a real estate boom, buyers will clamor for almost any house
that hits the market. This is great while it lasts, but unfortunately when the
party's over, the homebuyers who chose the best locations will be left holding
property that depreciates at a much slower rate. This discrepancy is largely a
result of a home's location.
location" is a common mantra in real estate. And it's good advice – except
for one thing: most people have no idea what this really means.
A "good location" can
mean different things to different people, but there are also subjective
factors that determine a home's value. Depending on your personal needs and
preferences, you may not be able to buy a home with all of these factors. And
that's OK – after all, a home is much more than just an investment. However,
next time you're shopping for a new property, keep the following factors in
What part of a city you choose to
live in will undoubtedly affect how much you pay for your home. Land is a
finite commodity, so cities that are highly developed and are bound from large
amounts of additional growth, such as San Francisco, tend to have higher prices
than cities that have too much room to expand. For example, many suburban
communities have become what the media has dubbed "slumburbs"
because such a large number of homes are uninhabited that the areas have fallen
into disrepair. In most cases, this urban sprawl occurs as a result of
population growth, according to the U.S. Bureau of Census Data on Urbanized
Areas. When sprawling cities experience a population exodus, it's the outlying
areas that tend to suffer the most sever declines in property value. (See also: Making Money In Residential Real Estate.)
The neighborhoods that appeal to
you will largely be a matter of personal choice. However, a truly great
neighborhood will have a few key factors: accessibility, appearance and
amenities. Your neighborhood may also dictate the size of the lot on which your
house is built.
In terms of accessibility, you
should look for a neighborhood that is situated near your city's major routes
and that has more than one point of entry. Commuting to and from work is a big
part of many people's day, so a house with easy access will be more desirable
than one that is tucked away and can only be accessed by one route.
The appearance of the
neighborhood is also important. Large trees, landscaping and nearby green or
community spaces tend to be desirable. You can also judge the popularity of the
neighborhood based on how long homes in that area tend to stay on the market;
if turnover is quick, you're not the only one who thinks this is a desirable
place to live.
A great neighborhood should also include important amenities such as grocery
stores, shops and restaurants. Most people like to frequent places that are
convenient – if you need to drive a great distance to get to anything, this is
likely to make your house less attractive. Schools are another important
amenity – even if you don't plan to have kids, if you want to sell your home
this is something many buyers will be on the lookout for. The distance from and
quality of local schools both play into this. (See also: 8 Signs Your Neighborhood Is
On The Upswing.)
It's not just present amenities
that matter, but future ones as well. Plans for schools, hospitals, public
transportation or other public infrastructure can dramatically improve property
values in the area. Commercial development can also improve property value.
When you're shopping for a home, try to find out whether any new public, commercial
or residential developments are planned and consider how these additions might
affect the desirability of the surrounding areas.
The next thing you need to
consider is where the house is actually located. In this instance, there are a
few things you should watch out for.
For example, if your home is on a
busy road, you will probably get it for a lower price, but it will also be more
difficult to sell down the road. The same may hold true for houses that stand
next to or back onto commercial property, such as a grocery store or gas
station, or houses on streets that get an unusual amount of parking traffic and
parked cars, such as those near large churches or community centers. This is
why a large number of such homes are rentals.
Suppose that you have narrowed
your choices to two homes that stand side by side in a great neighborhood. One
needs repairs and updates, but has a huge lot. The other is in tip-top shape
but sits on a lot half the size. The prices of the two homes are similar. Which
do you choose? This is one aspect of house hunting that surprises many people.
In most cases, the beat up house is the better investment.
Why? Your house is a depreciating asset. The lot, on the other
hand, will maintain its value (or likely appreciate) relative to the house. If
you bulldozed both houses, the larger lot would sell for more. So, if you can,
choose a bigger, better shaped or better situated lot over a nicer house. A
less attractive house can always be updated, added on to or replaced altogether
while the lot can't be changed. (See also: Top 4 Things That Determine
Your Home's Value.)
Location isn't entirely
subjective – in fact, it's based on a fairly static set of criteria. So, when
you set out to shop for a new home, make sure the neighborhood isn't just
desirable to you.
Tara Struyk – To view the original article click here
Conventional wisdom says that spring is the best time to buy a
house. But if you’re in the market for a starter home, you may be better off
ignoring that wisdom. A recent report from Trulia.com, an online resource for
homebuyers and renters, found that during the autumn months, starter-home inventory actually increases by about 7% compared to the
spring. That extra inventory helps push listing prices lower by about 4.8% and
3.1% in the winter and spring, respectively, compared to summer prices. With
that in mind, it looks like now may be a good time for first-time homebuyers to
step up that house hunt. (For a guide to the whole process, see How
to Buy Your First Home: A Step-by-Step Tutorial.)
Trulia’s Inventory and Price Watch report
examines the supply and affordability of starter, trade-up and premium homes on
the market. The most recent
edition of the report concludes that fall (which Trulia considers the fourth
quarter – Oct. 1 through Dec. 31) is peak season when it comes to starter
of the 100 largest metros in the U.S., 70 see peak levels of inventory for
starter homes during the fourth quarter of the year (based on Trulia Inventory
and Price Watch data from 2012 to 2017). And it’s not just the peak inventory
that should interest starter homebuyers: Starter-home listing prices drop each
year between January and March, probably in response to the previous quarter’s
sharp rise in inventory. See also: Are You Ready to Buy a House?)
