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Keep Your Cash For A Rainy Day

Buying property is expensive under the best conditions. Even if you don't outlay a huge wad of cash initially, you're signing up for a substantial financial commitment. For those intending to occupy the property, at least for a while, there are additional expenses — moving, storage possibly, and often tax consequences.

So, here are some suggestions about how to conserve your cash, while getting the best rate possible on that terrific deal you went to all the trouble to find and negotiate.

Among the many costs you're going to be expected to cover — one way or the other — are an initial down payment on a mortgage and closing costs. Closing costs break down into mortgage, fire, and hazard insurance, title expenses, and a dozen other high ticket items. Lucky for you the seller pays the agent!

So the first step after agreeing on a deal is to get favorable financing. Bzzz! Wrong answer. Get favorable financing BEFORE you agree on a price and decide who pays for what. Assuming you intend to finance, and if you aren't you don't need to read this, shop around for lenders.

Banks, mortgage companies, on-line financiers, and others all compete for your business. Make them earn it by looking for the lowest rate you can obtain for your credit rating. Negotiate fees required and the dozens of charges that lenders tack onto the loan — sometimes before even agreeing to fund it. Don't pay the lender a large 'application fee', unless you have seriously bad credit and have no other option.

Repeat the process with everyone else involved in the deal. Title companies often have high fees, but you're not required to use the one an agent or the lender recommend. You're free to use whomever you wish. Watch out for 'rush delivery charges' - often $50 or more to have a package of a dozen papers sent across town — and similar fees. You're not required to give anyone free rein when they're spending your money.

Do the same thing with whomever the lender and title company recommend for insurance. You're not required to use the one they like, but they will usually try to bully you into accepting it because they're busy and it's easier for them. Remember, though, you are paying them. They're looking out for their interests — you have the right to do the same.

When you talk to the lender, ask what options are available with your credit rating. You can often obtain 5% down, and sometimes even no-down, loans — but beware of the high interest rate that sometimes accompanies them.

Other financing options can be found by those willing to wait and to shop around. Some sellers and lenders will allow you to assume an existing loan. It's also possible to negotiate a deal in which the seller agrees to pay a larger percentage of the closing costs. In rare cases, they will pay all the closing costs, but usually by rolling it into your loan.

The last few years have been largely a seller's market, so this has been less common. But the situation is changing. Even in a seller's market, though, not everyone is in a position to be rigid. New employment opportunities, layoffs, unexpected expenses, a death in the family, and a dozen other reasons can give a seller a big incentive to move quickly. That translates to a willingness to negotiate a fast deal for the best price they can get.

It's your money. Keep as much of it as you can by shopping around and not letting anyone rush you into taking a bad deal.