Tag Archives: Buying

Advantages of Buying a Home Over Renting

Many people are caught between the dilemma of whether to buy a home or rent one. The answers are not easy because each individual’s situation is different, and the answer may also vary depending on the prevailing market rates for buying and renting at any given point of time. However, with the real estate rates at fairly low levels at present, buying a home offers a much superior opportunity in many ways over renting for a majority of people.

Sense of Ownership

Almost everyone has a dream to have their own home someday. Owning a house gives a sense of permanence and ownership to a family. For many homeowners, the value of owning a home and the peace of mind that comes with it is priceless. Apart from the financial advantages, there is an inherent sentimental value attached to owning a home, which cannot be assessed in monetary terms.

Sense of Financial Security

When you own a home, it becomes a long-term financial security for you and your family. It is a safeguard against the future uncertainties of inflation and other economic conditions. If the construction costs and rentals rise unexpectedly in the future, a homeowner remains unaffected by such sudden conditions.

Tax Benefits

In many cases, the interest payments on the home mortgage and even the real estate tax amount may be deductible from your income tax. Therefore, if you pay installments on your home rather than paying monthly rentals, you can build your own home without too much burden on your financial capacity.

Potential for Capital Appreciation

If you have purchased your home during dull market conditions when the prices are hovering at low levels, chances are that you may benefit in terms of capital appreciation over a period of time. A prudent investment can enable you to accumulate or earn a sharp and considerable return, which you cannot expect in case of a rented home.

Better Financial Planning

If you have taken a fixed rate mortgage, you know exactly how many installments you will be required to pay in the future for what amounts. You can plan your monthly budget accordingly and maintain proper and appropriate control over your finances. This may not be possible so easily in case of the rental option because the rent is not in your control once the term of rental agreement is over.

Enhanced Credit Opportunities

Homeowners usually have a better advantage when they need to apply for loans in the future. A homeowner can build equity over a period of time, and borrow against that equity when necessary. Credit card companies and other private lenders typically favor homeowners for the disbursement of credit and loans.

Private Mortgage Insurance *

If the down payment on your home is below 20 percent of its sale value, you can get a private mortgage insurance (PMI) with your lender. PMI helps you to acquire a mortgage with a lower down payment because it protects the lender against any default on your loan. PMI offers an excellent advantage to people who wish to own a home rather than rent one, but do not have substantial finances available for a larger down payment.

Resource:

* http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx

Calendar Considerations When Buying A Home

Most markets are cyclical in nature. In practical terms, this means there are periods where the market in question is very busy and periods where it is very slow. Many people are surprised to learn this also applies to the real estate market.

Buying a home in a seller’s market is tough. In contrast, buying during a slow market is an incredible opportunity. You have a chance to get in at or near the bottom floor of prices. If you can keep focused on the future, you can really make a killing. Yes, you might see the value of the home drop a bit more, but the key is to focus on 2010 and beyond. That may seem a long way away, but the real estate market will bounce back and have returned to typical highs by then. This is where millionaires will be made.

Since you’ve seen the cyclical nature of a sellers’ market versus a buyers’ market, you can see the power of buying or selling during each of these markets. Well, the good news is there are actually busy and slow times within each calendar year.

Nearly every real estate market can be timed year after year. A classical perfect time to buy is during the winter holidays. Why? Well, think about it. How many people are out looking for homes around Christmas or New Years Eve? Not many. This creates an artificial buyers’ market because the number of buyers interested in purchasing a home is greatly reduced. This period usually lasts from November through February.

Given the rather cold nature of winter, it is hardly surprising to learn that the real estate market is slow during the winter months. You might be surprised to learn that the same is true when things heat up. Specifically, the real estate market tends to cool off from July to August. Why is this? Well, families tend to head off on vacations and get caught up in dealing with the kids. There is little time to house hunt and real estate markets tend to slow down, which makes them prime buying time.

Location may be the number one rule for real estate, but knowing when to buy is important as well. It can make the difference between getting a great deal and buyer’s remorse.

Rules To Help You Succeed When Buying A Home

Get your funding before you get your property. There are very few things in life as discouraging as losing out on the house of your dreams because of not being able to secure financing. Although the drive to go out there and hunt for that great house is easy to understand, it is crucial to set up the funding you will need before you begin looking for a house.

