Posts Tagged ‘home ownership’

Deciding on a New Home – 3 Tips To Find Your Dream Property

Creative people look at the world a little differently. We tend to buy differently, often focusing on experiences over material goods. This even seeps for many of us into our decisions about property. If you’re someone who
appreciates aesthetics and fine art, there are some traps you’ll want to avoid if buying a new home. Thinking about purchasing a house? Maybe someday? We have you covered!

Remember Resale

Home Buying

Sure, you want to live in a home forever, but if you end up moving, you’ll want to be able to sell the property quickly. Here are four important areas to evaluate when making a home purchase:

1. Major roads and transportation. You want to be close to the train and have access to busy streets…but you don’t want them too close. Buyers will fall off quickly when you’re ready to sell if you’re on a major road or have railroad tracks running through your back yard. This can be a huge trap when you’re buying. Many houses on busy streets or bordering a railroad will look like deep discount properties. They are definitely discounted…but it’s because nobody’s buying and the seller has to practically give the home away.

2. Exteriors matter. A well-manicured lawn may tell you that a house is well cared for. But also, don’t overlook homes where you’ll be able to do a few simple pieces of yard and home exterior projects to improve the property. Curbside appeal can help drive potential buyers into your home (and make it more fun to come home to while you’re living in it!). Three easy steps can help you bring an exterior to life: power-wash the home, tame the landscaping and add color (either via landscaping or accent colors on your house) to make a home instantly more attractive. (more…)

Buying a House? Now Might Be The Time

I was reading a Yahoo! Finance story this morning about housing prices and saw that for the first time in a long time, prices might be falling. Are you looking for a house? Now might be the perfect time.

HouseinaBox

What’s happening with the housing market?

Let’s talk first about the market. You definitely don’t want to buy a home when the market is hot….and the trend is in a seller’s favor. But if prices are dipping and the number of people buying is light, you’re more likely to find a steal. However, real estate markets are very much regional, not national, like the stock market. That means that while prices might be tanking in Las Vegas, they could be rising in Miami. It’s important to check with pros in your area to see just how weak your local market is before wandering off into the home buying scene.

A weak market means more desperate sellers, so do brush up on your negotiation skills. A few thoughts on this front:

  • Remember that the seller isn’t your friend. It’s up to them to put their best foot forward and make their best deal.
  • You aren’t trying to “put the screws” to someone when you negotiate. You’re only trying to adequately protect your interest, which means paying as little as possible.
  • Don’t expect your real estate agent to negotiate on your behalf. Studies have also shown that real estate agents prefer not to negotiate (mostly because when you consider how they make money….on the sale price….there’s no real incentive for them to bargain).

Okay, the market might be right, but should I buy?

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Daily ProsperiTIP

Hire a qualified home inspector before you purchase a home. Any seasoned realtor will strongly advise this, but I’ve witnessed people working without a professional who skip this step to save a few dollars.

Don’t make that mistake.

When my husband and I were searching for our first home, we fell in love with a sweet little house. During the inspection it was revealed that its foundation was completely collapsing!

A house could be filled with mold, have water damage, leaky pipes, a furnace that’s about to go kaput…and many other problems you might not catch—mostly because you’re too in love with your potential new home to notice the flaws. Even if you’re skilled at real estate, it’s valuable to have another set of professional eyes.

Tip: Don’t send the home inspector to the property alone and settle for reading the report later. If at all possible, accompany her/him through the property. Often they’ll point out valuable information that never makes it into the report. You’ll also be able to read nuances from the inspector about which problems should be fixed immediately which can wait.

From the Mailbag

Miata,

Should I pay extra on my mortgage? I’m making a little extra money right now and I’m thinking paying off my house is a good idea.

 

– Jon

Hi Jon,

This is an intensely personal question. Certainly, less debt is always a step in the right direction, but there might be better choices to grow your net worth more quickly.

Here are a few areas to think about before tackling extra mortgage payments:

  • Is your credit card debt paid down? If not, this is a greater priority. Credit card debt is more harmful to your credit score and is usually at a higher interest rate.
  • Do you have an emergency fund? If not, put extra money into a savings account so that if you have financial trouble down the road, you’ll have funds available.
  • Are your long term goals met? If you’re saving enough for retirement, college or other priorities, then pay down your mortgage.