Since inventory tends to peak in
the fall, that’s a good time of year for starter homebuyers to intensify their
hunt – especially in Western markets, as it turns out. According to Trulia,
seven of the top 10 metros with the largest seasonal swings in inventory are in
the West. The largest inventory swing happens in San Jose, Calif., where
starter-home inventory is 42% greater, on average, during the fall than it is
during its lowest inventory quarter – typically January through March.
Colorado Springs, Colo.;
Portland, Ore.; San Francisco and Phoenix round out the top five metros, with
average seasonal inventory swings ranging between 32.8% and 34.7%. All but
Phoenix see their inventory peak in the fourth quarter of the year.
Not surprisingly, seven of the
top 10 metros with the largest seasonal swings in starter-home listing prices
are also out West. Wichita, Kan., tops the list, and median starter-home
listing prices there are an average of 18.6% lower during the first quarter
than in the third quarter, when prices are at their peak. Rounding out the top
five are Seattle; San Jose, Calif.; Oakland, Calif. and Denver, where average
seasonal price swings range between 9% and 12%. All of these metros see their
lowest starter-home prices in the first quarter of the year.
Starter homebuyers are likely to
find a better selection of homes at the end of the year. Trulia admits it can’t
say for certain why individual markets see large or small seasonal swings for
starter-home listing prices, but it has found a “strong and statistically
significant correlation between seasonal swings in listing prices and seasonal
swings in inventory.”
According to Trulia, “Markets
that witness bigger seasonal swings in starter home inventory tend to experience
bigger seasonal swings in starter home listing prices.” This suggests that
homebuyers in markets with significant inventory seasonality stand to benefit
the most by house-hunting during the fall and winter. Still, the majority of
markets across the U.S. see higher levels of inventory and lower listing prices
during the fall and winter – which means the best time to buy that first home
is right now. (You may also want to read: 10 Worst First-Time Homebuyer Mistakes.)
By Jean Folger – To view the original article click here
Home improvement loans sound pretty sweet:
Imagine, someone actually gives you money to fix up your
house! And these loans are actually plentiful if you know where to
look. Here are some options to explore, and how to tell whether they're
right for you.
FHA 203(k) loan
The FHA 203(k) loan is a loan from the Federal Housing Administration—so that means you
can put as little as 3.5% down! Homeowners can use the money to redo
a kitchen or bathroom, finish a basement or attic, change out the floors, buy
appliances, or add a room.
The loan can even be used to rebuild a
tear-down as long as the original foundation remains, explains Suzanne
Caldeira, a finance expert at Shamrock Financial Corp. The only no-nos
are upgrades that are deemed "luxury" items, like adding a
pool or fire pit.
How it works: To qualify
for a 203(k) loan, homeowners have to provide a bid from an approved contractor
to make the upgrades they want with their loan paperwork. An appraiser reviews
the home and the submitted bid, and appraises the estimated value of the home
postrenovation. That appraisal must be in line with local comps—if it's not, you could be required to scale back the
reno you're proposing.
Once the loan is approved, the money for the renovation is
put into escrow. After the work is completed—the deadline is six months—an
inspector visits to determine that it's been done correctly,
then the money is released to the contractor.
traditional FHA loans, you can pay it back over 15 or 30 years. Although
the interest rate can be fixed or adjustable, you can expect to pay a rate
that’s about 1% higher than a standard loan, as well as private mortgage insurance for the life
of the loan.
HomeStyle loan is similar to the 203(k) loan, but it requires at least a 5%
down payment. Another difference: There's no limit to the kinds of
renovations you can do, as long as everything is permanently affixed to
the home and adds value.
How it works: As with
the 203(k) loan, you have to hire an approved contractor and submit a bid
for the project with your loan paperwork. You then have an appraiser
determine what your home will be worth after the renovations. Once you've got
that number, you can borrow up to 50% of that appraised value to do the
to a 203(k) loan, the money for the renovation is held in escrow until the
work is completed and inspected and is then released to the contractor.
However, with the HomeStyle loan you get 12 months to complete the renovation
instead of six. You then pay it back over a period of 15 to 30
years at either a fixed or adjustable rate. As with any loan, you
must pay PMI if you put down less than 20%.
government initiative helps qualified homeowners improve their
homes, but not in a "I'm dying for a new backsplash"
way. Rather, the renovations must make your home safer (e.g.,
replacing dangerous electrical components), more energy-efficient
(e.g., repairing the insulation, furnace, or ducts), or more
accessible to the elderly or people with disabilities (e.g., adding ramps
qualify for a Section 504 loan, you have to have a household income below 50%
of the area's median, and be unable to obtain affordable credit elsewhere.
There's also a grant program for people over the age of 62 to add accessibility
features, which is ideal for homeowners aging in place.
How it works: The
maximum loan amount is $20,000, which can be repaid over 20 years with the
interest rate fixed at 1%. You apply for the loan, then after determining that
you are indeed eligible, a loan officer comes to your home to figure out which
repairs would qualify. After that, you get at least three bids from approved
contractors. The loan originator signs off on the contractor and the work, and
you can get started with the improvement. Here's more on Section 504 home loans.
By Audrey Ference – To view the
original article click here
Buying your very first home can be
overwhelming. There’s all the financial jargon and the mountainous mortgage
paperwork, not to mention the dollar amounts that can make you dizzy.
Money issues often stand in the way of
homeownership. A survey by rental service Apartment
List found that 80 percent of millennial renters want to buy a
home, but most say they can’t afford to.
What you may not realize is that many
first-time homebuyer programs and grants offer financial help, and you may be
eligible for various types of assistance.