Getting the funding in advance has several important benefits, such as being aware of how much you can buy and earning a lot more respect from the listing agents. By understanding how much house you really can afford before you decide to shop, you will avoid wasting your time and energy looking at expensive houses, and the real estate agent will be more than happy to show you the properties within your budget.

It is also essential to take a good look at the different mortgages in the marketplace before getting started with the house shopping process. Nowadays, home loans are available in far more options than the standard 15 or 30 year. Because of this, prospective house buyers need to comprehend how each kind of house loan works, and also to determine which mortgage loan is the ideal option for their needs.

Look at the neighborhood, not just the property. It is a great idea to have a look at the whole area, rather than concentrating on a single house. This is usually a particularly significant thing to think about for anyone moving to a new urban area, because these potential buyers will likely be unfamiliar with the local environment and lifestyle. It is vital to figure out the parts of town that are most appealing, and also to look at things like distance from work and local shopping opportunities.

We have all heard that location is key considering when it comes to real estate, and that is exactly the case. Purchasing a property in the wrong place could be a huge mistake, and you should choose the area along with the house. Possible buyers can learn a whole lot about the nature of the different neighborhoods merely by driving around town, and also by speaking to other locals.

Be reasonable with your initial offer. Looking to low-ball a seller on the very first offer can backfire, as can spending too much. It is essential to thoroughly evaluate the local marketplace, and to compare the selling price of the property with what identical properties in the area have sold for. Comparing the sales of similar properties, what are called “comps” in the business, is probably the best way to figure out what is fair, and to make certain that you neither pay too much or underbid on the property.

Always get a home inspection. Always check out the property for any possible problems prior to making an offer. Compared to the price of the standard house, the cost of a good property inspection is practically negligible. Therefore, get a good property inspection performed before you purchase. To get the best house inspector, it is a great idea to get word of mouth referrals as most of the best home inspectors depend on word of mouth marketing.

Also try not to alienate the sellers of the house. Several real estate deals have fallen apart because of the personal animosity of the buyer and the seller. It is very important to avoid offending the seller of the property during the process, and to avoid nitpicking every small detail during the sale. Keeping the good will of the seller will help the deal go smoothly, and will also provide the best atmosphere for seller and buyer alike.

Bankruptcy and Buying a Home – 3 Benefits to Buying a Home After Bankruptcy

If you have filed bankruptcy recently, you may wonder if you can get approved for a home loan. You may also wonder if buying a home after a recent bankruptcy is a good idea for you.

While a bankruptcy can make getting approved for a mortgage loan more difficult, it is still possible to get approved for a mortgage loan. In fact, there are more and more bad credit loan programs coming out all the time. Subprime lenders are focusing more on helping individuals with poor credit achieve home ownership. This is happening mostly because bankruptcies are still on the rise and there is an increasing number of people with bad credit who are looking for home financing.

Here are some reasons to consider home ownership after a bankruptcy:

1. Increase Your Credit Score – When you make your payments regularly, you improve your credit rating. Once your pre-payment penalty period is over, you should be able to refinance your mortgage loan for a much lower interest rate. After your bankruptcy has been discharged for over 2-3 years, you should have a much easier time qualifying for a lower interest rate mortgage loan.

2. Accrue Equity In Your Home – If you are just making rent payments, you are throwing your monthly payments away. When you own a home, over time, home values increase and you are working toward owning an asset.

3. Take Out An Equity Loan To Consolidate Debt or Get Needed Extra Cash – Once you have bought your house, as soon as 6 months or so later, you might be able to take out an equity loan on your home and consolidate any other debt that you might have since your bankruptcy or debt that could not be included in your bankruptcy. Taxes and student loans will not be discharged in a bankruptcy. You may also want to use the extra cash to invest in a business venture or for needed home improvement.

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Before Buying, Know What You Want In Your New HOME!

