Looking to buy a home? Here are five essential tips for making the process as smooth as possible.
Get your finances in order.
Start by getting a full picture of your credit. Obtain copies of your credit report. Make sure the facts are correct, and fix any problems you find. Next, find a suitable lender and get pre-approved for a loan. This will put you in a better position to make a serious offer when you do find the right house.
Find a house you can afford.
As with engagement rings, there’s a general rule of thumb when it comes to buying a home: two-and-a-half times your annual salary. There are also a number of tools and calculators online that can help you understand how your income, debt, and expenses affect what you can afford. Don’t forget, too, that there are lots of considerations beyond the sticker price, including property taxes, energy costs, etc.
Hire a professional.
While the Internet gives buyers unprecedented access to home listings and resources, many aspects of the buying process require a level of expertise you can’t pick up from surfing the web. That’s why you’re better off using a professional agent than going it alone. If possible, recruit an exclusive buyer agent, who will have your interests at heart and can help you with strategies during the bidding process.
Do your homework.
Before making a bid, do some research to determine the state of the market at large. Is it more favorable for sellers or buyers? Next, look at sales trends of similar homes in the area or neighborhood. Look at prices for the last few months. Come up with an asking price that’s competitive, but also realistic. Otherwise, you may end up ticking off your seller.
Think long term.
Obviously, you shouldn’t buy unless you’re sure you’ll be staying put for at least a few years. Beyond that, you should buy in a neighborhood with good schools. Whether you have children or not, this will have an impact on your new home’s resale value down the line. When it comes to the house itself, you should hire your own home inspector, who can point out potential problems that could require costly repairs in the future.
Moving from a small town or suburb to a large city can be an intimidating proposition. Here are a few tips to help make your move as painless as possible.
Research before you move. It’s important to understand the culture you’re joining. Do research online and find out about school systems, neighborhoods, parking, weather, public transportation, and laws that are native to that area. If you can, visit a city before moving and connect with someone who’s lived there before.
Have a plan. There are a lot of steps to go through before you start packing the moving truck. Find housing before you leave, or at least know where you’ll stay while you look for a home. Never sign a lease on an apartment that you haven’t seen. If you can’t get there, find a friend or an employer to check for you. Have a job waiting for you, or if that’s not possible, know what you’ll do for money in the first few weeks of living there. Try to line up things like driver’s licenses, car insurance, renter’s insurance, and parking passes ahead of time as well.
Get involved. Meeting people in a big city can be daunting. Don’t expect the neighbors to knock your door down with a casserole when you arrive: city life is often too noisy and hectic. Take the initiative. If there are things you liked to do in your town, find ways to do those things in the city. Try new things. Volunteer. Big cities offer so many opportunities to engage other people, so find what you like.
Mind your wallet. City life is expensive. Everything costs more: food, insurance, clothes, rent. There are also a lot more ways to get ripped off, whether legally or criminally. Be careful how you spend, and know where your money is going.
As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing with the dollar signs so that you can take down that “for sale” sign on your new home.
Get pre-approved. Sub-primes may be history, but you’ll probably still be shown homes you can’t actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. By doing a thorough analysis of your actual spending power, you’ll be less likely to get in over your head.
Choose your mortgage carefully.Used to be the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means it’s better to opt for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in the house for a long time—and given the current real estate market, you should—taking the points will save you money.
Do your homework before bidding. Before you make an offer on a home, do some research on the sales trends of similar homes in the neighborhood with sites like Zillow. Consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.
Selling your home doesn′t just mean hiring a realtor to stick a sign out front. There are a lot of preparations you should make to ensure you get the best offer possible in the shortest time.
Repair. Just because you’ve gotten used to the cracks in the walls and the rattles in the radiators doesn’t mean a buyer will too. If you have hardwood floors that need refinishing, be sure to get it done—hardwood is a huge selling point. Buyers like to snoop around, so be sure to fix any sticky doors or drawers as well. Finally, don’t forget to address any issues with the exterior—fences, shingles, sidewalks, etc. After all, without curb appeal, some buyers may never get to see the inside.