A mortgage is tax deductible, low interest debt in most cases. Because money paid into a mortgage can’t be used for other goals, I usually look toward other options before paying it down.

From the Mailbag

I’m thinking of buying my first home! One quick question: how do I decide between a 15 and 30 year loan?

Gary

Congratulations, Gary! That’s a big step, and I’m happy to help you with this huge question. For most people, taking on a mortgage is the largest debt they’ll ever owe. It’s important to do it right.

I’ve noticed some advisors like one type of mortgage better than another. I think each type exists for a specific reason. Unfortunately, this means I won’t be able to answer your question directly, but I can give you some tips to help along the way:

First, you didn’t ask about adjustable rate mortgages–where the initial interest rate is low but can adjust to a higher amount after a specified period of time–but for the vast majority of people, they aren’t a great idea right now. Interest rates are at near all-time lows, so locking into a fixed rate mortgage is best for most home buyers. The exception? If you are absolutely certain you’re going to move again soon, an adjustable rate will save you money.

15 year loans are best for people who want to pay off their mortgage quickly and need the forced discipline of a larger payment. The upside of a 15 year loan is that you’re guaranteed to be mortgage-free in 15 years (assuming you remain in the home). The downside? If you lose your source of income, the monthly payment on a 15 year mortgage will be much harder to meet than a 30 year payment.

30 year loans work best for people who want the flexibility of a lower mandatory house payment. It’s a mistake to think that people with 30 year loans will pay them off over a long period of time. On the contrary, I’ve met quite a few successful savers who chose a 30 year loan and then paid significantly more than the amount due each month. Why? If they ran into financial trouble, their monthly payment was pretty low, and the chances they could meet the payment was better than if they’d bitten off the higher 15 year payment.

Don’t take out the 30 year loan and “hope” to make extra payments. Set up an automatic payment plan for more than the requested amount so that you’re still forced to pay your home off early.

I hope this helps and I wish you happy house hunting! Send us a picture! 🙂

From the Mailbag

I want to sell my house. With all of the foreclosures, is this actually a good time to be in the real estate market?
-Sherry

This is a tough question Sherry. Sadly,  there isn’t a great answer. If someone absolutely loves your home, they may overpay, even in this economy.  Wouldn’t that be great?

I will give you three points to consider when deciding whether to sell in this market:

  1. Are you upgrading to a larger/more expensive home or downsizing? Here’s why this is an important factor to consider:  there is a good chance that if your home has slipped in value, so has the home you’re about to purchase. If the properties are in similar markets, you’ll lose some money on your current home but will then save a bundle of money on the new property. If you’re about to spend more money by upgrading, this works in your favor. When downsizing, you’ll lose more on your current home than you will on the one you purchase.
  2. Why are you moving? Interest rates are low. If you’re moving because you can’t afford the house payment, will a simple refinance work? Would there be ways to take advantage of the interest rate climate that involve less upheaval?
  3. My friends who are real estate pros tell me that there is no single “housing market.” There are thousands of little markets. How do your current and prospective markets compare? If your market is depressed but the area you’re moving toward is still booming, maybe this isn’t a great time to sell. If the area you’re moving to is depressed, but yours is holding up well, you may find a steal.

Selling a home is a difficult decision because real estate is usually the most expensive item on a person’s net worth statement. Take your time to make a good decision you’ll be happy with—because you’ll literally live in it!

Top 5 Financial Lessons of 2010

PHILOSOPHER GEORGE SANTAYANA SAID, “Those who do not remember the past are condemned to repeat it.” That’s why, at the end of the year, I like to study the past twelve months and ask myself, what is it that I learned? Some years the answers to the question are easy, like in 2000, when the obvious moral was that the stock market doesn’t always skyrocket. In 2002, we were lucky to learn that the inverse, stock markets don’t always plummet, was true. Other years are more difficult, but if you dig, each twelve months you’ll find plenty of learning nuggets buried in the headlines that you can carry into the next year and beyond. 2010 is no exception. Although it wasn’t a year with brilliantly shining financial stories, there is plenty to remember.

Here are my top five 2010 lessons, in descending order:

5) Home ownership is difficult (still). According to RealtyTrac, one out of every 389 homes received a foreclosure notice in the month of October. Banks are still uneasy about loaning money to people for home purchases, and with good reason. If you own a home, having a good cash reserve, a low amount of debt, and a consistent income stream are all vital to maintain your mortgage.

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