Here are nine first-time homebuyer
programs and grants designed to help you land a
great mortgage and get a place of your own.
1. FHA loan
In an FHA loan, the Federal Housing
Administration insures the mortgage. The FHA is an agency within the U.S.
Department of Housing and Urban Development (HUD).
The FHA’s backing offers lenders a layer of
protection, meaning that your lender won’t experience a loss if you default on
FHA loans typically come with competitive
interest rates, smaller down payments and lower closing costs than
If you have a credit score of 580 or higher,
you could be eligible for a mortgage with a down payment as low as 3.5 percent
of the purchase price. If your credit score is lower than 580, you still might
qualify for an FHA mortgage, but the down payment would be at least 10 percent
of the purchase amount.
2. USDA loan
While not well known, the U.S. Department of
Agriculture (USDA) has a homebuyer assistance program.
While the program focuses on homes in certain
rural areas, you don’t need to buy or run a farm to be eligible.
The USDA guarantees the home loan. There may
be no down payment required, and the loan payments are fixed.
Applicants with a credit score of 640 or
higher typically get streamlined processing. With a credit score below 640, you
still can qualify for a USDA loan, but the lender will ask for extra
documentation about your payment history.
Keep in mind that there are income
limitations, which can vary by region.
3. VA loan
The U.S. Department of Veterans Affairs (VA)
helps active-duty military members, veterans and surviving spouses buy homes.
The VA guarantees part of the loan, making it
possible for lenders to offer some special features. VA loans come with competitive interest
rates and require no down payment. You aren’t required to pay for private mortgage insurance (PMI), and a
minimum credit score isn’t needed for eligibility.
If it becomes difficult to make payments on
the mortgage, the VA can negotiate with the lender on your behalf.
4. Good Neighbor Next Door
The Good Neighbor Next Door program,
sponsored by HUD, provides housing aid for law enforcement officers,
firefighters, emergency medical technicians and pre-kindergarten through
Through this program, you can receive a
discount of 50 percent on a home’s listed price in regions known as
Using the program’s website, you can search for
properties available in your state. You must commit to living in the home for
at least 36 months.
5. Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are
government-sponsored entities. They work with local lenders to offer mortgage
options that benefit low- and moderate-income families.
With the backing of Fannie Mae and Freddie Mac,
lenders can offer competitive interest rates and accept down payments as low as
3 percent of the purchase price.
Fannie Mae also provides homeownership
education for first-time homebuyers through its “HomePath Ready Buyer” program.
6. Energy-efficient mortgage (EEM)
An energy-efficient, or “green,” mortgage is
designed to help you add improvements to your home to make it more
environmentally friendly. The federal government supports EEM loans by insuring them through the
FHA or VA programs.
The key advantage of this mortgage is that it
lets you create an energy-efficient home without having to make a larger down
payment. The extra cost is rolled into your primary loan.
Some improvements you can make include
installing double-paned windows, new insulation or a modern heating-and-cooling
7. FHA Section 203(k)
If you’ve run the numbers to see how much house you can affordand have
determined a fixer-upper is best for your budget, the Section 203(k) rehabilitation program may
be a good fit.
This type of loan, backed by the FHA, takes
into consideration the value of the residence after improvements have been
made. It then lets you borrow the funds you’ll need to carry out the project
and includes them in your main mortgage.
The down payment for a 203(k) loan can
be as low as 3 percent.
8. Native American Direct Loan
Since 1992, the Native American Veteran Direct Loan program
has helped Native American veterans and their spouses buy homes on federal
trust lands. The VA serves as the lender.
If you’re eligible, you won’t be required to
make a down payment or pay for private mortgage insurance (PMI).
This first-time homebuyer loan also offers low
closing costs and a 30-year fixed-rate mortgage.
9. Local grants and programs
In addition to the various programs provided
by the federal government, many states and cities offer
help to first-time homebuyers.
Before buying a home, check your state’s or
community’s website for information on housing grants and programs available in
You also might consider contacting a real estate agent
or local HUD-approved housing counseling
agency to learn more about programs in your area that might
apply to your situation.
Hartman – To view the original article click here
Finding good tradespeople
can be difficult. Seek out help through personal recommendations or through
professional organizations, and preferably view their previous work before
hiring them. Always insist on a "price." This should be the amount
you pay for the job specified — no less and no more. The only reason a price
should change is if you alter the specifications of your particular job or if
the professional discovers "unforeseen problems." Both should be
clearly defined in the contract.
An architect will draw plans required for construction, if you are seeking a
building permit, for example. Architects generally charge a flat fee for
drawings, and then extra to oversee work being carried out (normally a
percentage of the final building bill, ranging from 5 to 25 percent). If the
architect is going to oversee work, check what this entails and get it in
Masons and Bricklayers
Bricklayers tend to solely lay bricks and
blocks, whereas masons will also build natural stone walls and construct
special stone features. Charges for stone and masonry work are normally based
on every 1,000 bricks laid, or a lump-sum price for a specific job, such as
building a chimney. If you hire a bricklayer, specify the brick type and insist
on seeing samples.
Large building companies manage trade contractors to do the work on your
behalf. Smaller building companies or general contractors will normally have
trade skill sets themselves, such as carpentry or bricklaying, but may also
become the project manager for part or all of the work being carried out. The
builder may include this cost in the submitted price, or charge a further
percentage on top of the final cost. Get this in writing before work starts.