Neutralize. You want buyers to see themselves in your home. If your living room has lime green shag, wood-paneled walls, and all your collectibles and personal photographs, this will be much harder for them to do. Try replacing any bold color choices in your floors and walls with something more neutral—beiges, tans, and whites. Repainting and reflooring will make everything look fresh and new, and help prospective buyers imagine all the possibilities.
Stage. Once your house is clean and updated, it’s time to play dress up. Home stagers can add small details and décor touches that will bring out the possibilities in the various spaces in your home: lamps, mirrors, throw rugs and pillows, flowers, decorative soaps and towels, patio furniture. Home staging can be particularly useful if your home is especially old or if the exterior looks dated. Think of it as a little mascara and rouge—if it’s done right, you notice the beauty, not the makeup.
Home values are generally increasing at an annual rate of 4 to 5 percent, above the inflation rate, according to recent housing reports. That is good news for current homeowners watching their property values increase. But it means potential home buyers must come up with a larger down payment. Especially millennials who have been living with parents, have better job prospects and wages, and are thinking of moving out on their own. With mortgage rates still low and predicted to increase in 2016, this may be the year to plan on becoming homeowners before missing out.
Homeownership is one of the biggest financial decisions you make. The six tips from Michigan State University Extension for 2016 are:
- Affordability: Start considering your realistic price range. Your decision must include understanding the overall cost of the home plus the mortgage payment. Learn more at “Can I afford to buy a home? The Your Home Loan Toolkit has useful information and worksheets to use to do the math.
- Credit: Your credit score will also affect the type of loanfor which you qualify. Most prime lenders look for a credit score of 640 or higher to get better interest rates. Buyers with lower credit ratings should look at FHA (government insured loans), USDA Rural Development loans, and Michigan State Housing Development Authority (MSDHA) loans, which are specific programs for low-income or first time homebuyers.
- Down Payment Assistance: Almost all mortgage loans now require a down payment. You may qualify for help with these funds. Talk to a loan officer or check out qualifications through FHA, USDA Rural Development, MSHDA lenders listed in the Credit bullet point above. Habitat for Humanity, and Individual Development Accounts (IDAs) may be additional resources.
- New Disclosure Forms: Residential mortgage loan applicants will see a new look in the disclosures because of a rule issued by the Consumer Financial Protection Bureau (CFPB) in late 2015. The “Loan Estimate” explains the costs and terms of the proposed loan in one form instead of the two previously required, and a “Closing Disclosure” summarizes the key terms of the final loan contract in one document in place of two.
- Estimate home value: Online sites offer free estimates of home values, such as Trulia and House Values. Look in the geographic areas and neighborhoods you are considering.
- Underserved areas: Fannie Mae and Freddie Mac have a duty to serve very low, low, and moderate income families in three specified underserved markets: manufactured homes, affordable housing preservation, and rural housing. More guidelines from the Federal Housing Financing Agency will be coming.
Another good idea is completion of a certified home buyer education course before the loan closing. This education actually is required by some mortgage programs. Local housing counseling agencies who offer this education may be aware of federal and state funding opportunities as well as down payment assistance programs. The pre-purchase education courses may be free or low cost. Visit MI Money Health, the U.S. Department of Housing and Urban Development (HUD) Office of Housing Counseling to find your local housing counseling agency or look up your state online.
Be prepared for the home purchase process in 2016. Making financial decisions takes time, patience, and discipline. Many resources are available to assist you.
Article originally found on:http://msue.anr.msu.edu/news/six_tips_to_living_th…
Interested in buying a piece of real estate? Many real estate investors and first-time homeowners seem to focus on the style and functionality of their potential purchase, thinking that these aspects help to increase the property’s value. They seem to have forgotten the popular adage, “location, location, location.”
The truth is, the physical structure deprecates as time goes on, it is the land that increase in value. This is very important to note because buying a home is a huge purchase, one of the biggest in most people’s lives. If you don’t look at your investment from all angles and understand everything that drives the value of your home, you can limit your opportunity to increase your wealth.
Land appreciates in value because, as the population grows, the demand for it grows and it’s in limited supply. When you focus on the land underneath the structure, this can help you find more efficient investments that will give you the best return for your money.