Since, for most Americans, their house, represents their single, biggest, financial asset. Therefore, doesn’t it seem, to make very little sense, that, when people are ready to purchase their first HOME, or upgrade to a new one, they appear to often, do so, in a rather, haphazard manner. Wouldn’t it make more sense, if, before buying any specific home, we took the time, and fully considers, what we, personally, sought, and hoped for, in the place, where we will hang our hat? Obviously, we need to consider, economic and financial considerations, so we avoid the so – called, Money Pit, where we become house – rich, but overwhelmed by the obstacles and challenges. However, unless, we, also, fully consider, what we are looking for, and might make us happy/ satisfied, it doesn’t make sense, to proceed. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, using the mnemonic approach, what this means, and represents, and makes sense, to consider, from the beginning of the house hunting.

1. Happiness/ healing/ heart; heating: Living, where you do, should bring you happiness, and self – fulfillment! It should bring you, a healing heart, and spirit! However, major systems of a house, must function effectively, and easily, such as heating, air conditioning, and other major and minor systems, which might impact, your enjoyment of the particular home!

2. Objectives; option; organized; opportunities: Before you begin, take an introspective, objective look. and fully consider your personal objectives, needs, goals and priorities. Which home options, might be most useful, in making you more fulfilled, and happy, living in a specific home? Observe how it is organized, and consider, if, it serves your needs, as is, or, might be easily adaptable (in a somewhat, inexpensive way), to do so! Consider, your immediate, as well as longer – terms needs, and purposes, and whether, you desire, to live there, for a temporary, or a longer period. Recognize those opportunities, this house might present, to serve your needs, in terms of the interior, exterior, neighborhood, school system, and other conveniences.

3. Motivating; meaningful; manageable: Is this house, manageable, or, would it overwhelm you? Is it worth, the effort? What is most meaningful to you, when you consider making this type of significant commitment? Your home must be motivating and inspiring, to your life, as a whole!

4. Energy/ energize; efforts; emphasis; excellence: Be realistic, but seek a degree of excellence, rather than settling, merely for, good – enough! What do you consider, your major emphasis? Is this prospective place, worth your efforts? Will it energize you, and meet your needs, goals, and aspirations, providing you with extra energy?

A house may not be a HOME. When it’s time to purchase one, seek a house, which you’ll make, a home, of your own!

Is Buying a "Fixer-Upper" a Good Investment?

Should you spend less money buying a fixer-upper, or more money buying a fixed-up house? That is the question. While there are no simple answers to those questions, here are some tips that you should consider when making your choice:

1. Do the math.

One of the keys to determining whether or not to purchase a “fixer-upper” is to determine the cost of fixing it up. Get a professional appraiser to handle the task, to get an accurate assessment. The cost of fixing the house will vary, depending on the current state of the house. After the appraisal, you will have some concrete data to make a wise decision about whether you should fix up the house, or make it someone else’s headache.

2. Choose houses that need minimal repairs.

Fixing up a house does not have to require revamping it completely. It is advisable to look for houses that need a fresh coat of paint (interior or exterior), new carpeting, some basic plumbing, and so on. On the other hand, if a house needs major repairs then make sure that it is at a rock-bottom price, and suits your long-term housing plans.

3. Consider how much time and effort you have.

The amount of repair-work a fixer-upper needs can vary quite significantly. So besides determining how much work is needed, consider how much time and effort you are willing to spend. If you need a livable house sooner, then it might be a bad option. If you do not have the energy to do the needed repair-work on the house, then you should probably buy a new house instead.

4. Learn the housing trend in the area.

Fixing up a house in a good location is one thing. Fixing up a house in a bad location is not such a good idea. So before deciding whether or not you should buy a particular fixer-upper, determine if the house’s value would generally rise or fall afterwards. If the latter would happen, then you might decide that the funds needed to repair the home would not be worthwhile. On the other hand, if the houses in the neighborhood are generally appreciating in value, then it might be money well spent.

5. Consider your long-term housing plans.

Do you want to live in your next house for years or decades? Fixing up a house can be a lengthy and difficult process. The time, effort, and money required might be too much if you are not planning to live in a particular house for several years. Then again, the investment could be worthwhile if the repairs needed for a fixer-upper are basic ones.

6. Get thorough and multiple appraisals.

This is crucial when considering whether or not to buy a fixer-upper. Consider getting at least three appraisals, and then calculating the average of them. Besides getting multiple appraisals, you should always get thorough ones that include the roof, soil, and so on. Make sure when comparing appraisals that you compare apples with apples.

Is buying a fixer-upper the right option for you? The above tips will help you to make the best decision.