Carpenters and Joiners
Finish carpenters assemble custom-made,
wood-based items such as doors and windows, whereas rough carpenters or framers
will fit these items into your home, and tackle structural tasks. There are
overlaps between the two. A good carpenter can be invaluable in complex tasks,
such as calculating complex roof layouts. With a finish carpenter, be clear on
specifications for any items that you have commissioned him to make. If he is
making custom cabinets, for example, make sure that he specifiesthe type of
wood and the finish detail. The difference in quality and price, can vary
An electrician will carry out all types of
electrical work, usually for the wiring of outlets, light switches, phones, and
televisions. Most states require electricians to be certified but specific
requirements may vary by county and state jurisdictions. Check with the city
building department about the specific type(s) of required certification and/or
licenses and verify that your electrician meets those requirements.
General flooring companies can tackle any
floor requests, ranging from initial leveling to waxing a hardwood floor, for
example. However, make sure they have the relevant experience in all areas. You
can also employ carpet installers, wooden floor specialists, or floor tilers.
Before a building starts to go up, excavators generally do all the preparatory
work, including digging for foundations and routes for drainage and utilities.
Many are employed by a builder, but some work independently. It can save time
and money to employ an excavator and his equipment for the day to carry out all
of the heavy earth-moving requirements on a project.
Skill and experience in this trade vary greatly. Good laborers are skilled at
helping another trade to finish a job. General laborers will price themselves
based on knowledge and experience, and hourly rates will vary widely. Personal
recommendation is essential.
Painters and Decorators
A good decorator will carry out all aspects of
decorative coatings, including painting, papering, and, in some cases, tiling.
Specialist tilers sometimes tile both walls and floors as a full-time
occupation. Good decorators can provide very-high-quality finishes-a preferable
option when looking to hang expensive wallpaper, for example. Make sure that
the number of coats, type of paint, and general quality of materials is
specified in any painting job. Decorators can be an excellent source of ideas
for new effects and finishes.
Minimal drywall repair is easily done by the
"do-it-yourselfer" but large scale jobs require skill. Pricing for
repair work is usually set according to square footage or estimated time. Check
that the price includes all coats required and whether painting is included.
They may also offer "tacking" services-cutting and fixing drywall
Plumbers and Heating Contractors
There is often an overlap in expertise between
plumbers and heating contractors. When installing, servicing, or maintaining a
gas- or oil-fired furnace, they must have the relevant county and state
certification/licensing. If you do not have experience in working with gas or
propane piping, hire a professional. For general plumbing work such as
installing tubs or toilets, the law is less exacting but most often also
requires state or local licensing. Always find out what is required by your
area before you hire one of these specialty trades.
A general contractor may be the best choice
for project management. He can schedule the job, coordinate the various trades,
and communicate on your behalf with everyone involved in the project. If you
are employing an architect on new building work, it may be best for them to
project-manage. If the size of job warrants a professional project manager, be
certain of their credentials based on proven experience.
Usually, roofers only deal with roof
coverings, such as tiles, shingles, felt, and finishing and any mortar work on
the roof. A carpenter will deal with any structural elements. Large companies
have carpenters working with the roofers. Smaller firms subcontract out structural
carpentry. Roofing bids or prices can be complicated. If weather delays work,
this can have effects such as increasing the price of scaffolding rental. On
large jobs, a roofer may actually scaffold over the top of the house and
provide a waterproof "tent" so that work can continue in most
weather. This increases cost and is only worthwhile on larger jobs. Check
samples of materials, such as tiles and felts, before they are bought and make
sure your choices are specified in writing.
This category includes all those trades and
services that offer a product with their own installation service. This can be
anything from new windows, to garage doors, blinds, or custom kitchens. Make
sure the product you receive is the same as the specification you were sold to
avoid problems with your installers. As the number of different installers a
project involves increases, more vigilance is required to ensure that the job
runs smoothly. Make sure that you specify each installer's individual responsibilities.
For example, a company that installs blinds only has to supply what you ordered
and use relatively basic skills to install them. A company that offers a custom
kitchen installation service needs to supply carpenters, plumbers,
electricians, and possibly heating engineers, decorators, and tilers.
As their name suggests, structural engineers
assess the structural and load-bearing issues of a building and provide
specifications. For example, they can calculate requirements for headers and
for foundations. They are often consulted by architects when plans are being
made, and generally charge a flat fee. Many municipalities require a stamp from
structural engineers for new or remodeling jobs and ignorance of this
requirement could cost you serious money in fines or replacing work in place.
Payment and Extras
On small jobs, never pay the entire fee up
front. It's not uncommon to pay a deposit but be clear on what your recourse
is. Pay the full amount only when you are satisfied that work has been
completed to specification. On larger projects, it is common to stagger
payments through the course of the project. Link these to clear stages, such as
the completion of excavation, for example. On large projects, a builder may
require some money up front. This acts as a deposit and allows the builder to
order and buy materials. The builder usually has a clear "progress
schedule" for payments and you should feel comfortable with the
requirements. It is standard practice to retain a portion at the end until all
work is complete to satisfaction. Any payment in addition to that originally
estimated, or quoted, should be backed up by reasoning agreed between both
parties, in writing.
As building materials, environmental
protection policies, and health and safety standards change, so do planning and
building regulations. Local authorities deal with most planning issues under an
umbrella of national policy and rules. Further rules apply to listed buildings
and conservation areas. If you are considering structural work, always contact
the local building department first. They are there to help, not hinder. A
quick phone call can often put your mind at rest about what does or does not
need a permit. Construction is supervised by an inspector. Again, a quick phone
call can often solve many problems. If you are carrying out work, the inspector
will often need to check various stages to ensure that regulations are being
adhered to. Insulation, ventilation, electrical wiring, water supply, and
drainage systems have all recently become more stringently regulated. Use these
highly trained professionals as allies.