It’s not to say that the appearance of the home doesn’t increase the value of the property, but it’s impact is less that you may think. When you understand how location and future estimates of land value will influence property return you can then make better investment decisions.
Here are some considerations of the top things that determine a home’s value to ponder before you purchase your next home:
1. Smaller and/or less attractive home can provide you with more bang for your buck: This is because all homes in a neighborhood, no matter the size or aesthetics, appreciate by approximately the same amount every year
2. Your location within your neighborhood will affect the value of your land: Because they get less traffic and the implied increase in safety for children, homes in cul-de-sacs are more in demand than others with more traffic.
3. The average age of your neighbors can tell you how much your property will appreciate: For instance, neighborhoods with older homeowners are less in demand for home-buyers with children.
4. Future prospects of development can change your property’s value: You must be aware of both the present state of local amenities as well as the future prospects for governmental and commercial development in the area. Both of these factors will influence whether your land will appreciate or depreciate.
An effective real estate investor looks past the physical attributes and the style of prospective purchases and, instead, focuses on the land appreciation potential. So, in order to be successful, you must overlook the more beautiful homes for a great location that provides opportunities for improvement that will increase the value of the land.
(Article originally found on: http://alberto.realtytimes.com/advicefromagents1/i…)
Additional Photos: Video Tour
Listed for: $559,000
Spacious three bedroom two and half bathroom END unit townhouse located in beautiful Countrywood. This townhouse features a large family room, light and bright kitchen, oversized master bedroom with two closets, great entertaining back patio and is conveniently located close to great shopping, numerous restaurants, and easy freeway and BART access.
* Spacious family room with gas fireplace, newer carpet and
* Large front porch entry with room for patio table
* Light and bright kitchen with solid surface countertops, room for
eat-in area and ample cabinet space
* Downstairs half bathroom
* Large master suite with two closets, newer stall shower
* Good size spare bedrooms with plenty of closet space
* Backyard patio with two separate entrances is great for
* Newer HVAC System (2014)
* Inside laundry
* Large detached garage with plenty of storage
* HOA is $298/month
Great HOA amenities including pool, green belt area, and Club House.
Buying a home is thrilling, scary, sometimes weird, often epic, and never dull. You’re ponying up a huge wad of cash for a place you’ll inhabit hopefully for years to come. As such, you’re bound to have a lot of questions throughout every step of the process. So to head you off at the pass, we asked real estate agents to spill the beans on most common questions buyers ask them—and the answers, of course. You’re welcome.
Q: What home can I afford?
That depends, of course—on your income and other financial obligations; plug them into realtor.com’s Home Affordability Calculator for a ballpark figure. And do it before you start shopping, says Alyssa Blevins of Pierce Murdock Group in Alexandria, VA. “If you see houses you love outside your price range, it opens you up to disappointment,” she says. Meet with a lender to get pre-approved for a home loan (added bonus: pre-approval makes you much more attractive to sellers).
Q: Can I buy a home and sell my current one at the same time?
Yes, you can—but it’s the real estate equivalent of walking a tightrope. “This is one of the trickiest questions to answer,” says Cedric Viquerat of Coldwell Banker Residential Real Estate in Bradenton, FL. On the one hand, if you buy a home before you sell the one you’re in, you’re overextended financially; if you sell before you buy, you might need to rent awhile before finding a new place. But there are ways to do both at once, and one option is to instate a “sale contingency” in your contract. This means you only agree to buy a home if you can sell the one you’re in. The only downside is if your seller doesn’t agree (which is possible if they want the timing set in stone).
Q: How many homes should I see before making an offer?
Up to you, sport! While home shoppers these days can look at hundreds of homes online, they only hoof it to check out 10 homes on average before they put in an offer. But keep in mind, “This varies tremendously for each person,” says Will Johnson, a Realtor® in Hendersonville, TN, and founder of Sell and Stage. “Some people find their home within hours of hunting. For others, it takes months.” If you want to streamline the process, it can help to really hone in on a particular neighborhood you’re keen on; that said, if you feel limited by your options, it may be time to expand to surrounding areas.
