knowledgeable about trends in home values in different neighborhoods, and is often part of a network that trades information about unpublicized properties. And your agent can make an expert judgment on the value of a home and negotiate a price on your behalf.


Best of all, your agent’s commission is most often paid by the seller, so you get all these benefits at no cost.


Here are a few points to take note of:

Price vs. Payments – If you’re financing your purchase, you’ll probably never come close to paying the actual price. You’re making a comparatively small down payment and then paying interest on the loan until you refinance or sell. Yes, you will have a higher payment if you pay more for the home, but an extra $10,000 of mortgage money can add less than $50 per month on a low-rate, 30-year loan.


Relative Prices – Our natural tendency to pay as little as possible is not as meaningful for an investment, such as a home, as it is for a consumable. In this case, what you pay now can affect your sales price later. There may be little difference in total earnings if you pay less and sell for less or pay more and sell for more.


Influencing Value – For appraisers, the last sale or “comp” in an area sets the value for similar homes. Whatever you pay helps to establish what your home and comparable properties are considered to be worth.


Setting the Trend – If you pay less for your home than was paid for the last similar home, you may be contributing to a downward price trend, which can be difficult to reverse. Conversely, helping to maintain a trend of price appreciation can end up paying you back many times over.


One Chance – No two homes are ever exactly the same. Even when structure matches, your land, your view, your address and your immediate neighbors will always be different. You truly may have only one chance at just the right house. Industry professionals have all seen buyers lose out on what they really wanted. We don’t want that to happen to you. Nor do we want you to pay more tomorrow for something less than what you could have had today as a result of increasing prices and rates.

2016-11-08T19:02:06+00:00 Categories: The Mortgage Process|