They offer excellent advice and help.
Always use personal
recommendations for tradespeople.
Always get estimates
or prices put in writing with a detailed job specification.
Check that heating,
plumbing, and electrical contractors have the required qualifications.
Check that any
tradesperson has the appropriate insurance.
Ask for samples of any
materials that will be used, such as bricks, blocks, shingles, or finish
Network - To view the original article click here
These errors can cost you the chance to
buy your dream home, and they can set you back financially.
blindly listen to advice from family and friends when searching for a new home.
a home, a lot can go wrong. Your seller, the lender, the appraiser or your
real estate agent could do something to inadvertently sabotage the purchase of
your new home.
yes, even you could make a mistake. Homebuyers make plenty of them.
in today's homebuying market, where demand is high and supply isn't, you can't
afford to make any mistakes. This doesn't even begin to scratch the surface of
what could go wrong, but if you're looking to buy a house, do what you can to
avoid making these classic homebuying blunders.
Not having your financing ready when you make an offer. If you
want a house, and you love it, you don't have any time to waste, says Ryan
Critch, chief executive officer of Ocean400 International Realty in Fort
today's environment if you love the house, don't leave without putting in your
offer, or the next family will," he says. "Countless times over the
last year families have experienced heartbreak by thinking about it. Get your
offer in fast, and think about it during the negotiation. Don't lose your dream
also says that when you make
your offer, you shouldn't suggest you pay less than what the homeowner is
asking. "In today's seller's market, we're often in multiple offer
situations, and sellers have little patience for low offers," he says.
Not looking at homes before you're ready to make an offer. This is
the period of homebuying where you're window shopping and learning about buying
a house. But many homebuyers skip this stage, says Kate Ziegler, a realtor in
recommends going to open houses as soon as you know you're in the mindset that
you want to buy a house. Just know that even if you fall in love with a home,
you won't make an offer since you haven't lined up the financing yet.
more properties you can visit in the early stages of a search, the more confident
you'll feel signing the offer when you do find – the one," Ziegler
looking at a lot of homes early in the process, "it will help you learn
what you're really looking for, give you practice evaluating potential homes
with some emotional detachment, since you're not ready to offer anyway, and
motivate you to keep moving forward as you see things come on and off the
market," she says.
this goes for any homeowner, and not necessarily first-time buyers, Ziegler
says, adding: "If you've been off the market for more than a year, you're
out of practice."
Skipping or skimping on the home inspection. Many
real estate agents say this is happening more and more, especially in a climate
where homebuyers are trying to close a deal before anyone else does.
don't do that, says Daniel Gyomory, a realtor with Century 21 Town &
Country in Northville, Michigan.
buyers want to save a few hundred dollars by not having an inspection done or
by having their family member who isn't a licensed inspector do the inspection.
This is a very big mistake," Gyomory says.
reasons why it's a mistake should be obvious – if there are roof leaks you
don't know about, foundation problems, mold issues or any number of reasons you
might not want to buy a house, an inspector will probably find them. Otherwise,
you'll find them – someday.
Blindly listening to advice from friends and family members. So you
think you've found a house, but this is your first one, and you think it'd be a
good idea to bring in Mom and Dad to take a look at the home with you. That can
be a bad move, says Joshua Jarvis, a real estate agent and owner of Jarvis Team
Realty in Duluth, Georgia.
one is common with first-timers," says Jarvis. "They go see 10 homes
after eliminating 50 on the internet, and they invite the parents or Uncle Joe
to see the home."
your parents and uncle care about you, any potential problem that they spot,
they'll share with you. And while that's admirable that they're looking out for
you, they didn't look at 50 homes on the internet or go to those other homes,
basing their decisions on their current perspective of their living situation.
If you're going
to rely on advice, then make the person go through as much of the process
as you can," Jarvis says.
sure, Jarvis is speaking from the perspective of an agent who has often been
close to a sale, only to have a well-meaning relative sabotage it. But chances
are, if you start talking to friends who are homebuyers, they'll tell you
stories of how a parent or in-law once talked you out of buying a home, and how
ever since they've wistfully wondered if they made the right decision.
expensive of a home. Gyomory says that this happens a lot.
buyers get their preapproval letter and want to look at houses that are at the
very top of their price range, without thinking it through," he says.
says that you should be thinking about not just those monthly mortgage payments
but the cost
of owning a home.
is, you need to be thinking about how much it'll set you back when you buy a
lawn mower or pay a service to cut your grass. You'll want to keep in mind that
when you buy a home, you'll soon be making the owner of a local furniture store
very happy. If you plan on having kids, someday you'll be begging them to turn
off the lights and asking, "Do you think I'm made of money?"
other words, to have a better future, think about those future costs.
– To view the original article click here
The challenge of buying a home for
the first time can seem so daunting that it's tempting to either just go with
the first house that falls in your price range or continue to rent. To help you
demystify the process and get the most out of the purchase, we'll examine what
you'll need to consider before you buy, what you can expect from the buying
process itself, and some handy tips to make life easier after you purchase your
The first thing you'll need to determine is what
your long-term goals are and then how home ownership fits in with those plans.
It could be that you're simply looking to transform all those
"wasted" rent payments into mortgage payments
that actually give you something tangible. Others see home ownership as a sign
of their independence and enjoy the idea of being their own landlord.