Q: What do you think the seller will accept as a fair price?
As a rule of thumb, knocking 5% off the list price won’t ruffle any feathers. If it’s been sitting on the market for months, you can venture below that, but the bottom line is, “You never know how low a seller will go, as they have different motivations for selling,” says Marc Castillo of Coldwell Banker in Atlanta, GA. If the sellers are eager to move, you could luck out and score a deal.
Q: How do I know if the property is a good deal?
While there’s no crystal ball on whether a certain home is a bargain and will appreciate, rest assured that with research, you can keep surprises to a minimum. The best way is to check out comps—what similar properties are selling for in the area—“and whether those prices have been going up or down in the recent past,” says Felise Eber, a Miami Beach real estate associate with Coldwell Banker.
Q: How quickly can I close?
“Typical escrow periods are 30 to 45 days,” says Rina Camhi, a Houston, TX-based agent and founder of 10MinRealty. “This gives you enough time to do the investigation on the property and get a loan completed.” And yes, this due diligence counts (see our next point).
Q: Should I get a home inspection?
While buyers often wonder if a home inspection is truly necessary, most Realtors unequivocally say yes, yes, and yes. “A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing,” says Johnson. “Ensuring these things work prevents you from paying to fix them in the future. If some things are not up to par, you can negotiate with the seller to get those fixed before you sign the paperwork.”
Q: When can I back out if I change my mind?
While buyers can always back out of a deal, doing so without good reason may forfeit their earnest money (the cash put down to secure the offer, typically around 1%-2% of the home’s price). But there are some ways to walk with your earnest money in hand.
“Contingencies are great loopholes,” says Bridges. “For example, upon an unsatisfactory home inspection, the buyer can ask for their deposit back. Another loophole is ‘subject to appraisal.’” That means you can back out if the lender for your loan doesn’t think the property is worth what you offered.
Home buyers aren’t the only ones with questions; home sellers have plenty on their minds, too. Find out what they’re wondering in a new article next week!
Article originally found at: http://www.realtor.com/advice/buy/top-questions-ho…
Entrepreneurs, you know that cash flow is key to your business and peace of mind. Positive cash flow, that is. The same principle applies to your personal budget; every purchase you make affects your available resources.
While homeownership took a dent in the last recession, it remains the American dream for many. But becoming a homeowner comes with a great deal of responsibility. Your home can be both an asset (building equity over time) and a liability (adding greatly to your personal expense column).
The good news is you’ll be eligible for new tax breaks, particularly on the mortgage interest. You can write this off on your tax return and deduct interest on up to $1 million dollars of the debt owed on your home.
You can also deduct the property taxes that you have to pay each year.
Buying a home might be the largest single purchase you’ll ever make, so it’s important to run the numbers before you sign any contract. If you’re ready to take the leap and purchase your first home, here are 7 tips to consider before you buy:
1. Know how much you can afford. This may sound elementary, but underestimating the true costs of ownership is a common mistake. Not only will you have a mortgage, you’ll need to pay property taxes, insurance premiums, and other expenses that come with owning a home. Today, a down payment is typically 20% of the purchase price. Think about how much house you will need and factor this into how much you want to put down on a home.
2. Know the score. Your credit score plays an important part in obtaining low-interest financing. Check your credit report and fix discrepancies before meeting with a lender. Your perceived debt can include your credit card limit (your allowable amount you can charge) and back taxes.
3. Avoid large purchases on credit. Accumulating new debt prior to financing a home may impact your debt-to-income ratio and how much you can borrow from a lender. In other words, don’t go shopping for a car or other big-ticket item on credit if you plan to buy a home in the near future.
4. Research financing options. Save time and money by shopping around–there are dozens of websites that can help you do this– to see which lenders are offering the best interest rates in your area. Just like buying any product, comparison-shopping will save you money in the long run–and in a 30-year mortgage the long run is pretty long.
5. Set money aside for emergencies. Many a dream home has turned into a money pit, costing more than budgeted. What if your street floods or your plumbing needs an overhaul? Before the purchase, hire a reputable home inspector, and prepare for the unexpected with money set aside for the unknown.