Cesspool Inspection When Buying a House

People who look for new properties are concerned about the aesthetics of the house or the landscape, but only a few consider asking about the septic tank or cesspool. However, cesspool inspection is important when obtaining a property. Cesspool services are necessary in many cases. You have to learn the value of cesspools in homes.

A lot of home buyers are not too concerned about cesspools. Knowing whether the cesspool is in good condition and functional is important whenever you are about to buy a property. You have to ask your realtor about this, and he or she should be able to give you an answer. A realtor who does not know the condition of a property’s cesspool or septic system cannot be trusted.

The problem with cesspools is they are buried underneath the ground, so you cannot be sure if the one in a prospective property is in good condition. A specialist should be called to do an inspection. There are companies that offer cesspool services including inspection. Keep in mind that an inspection is just an inspection. The service specialist will not fix problems unless you specifically ask him to do so. You probably will not need cesspool repair unless you really are planning to move into the property. If a property you are looking into has damaged cesspool, you can consider a repair service. If not, you can look at another property.

Cesspool inspection is a dangerous task if you are untrained. This is why it has been stressed that only a trained professional should do the task. You may only do as far as removing the cover. The next step should be reserved for the trained professionals.

How would you know if it needs service? A faulty cesspool may leak and cause contents to pollute the surrounding soil. In this case, foul odor will diffuse from the ground into the air. If the area smells like rotten eggs, the pit must be damaged. Water leaking from the pit will also saturate the ground around it. Look for signs of sogginess. You would also know if the cesspool is draining properly if the leach field has green grass. If not, the drainage lines must be clogged.

Cesspools should be checked regularly for signs of clogging or leaks. Settling solid matter and scum may build up and block drainage pipes. Such event poses problems in the future, but this may be momentarily un-obvious. Ask the realtor if it has been checked in the past year. You don’t want to buy a property and then spend your bucks getting the troublesome pit serviced.

Supposing you have bought the property and then sometime in the future you encounter a problem with the cesspool, what would you do? In this case, you can contact a septic plumber or a cesspool cleaner to find out what the problem is and fix it. Cesspool and septic tank services may be available in your area. Be careful when checking out your cesspool on your own. The gas build-up is toxic and flammable, not to mention extremely sickening.

Buying A House In A Recession Time – Pros and Cons

Buying a house in a recession time has both pros and cons, and both of these aspects should be examined before this move is made. During a recession the US economy is down, the housing market and home prices are depressed, and there are high unemployment numbers. Consumers tend to become nervous about making big purchases or long-term financial commitments, and lenders require great credit to even consider a mortgage loan. With all of this it can make sense for some individuals to purchase a home during these economic times, as long as the pros outweigh the cons. A careful evaluation should be done to examine the individual situation, and this can help determine whether the advantages of buying a home during tough economic times are worth the drawbacks.

Pros: There are many advantages to buying a house during a recession. As long as you have a 700 or higher credit score and can provide a 20% down payment most lenders will offer a mortgage. In a recession housing values often plummet, and this means that you can get a home for much less now than you could five years ago. There is a wide range of homes on the market, and these include foreclosures as well as private sellers. The current mortgage rates and interest rates are incredibly low, and the homes on the market are priced at fantastic savings in many cases. Another pro is that first time home buyers can take advantage of tax credits worth thousands of dollars. In addition to a large number of foreclosures many home owners have found themselves underwater, and may be extremely motivated to sell. The housing market is a strong buyers market right now, making it an ideal time to buy for many.

Cons: While there are many benefits to buying a house during a recession it is important to remember that there are also drawbacks as well. During a recession the future economic outlook is not clear, and there is a lot of uncertainty. Home prices could continue to fall after the home is purchased, causing you to lose value and equity quickly. You could end up losing your employment if your employer downsizes or closes the doors, and this could make it impossible for you to stay current on the mortgage payments. In tough economic times many people move to a better location, and if you have purchased a home this may be difficult to do. The rising cost of fuel and food may make finances tight, and this could result in foreclosure in the future.

Buying a house during a recession will make sense for many people. You can get a larger and higher priced home for less thanks to dropping home values, but this could also be a drawback as well after you have made the purchase. This method can be very beneficial for many, but it is not right for everyone. For some individuals the drawbacks of this purchase and the uncertainty caused by the poor economy mean that now is not the time to purchase a home.