Narrowing down your big-picture homeownership goals will point you in the right
direction. Here are five questions to ask yourself:
You have several options
when purchasing a residential property: a traditional single-family home, a
townhouse, a condo,
or a multi-family building with two to four units. Each option has its pros and
cons, depending on your homeownership goals, so you need to decide which type
of property will help you reach those goals. You can also save on the purchase price in
any category by choosing a fixer-upper, although the amount of time, sweat equity and
money involved to turn a fixer-upper into your dream home might be much more
than you bargained for. (To examine your options, check out Does Condo Life
Suit You? and Is A Housing
Co-op Right For You?)
While it's good to
retain some flexibility in this list, you're making perhaps the biggest
purchase of your life, and you deserve to have that purchase fit both your
needs and wants as closely as possible. Your list should include basic desires,
like neighborhood and size, all the way down to smaller details like bathroom
layout and a kitchen that comes with trust-worthy appliances.
Before you start
shopping, it's important to get an idea of how much a lender will
actually be willing to give you to purchase your first home. You may think you
can afford a $300,000 home, but lenders may think
you're only good for $200,000 depending on factors like how much other debt you
have, your monthly income and
how long you've been at your current job. (For an introduction to the
terminology and structure of a mortgage, read our tutorial Mortgage Basics.)
On the other hand,
sometimes a bank will give you a loan for more house than you really want to
pay for. Just like with the purchase of a new car, you'll want to look at the
house's total cost, not just the monthly payment. Of course, looking at the
monthly payment is also important, along with how much down payment you
can afford, how high the property taxes are
in your chosen neighborhood, how much insurance will cost, how much you
anticipate spending to maintain or improve the house, and how much your closing costs will
be. (For help deciding what mortgage type is best for you, read Shopping For A
Mortgage and Make A
Risk-Based Mortgage Decision.)
A real estate
agent will help you locate homes that meet your needs and are
in your price range, then meet with you to view those homes. Once you've chosen
a home to buy, these professionals can assist you in negotiating the entire
purchase process, including making an offer, getting a loan, and completing
paperwork. A good real estate agent's
expertise can protect you from any pitfalls you might encounter during the
process. (Keep reading about this in Finding A
Listing Agent and The Benefits Of
Using A Real Estate Attorney.)
The Buying Process
Now that you've decided to take the plunge,
let's explore what you can expect from the home buying process itself. This is
a chaotic time with offers and counter-offers flying furiously, but if you are
prepared for the hassle (and the paperwork), you can get through the process
with your sanity more-or-less intact. Here is the basic progression you can
1) Find a home.
Make sure to take advantage of all the available
options for finding homes on the market, including using your real estate
agent, searching for listings online and driving around the
neighborhoods that interest you in search of for-sale signs. Also put some
feelers out there with your friends, family and business contacts. You never
know where a good reference or lead on a home might come from.
2) Consider your
financing options and secure financing.
First-time homebuyers have a wide variety of
options to help them get into a home, including federally-backed loans and
loans for homebuyers who don't have the standard 20% minimum down
payment. Your state may also have its own programs for first-time
homebuyers. Your mortgage
interest rate will also have a major impact on the total price
you pay for your home, so shop around. It will really pay off. (To learn more,
The Mortgage Payment Structure.)
3) Make an offer.
Your real estate agent will help you decide how
much money you want to offer for the house along with any conditions you want
to ask for, like having the buyer pay for your closing costs. Your agent will
then present the offer to the seller's agent; the seller
will either accept your offer or issue a counter-offer. You can then accept, or
continue to go back and forth until you either reach a deal or decide to call
it quits. If you reach an agreement, you'll make a good-faith deposit and the
process then transitions into escrow. Escrow is a short
period of time (often about 30 days) where the seller takes the house off the
market with the contractual expectation that you will buy the house - provided
you don't find any serious problems with it when you inspect it. (For more on the
escrow process, read 10 Hurdles To
Closing On A New Home.)
4) Obtain a home inspection.
Even if the home you plan to purchase appears to
be flawless, there's no substitute for having a trained professional inspect
the property for the quality, safety and overall condition of your potential
new home. If the home inspection reveals serious defects that the seller did
not disclose, you'll generally be able to rescind your offer and get your
deposit back. Negotiating to have the seller make the repairs or discount the
selling price are other options if you find yourself in this situation. (For tips
on coming out ahead in any negotiation, read Getting What You
5) Close or move on.
If you're able to work out a deal with the
seller, or better yet, if the inspection didn't reveal any significant
problems, you should be ready to close. Closing basically
involves signing a ton of paperwork in a very short time period, while praying
that nothing falls through at the last minute.
Things you'll be dealing with and paying for in
the final stages of your purchase may include having the home appraised (mortgage
companies require this to protect their interest in the house), doing a title search to
make sure that no one other than the seller has a claim to the property,
obtaining private mortgage
insurance or a piggyback loan if
your down payment is less than 20%, and completing mortgage paperwork. (For
more on the pitfalls of private mortgage
insurance, check out Six Reasons To
Avoid Private Mortgage Insurance and Outsmart Private
Homeowner ... Now What?
You've signed the papers, paid the movers and
the new place is starting to feel like home. Game over right? Not quite. Let's
now examine some final tips to make life as a new homeowner more fun and
With homeownership comes
major unexpected expenses, like replacing the roof or getting a new water
heater. Start an emergency fund for
your home so that you won't be caught off-guard when these costs inevitably
arise. (To make saving for your emergency
fund a breeze, read Build Yourself
An Emergency Fund.)