6. Think green for Energy Tax Credits. Opt for qualifying energy-efficient equipment in your home. Thirty-percent of the cost of solar and geothermal installations can be claimed on your taxes, which can amount to a nice savings.
7. Other renovations may help. While you usually can’t deduct home improvements on your yearly tax return, the good news is that these costs can help when you sell your home. You can include them in your home’s adjusted cost basis. The bigger the basis, the lower your capital gain. To qualify as a deduction, the home improvement must add materially to the value of your home, prolong your home’s useful life significantly or adapt your home to new uses.
In calculating capital gains, you can also exclude up to $250,000 of the gain from the sale of your owner occupied home; $500,000 if you’re filing jointly.
A home can help you build your future or, as some people discovered in the last recession, it can break your proverbial bank. Run the numbers before buying into the dream.
Article Originally found at: http://www.inc.com/replacemeplease1456153792.html
As winter draws to a close, we are reminded that tax time is just around the corner. Those of us who own our own homes are fortunate enough to have many tax deductions and advantageous strategies available to us.
I have some solid advice below, but be prudent and check these out with your tax professional first.
The mortgage interest deduction is the first obvious deduction that comes to mind for many of us. In order to qualify, your mortgage must be secured by your home – and you may be surprised to hear what counts as a “home.” In short, if you can sleep in it and cook in it, and if it has a working toilet, that living space is a home. That includes boats and trailers, so don’t miss out if your home is one of those alternate options.
Interest paid on a mortgage of up to $1 million (or $500,000 each for married people filing separately) can be deducted when used for the purchase, construction or improvement of the house.
Second mortgages (also home equity loans or home equity lines of credit) count toward the $1 million limit if used to improve your original home or to buy or build a second one. If you use the home-secured loan for any other purpose, you can still deduct the interest on loans up to $100,000 (or $50,000 for married filing separately). Use Schedule A to make this deduction.
Prepaid interest (or points) paid when you took out your mortgage is usually 100 percent deductible in the year you paid it. If you refinance and use that money for home improvements, any points you pay are deductible in the same year. But if you refinance for other reasons, such as to get a better rate or use the money for something other than home improvements, you’ll need to deduct the points over the life of your mortgage. This deduction can also be made on Schedule A, and Form 1098 (sent from your lender) should list the points you have paid.
Don’t forget your property tax deduction, also on Schedule A. If your mortgage has an escrow account, the amount you paid will show up on your annual escrow statement. Property taxes paid when you closed on your house will also appear on your HUD-1 settlement statement.
Private mortgage insurance (PMI) premiums are deductible as mortgage interest on Schedule A if you itemize your return, but only if your loan was taken out in 2007 or later and if your income is less than $100,000 (or $50,000 for married filing separately). If your adjusted gross income is above those amounts, your deduction is reduced incrementally until your income reaches $110,000, after which you are no longer eligible for the deduction.
There is also mortgage insurance available from the Federal Housing Administration, Veterans Administration and the Rural Housing Service. You can usually deduct the cost of this coverage, but I urge you to use a tax adviser or well-rated tax software instead of figuring out these complicated rules on your own.
Capital improvements – work done to increase the value of your home – can also have tax benefits. If you plan to live in your home for many years and make multiple improvements, the odds of you turning a profit when you sell your house are greater. More profit is good news for the seller, but then taxes must be paid on any profit past the first $250,000 for single filers or $500,000 for joint filers.
If the money you expect to make from the sale of your home exceeds these amounts, you can benefit from deducting the cost of your capital improvements. The more of these costs you add, the smaller your profit is in the end and the less you pay in taxes.
The trick is in knowing what improvements are eligible. Basic repairs are not, unless your home was damaged by fire or natural disaster.
Eligible improvements have to last for more than one year and add value to your home, prolong its life or be adapted for new uses. They also have to remain in place when the house is sold, so if you build a new deck but tear it down 15 years later, the cost of building the deck cannot be deducted. IRS Publication 523 has a list of eligible improvements on page 9.
Article orginially found at: http://www.theexaminernews.com/home-guru-that-time…