Avoiding the Emotions When Buying a Home

When you are buying a home it is easy to let your emotions drive you. This is good sometimes, but there are times when this can be a very bad thing. Wrong decisions can easily be made when you are letting your emotions take over. The last thing you want is regret when you are buying a house. It is a decision that will take you until you get your next home, so it is a big one. Making rational decisions is usually the best option. There are three emotional pitfalls that people easily fall into when buying a home. This article will list and detail those pitfalls and tell you why these things should be avoided.

You often hear home owners talking about how they fell in love with their house. This may be the case, but this can easily be turned into a pitfall. It is easy to fall in love with a great house and then not be able to afford it. This can crush the home buyers experience and change their attitude for the rest of the shopping period. This is something you want to avoid. One way to avoid this is by getting pre-approved. If you do this, then you know what your price range is from the start. You can then shop in that range and never have to fall in love with a home you cannot afford.

After you find the dream home that you can afford, you can make an offer on it. But what if someone else wants the same house? They may make an offer that is better than yours and it can turn into a bidding war very easily. This can end up with you paying more than the home is actually worth. If you let your emotions drive you through the bidding war then this is an easy pitfall to get into. You either have to be logical about it, and do the numbers yourself, or have someone tell you when you should stop. The bidding war can be bad if you let your emotions take over. You do not want to pay more for the house than you have to.

Another pitfall comes in the form of repairs. If you are buying a home that is pre-owned, then there may be repairs that need to be done. This can be a good thing, but you need to look at yourself and ask if you can really do everything. Just because you are in love with a house does not mean it is best for you right now. Having a home that needs repairs will be very bad down the line and you want to fix everything as soon as possible. If you cannot do this, then the home may not be right for you.

These three things are crucial to remember when you want to buy a home. When you fall in love with a home, then you know it. But, being rational about everything is definitely a good thing to do. Remember to avoid these things and you will be fine.

6 Home Buying Considerations Other Than The House

We often focus on the bones – of – a – house, when deciding whether to purchase a particular residence, but, while that’s essential, an educated home buyer, recognizes and realizes, there are other relevant considerations, as well. In fact, before one, should even view and/ or consider a particular house, he should thoroughly consider these factors, to ensue he will also be happy, and satisfied, living there. With that, in mind, this article will attempt to briefly, examine, review, and discuss, 6 important home buying considerations.

1. Location/ convenience: A central premise in real estate, is, Location, location, location. The greatest house, in a less – than – optimal neighborhood, and/ or area/ location. serves very little positive, productive purpose! Some of the factors included in this sub – topic, include: Does it meet your personal needs?; Does it simplify or complicate your life/ existence?; Are the things, you personally, prioritize, readily available, and convenient, in this location?

2. Safety: Check the safety statistics of the areas, you are considering. What are the crime rates, relative to other alternatives? How safe does the area make you feel? Will your house be safe, largely free – of – crime, and is there, little crime, vandalism, etc, in this vicinity? Who wants to live somewhere, where he feels unsafe, and/ or insecure?

3. Education: Whether you have school – aged children, or, simply, want to assist your future ability to re – sell the house, the local school system, must be, both, actually, as well as perceived as, being superior, and above – average! If you have children, you want them to get the best education, possible, from the local schools, wouldn’t you?

4. Transportation: Since many individuals commute to work, the ease, quality and/ or convenience of mass transit, is often a relevant factor. In addition, how easily can one get to places of interest, including shopping, the arts, etc?

5. Shopping: Most people want their essential shopping, to be as easy and simple, as possible! Especially when this comes to food shopping, pharmacies, and conveniences, individuals would rather, not have to go out of their way, to do, what they feel, most essential.

6. Specific neighborhood: Even within the same, basic area, there are often significant differences, from neighborhood, to neighborhood. Where I reside, some people live uptown, while others prefer living near the water. Depending on one’s personal priorities, and preferences, this often makes, a significant difference, in where one wants to live. Speak to some of the neighbors, and determine, if you’d like to live there!

Using these 6 home – buying considerations, often, help people determine the best place, for them, to live. Will you do what’s in your personal, best interest?