With the large amount of
money you're putting into your home, you'll want to make sure to take excellent
care of it. Regular maintenance can decrease your repair costs by allowing
problems to be fixed when they are small and manageable.
It doesn't matter what
your home is worth at any given moment except the moment when you sell it.
Being able to choose when you sell your home, rather than being forced to sell
it due to job relocation or financial
distress, will be the biggest determinant of whether you will see a
solid profit from your investment.
Even though you own a
home, you should still continue to save the maximum in your retirement savings accounts each
and every year. Although it may seem hard to believe for anyone who has
observed the fortunes some people made during the housing bubble,
you won't necessarily make a killing when you sell your house. If you want to
look at your home as a source of wealth in retirement, consider that once
you've paid off your mortgage, the money that you were spending on monthly
payments can be used to fund some of your living and medical expenses in
retirement. (To learn how to get the most for your house when it is time to
sell, check out Fix It And Flip
It: The Value Of Remodeling.)
This brief overview should help put you on the
path towards filling in any gaps in your home-buying knowledge. Remember that
the more you educate yourself about the process beforehand, the less stressful
it will be, and the more likely you will be to get the house you want for a
price you can afford - and with a smile on your face.
By Amy Fontinelle – To view
the original article click here
a house is a life-changing process that requires lots of upfront financial
looking for a home, keep certain factors in mind, including your financial
situation, types of available loans, your credit score, the price of the house
and your down payment so you can navigate the process smoothly.
Your financial situation
you buy a house, make sure that your monthly budget can handle such a large
expense. Unless you’re one of the few people who can pay cash for a home,
you’ll likely be paying it off for 15 or 30 years, depending on the length of
addition to the mortgage payment, you’ll want to factor in expenses like
property taxes, homeowners insurance, property taxes and routine maintenance.
Bankrate’s calculator to see how much house you can afford and
estimate the mortgage amount that fits your budget.
Types of mortgages
buying a home, you have a few options for the type of loan you
want to use. Two of the most common mortgage types are fixed-rate and
Fixed-rate mortgage: The
interest rate on a fixed-rate mortgage stays the same over
the life of the loan, with payments divided up into equal amounts that you pay
on a monthly basis. The longer the loan term, the less you have to pay each
month. However, you’ll likely pay more in interest than you would with a
also need to review your credit score before buying a house. Your credit score
helps creditors determine your creditworthiness. Borrowers with credit scores
of 740 or higher generally qualify for the best mortgage deals.
still possible to buy a house if you have bad
credit. You likely will have to accept a higher interest rate on
your mortgage, which could cost you hundreds of dollars extra per month.
your credit score drops too low, though, you might not qualify for a mortgage
at all. Consider improving your credit score first before trying to buy a
house. You can check your credit report and scorefor free
The price of the home
higher the price of the house you want to buy, the more you can expect to pay
on a monthly basis. When looking at houses, consider your budget and how much
you can afford to spend.
to consider your needs, too. Do you have a new addition to the family and need
the room? Have your kids moved out and you want a smaller home?
take a look at the price range of the houses available in the area where you
want to buy. Compare the prices you find to your budget and determine what home
you can afford.
The down payment
large down payment represents
one way to reduce the monthly cost of your mortgage. As a matter of fact, a
down payment of 20 percent gives you access to better interest rates and
prevents you from having to pay private mortgage insurance. So, in addition to
lowering the amount you owe initially, a down payment also can get you a lower
interest rate, making a house more affordable.
By Cheryl Knight - To
view the original article click here
The mortgage process can be intimidating, especially to
first-time homebuyers, but it doesn't need to be. As long as you know some of
the basics about mortgages Opens
a New Window.before you start the process,
and choose a good lender to guide you through the process from the offer to
closing, getting a mortgage can be relatively painless.
With that in mind, here's what you should know before you start looking for a
lender, including how to compare different lenders and their mortgage offers.
To be clear, you don't
need to know your credit score Opens
a New Window.before you start shopping for
a mortgage lender. However, checking your score beforehand can give you an idea
of what sorts of terms mortgage lenders may offer you (more on that later)
-- and whether you're even ready for a mortgage in the first place.
Many credit card issuers
offer a free FICO score as a perk, but if you want your complete Opens
a New Window.(three-bureau) credit report,
you'll probably have to pay for it. MyFICO.com Opens
a New Window.is one popular website that
sells FICO scores from all three credit bureaus.
Certain loan programs require certain minimum credit scores.
Just to name one example, a conventional mortgage requires a minimum FICO
credit score of 620, while a low-down-payment FHA mortgage Opens
a New Window.can be obtained with a score
as low as 580. So if you check your FICO score and find that you have a 600,
you'll know to focus your search on lenders that specialize in FHA loans.
On the other end of the
spectrum, some lenders offer their own unique terms, such as 100% financing for
borrowers with excellent credit scores Opens
a New Window.. So if you know your FICO
score (and how to interpret it), you'll know which loan programs you can
realistically qualify for.
It can takes months or years to
boost your credit score significantly. However, there are some ways you may be
able to boost your score quickly Opens
a New Window., and you should consider them
before applying for a mortgage.
major distinction you should know before you begin comparing lenders is the
difference between interest rates and APR.
interest rate is simply the price you pay for borrowing money, expressed as a
percentage of the principal amount you're borrowing. As a basic example, if
you're borrowing $1,000 for one year, a 4% interest rate implies that you'll
pay $40 in interest to the lender.
