Whether you’re looking for a personal residence or an investment property, it’s important to know the best practices in buying a property.
To get the best tips about real estate and financing, we talked to Nawal “Noel” Hamad, a realtor with Solutions Realty Group and former V.P. Financial Adviser. She has vast experience with financing, several rental properties, and is currently a licensed realtor in Virginia and Maryland.
After chatting with Noel, we wanted to share her top tips for home buyers to save money and protect their credit scores.
1. Paying 30-year Mortgage Plan In 18 Years
Buyers should choose the 30-year mortgage plan as oppose to the 15-year in order to make lower payments. If the borrower makes just one extra payment per year, a total of 13 payments, then the loan is paid off in 18 years instead of 30 years. This way you’re paying less and finishing in a shorter amount of time.
2. Condo Fees Aren’t Worth It
Noel says the best investment anyone can ever make is owning at least one townhouse or single-family home. Condos, however, should be avoided because of the high HOA fees. While they take care of maintenance and amenities, the extra costs aren’t really worth it. Some HOA fees can be as much as the mortgage payment, which could be put toward another investment.
Of course, this depends on the lifestyle and location of the buyer. Some HOA fees are minimal and do affect cash flow as much.
Related: Invest in Condos or Single-Family Homes?
3. Deposit, Not Down-Payment
While a deposit is required, avoid making a down-payment until your current home has been sold. It’s important to make the deposit contingent upon the sale of the old property and upon the inspection of the new property. One mistake Noel often sees is buyers making a down-payment without securing the sale of their own home, which means gambling a significant amount of money.
Related: Why You Should Get A Home Inspection Before Investing In Property
4. Comparing Nearby Prices
An easy way to evaluate home values is by comparing the neighborhood prices and property types. Compare the listing price of the potential residence or investment property and try to understand if and why there are differences in the prices. Doing some digging will help you know what the property is lacking or has to offer that other properties don’t offer. It also tells the buyer what they can do in that neighborhood to increase the value of the property should they sell in the future.
Related: How To Find An Investment Property Using Analytics
5. Keep Your Credit Up
Noel says your credit score is the core in shaping your financial future. Noel has had to turn applications away because a seller or landlord would not accept any offers or tenants with low credit scores. By maintaining good credit, buyers can gain better interest rates and negotiating power in terms of closing costs and other fees – which can save a good amount of money.
Want more tips about real estate or investment properties? Buying or selling in Virginia or Maryland? Email Noel at [email protected].