On the other hand, annual percentage rate Opens
a New Window., or APR, is the total cost of
borrowing money. In addition to the interest, or finance charge, APR also includes
certain fees you'll pay to borrow the money, such as a mortgage origination fee
charged by the lender.
point is that APRs and interest rates are often slightly different, and APR is
the number you should consider when comparing lenders' offers. You may be
surprised how different the APR can be between two loans with the exact same
a final pre-shopping item, you can use national average mortgage rates along
with your credit score to get a rough idea of the APR you can realistically
expect to obtain for a mortgage.
One tool that is very useful is
the Loan Savings Calculator Opens
a New Window.provided by myFICO.com. This
breaks down the national average APRs, as well as state averages, for various
types of mortgages (30-year, 15-year, adjustable-rate, etc.) into credit tiers.
example, let's say I have a FICO score of 730 (Note: Lenders typically look at
your FICO scores from all three credit bureaus and use your middle score to
determine your rate). If I plan to get a 30-year mortgage in Florida, I can see
that the average APR obtained by other borrowers in my credit tier is 3.808% as
of Oct. 4, 2017.
addition to interest rates, there are some other to ask prospective lenders
For starters, ask how they
communicate with clients (phone, email, etc.) and how quickly you can expect
them to respond to messages. Having been through the mortgage process three
times myself Opens
a New Window., I can tell you firsthand
that it can be infuriating to have to wait several days when you ask your
lender for a status update.
can also ask about turnaround times, fees you'll be expected to pay, and how
much of a down payment they'll require. There are minimum down payments for
certain loan programs (such as 3% for a conventional mortgage), but some
lenders require more.
far the smartest thing you can do is shop around for a mortgage lender. Talk to
lenders at national banks, regional banks, credit unions, and others. Ask your
real estate professional for recommendations. And be sure to check out online
reviews, as they can tell you a great deal about each lender's reliability,
customer service, and other qualities.
doesn't just mean speaking with
a few lenders. It means taking the time to complete the pre-approval process Opens
a New Window.with at least a few lenders in
order to compare the loan terms each one offers you.
mortgage pre-approval is essentially a thorough mortgage application that
doesn't have a particular home in mind. The lender will check your credit,
verify your income and employment, and give you a firm commitment to lend a
certain amount of money at specific terms.
Finally, don't worry about your
credit suffering from completing several mortgage applications and credit
checks. There's a special provision in the FICO formula that allows for "rate-shopping" Opens
a New Window.for mortgages and auto loans.
As long as all of your applications occur within a two-week period, they will
count as a single credit inquiry for scoring purposes.
By Motley Fool - To view the original article click here
Getting approved for a mortgage is not the same as getting a
mortgage. Until your lender has transferred the money to your buyer's bank,
it's still possible for the process to be derailed.
means that once you have received a "yes," you still have to be careful. Your lender will be watching you
and will continue to monitor your credit and your general financial well-being.
issues like inspections or caveats about the seller finding a new home can
delay your closing. Be diligent about your finances until you actually own the
home and avoid doing these things that can derail your approval.
YOUR MORTGAGE IS
NOT FINAL UNTIL THE MONEY HAS BEEN TRANSFERRED. IMAGE SOURCE: GETTY IMAGES.
a lender decides whether to give you a mortgage, it looks at your ratio of debt
to income. If you take out a loan for another major purchase -- say, a car --
you change that ratio substantially. Paying cash won't prevent a mortgage
snafu, either, because your lender will see the sudden hit to your bank
account, and lenders don't want you to be short on cash after making a down
if the purchase isn't enough to prompt the lender to deny your mortgage, it
could lead to higher borrowing costs. It's possible your lender may change the
terms of your mortgage, handing you a higher interest rate because you've taken
on more debt or lowered your assets before your loan closes.
amount of income you have coming in is one of the key factors banks consider
when determining whether you qualify for a loan. Generally, you have to provide
two pay stubs to prove your income, but if a closing gets pushed back, your
lender may ask for continued proof of employment.
if you have an offer for a better job and would simply be trading one income
stream for another one, it's always best to ask your lender before making a
move. In the case of a job switch, you may need to provide an offer letter, and
your new employer may have to verify your start date and salary.
factor in whether you qualify for a loan to buy a home is how much credit you have
available to you. There's a sort of "sweet spot" where your lender
will believe you have enough available credit but not so much that you can run
up debt that will impact your ability to pay your mortgage.
addition, opening a credit card requires a credit check. That can lower your
credit score, which your lender may continue to monitor through your closing.
my wife and I bought our current home, before we closed, I received a fairly
significant payment from a company I then owned a piece of. Given that it was
money coming in, not going out, it was generally viewed as a positive by our
lender, but it still needed to be explained.
had to prove that the money was earned and was not a loan of any type. That's
because the mortgage company does not want anyone making a down payment with
money that must be paid back. That's why any non-paycheck income should be
declared and explained, as should any expenditure that's outside the norm.
addition to your pay stubs, your mortgage lender will ask for bank statements
-- usually 90 days' worth. If your mortgage closing gets delayed, the lender
may want to see new statements as they come in.
get ahead of yourself
while you wait to close on a house, consider your finances to be in a state of
suspended animation. Don't do anything that changes the picture your potential
lender sees. Even a move as small as getting a store credit card from a home
improvement store -- something many new homeowners do -- should wait until
after you actually own the house.
that the most important thing is closing on the house and owning your new home.
Everything else can, and should, wait.
Daniel B. Kline - To view the original article click here