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The Dummy’s Guide to Buying a House


Have you decided that the time has come in your life to settle down and buy a home? Perhaps you are tired of living in an apartment and throwing all of your hard-earned money into rent each month.

Either way, owning a home can be a very exciting and rewarding experience. Before you jump off the deep end, however, there are some things you should know about buying a house for the first time.

buying home
buying home

Explore Mortgage Options

The majority of people who buy homes do so by taking out a mortgage, which involves making a small down payment–typically between 3-5% of the total price–and then making monthly payments plus interest on the remaining principal balance.

Taking out a mortgage is a great way to go about financing your dream home, but be careful to explore your options and ensure that you are getting the best possible interest rate before you decide on any one mortgage lender.

Even a fraction of a percentage of an annual interest rate can mean the difference of thousands of dollars over the length of the loan.

Hire an Agent

With as many houses for sale in Beverly Hills as there are, trying to find the ones that best suit your needs and budget can be an overwhelming and seemingly impossible task. Instead of going it alone, consider hiring a real estate agent or a realtor to assist you in finding properties that are worth your time to check out.

If you are a first-time buyer, you may not even end up having to pay for a realtor, as this is typically done by the seller instead.

Be Realistic

Many first-time home buyers have very high expectations for their first home. They create a “wish list” and then get upset when they cannot find a home within their budget that has everything they want. Home buyers always need to make compromises when buying a home, and this will apply to you as well. Learn to understand and accept this ahead of time to avoid frustration down the road.

Have an Inspection Done

Before you make the final decision to buy a home, hire an inspector to go through it and make sure that it is in good shape. You never know what kinds of problems could be lurking in the home that the previous owners have not disclosed or are unaware of. Having an inspection done will give you more peace of mind in making your purchase.

Buying a home for the first time can be overwhelming, but keeping the above tips in mind should help you throughout the process.

7 Facts To Know About a Home Before you Buy

Before investing in a home, it’s important to know whether you will run into any trouble from previous owners. Make sure to ask your realtor about these seven issues before signing the check.

1. Plumbing Problems

If your new home is going to present difficulties with the plumbing, you need to know beforehand so arrangements can be made for repairs. According to Kamloops Septic Service, you should look out for rusted and leaking pipes, wet spots in the walls, floors, and ceilings that may indicate hidden leaks, and foul odors coming from pipe junctions.

2. Roofing Problems

Many home inspections check the structure of the home, but not always the condition of the roof. Ensure your inspection covers that; if not, climb up on the house and find out for yourself. Look for missing shingles or roofing tiles, as well as penetrations in the roof. Anywhere that a chimney, ventilation pipe, or other structure penetrates the roof, ensure the caulk is performed properly so that no leaks occur.

3. Find Out How Old The Wiring Is

If the home has been built within the past thirty years, it’s probably fine. If it’s older than that, you’ll want to inspect the condition of the wiring for potential problems and fire hazards. The insulation on the wiring may have decayed over time, and shorts in any part of the electrical system may cause sparks.

4. Examine The Insulation

Even after you purchase a home, you have to cover costs such as heating and cooling. Ensure that the home is properly insulated so that you aren’t throwing money away in an attempt to control the temperature. Make sure to check the walls, floors, and ceilings for proper insulation – a large amount of heat is lost through the attic.

5. Measure How Far The Home Is From Your Job

Your commute will play a large part in your decision to buy. Take the time to figure out how long it will take you to go to and from work in the mornings. It’s a good idea to drive the route several times to gauge the amount of traffic on the road.

6. Find Out About Possible Homeowner Dues

If the property is located in an HOA, you’ll be subject to their rules and regulations. Find out what kind of a headache that will present before you commit to purchasing. In addition, ensure that you’re able to build and expand freely on your property; some HOA has specific rules against expansion that would prohibit this.

7. Investigate Local Crime

The neighborhood may seem quiet, but appearances can be deceiving. Find out what kind of crime the local area sees, and take the time to consider whether your home might be the target of any of this crime. Contact the local police department and online reviews of the area. Consult historical data, particularly if the area is in the middle of gentrification.

The best way to find out this information is to speak with your realtor and the sellers. In addition, schedule a home inspection with a trustworthy and reliable company. If any of these problems appear, negotiate a lower price for the home – you would deserve it.

Three Things to do Before Buying a House

Buying a house is perhaps the most important purchase a couple makes in their life. It is certainly the most expensive thing most people own. Because of the magnitude of purchasing a home, I am sharing three key things to do before buying a house…

Don’t get an adjustable-rate mortgage

Remember those TV commercials offering a low rate mortgage for five years? They are offering adjustable rate mortgages, mortgages whereby bankers can increase (or “adjust”) the amount you pay on your interest.

They do this so that they can foreclose on you (or at least shake you down for more money) after you have paid some of your mortgages. Always read the fine print, but a better plan in addition to reading the fine print is to just avoid banks altogether.

Switch to a credit union

On Bank Transfer Day, Americans moved $60 billion dollars from banks to credit unions. Credit unions are non-profit associations of people and businesses that give credit to each other and make loans to members.

In this way, they are more like actual banks than modern “banks”, which these days gamble a lot of their money in derivatives swaps instead of reinvesting it into the economy.

If you can find a credit union and switchover, you can probably get a better deal than you can from a bank since credit unions usually make smarter investments and unlike banks, they are not trying to charge their members a lot of money so that their CEO’s can get a bonus.

But credit unions avoid people with bad credit just as much as banks, if not more so because they are not trying to tie people into debts they will never be able to pay off.

Credit score

Finding your credit score in a credit report will let you know how plausible buying a house is. If you have a low credit score, chances are you should (and will have to) save up a lot more money before buying a house since lenders will want you to pay a higher percent upfront.

Also, you will want to know what it is so that you can better negotiate with the lenders when you negotiate the loan in person: You can be more persuasive and forceful when arguing for a lower interest rate if you know what they know about you.

4 Financial Steps to Take Before Buying New Home

While purchasing a new home is always an exciting experience, it is important to remember that you need to get your personal life and finances in order before you can really feel secure about making an offer on a house.

Most people are thinking about swimming pools in the backyard and putting up a new fence once they have moved into the home, but the reality is that they should be thinking about their credit score and the total amount of debt that they already have in their name. Here are four financial steps that you need to take before you can even think about purchasing a new home.

Improve Your Credit Score

If you are someone who has made some mistakes in the past when it comes to credit, then you will be happy to learn that you are not alone. There is nothing wrong with having a few credit mishaps in your past, but you need to make sure that all of your credit problems are dealt with before you try to buy a home.

Your credit score is going to have a huge impact on whether or not you will even be able to borrow the money needed to buy a home.

Have a Large Down Payment

You should try to put down a large amount of money when you are making any kind of large purchase. The suggested amount is 20% down and once you are ready the Layton homes for sale will be a great investment. If you do not have that chunk of cash already saved up in the bank, take the necessary steps to start saving.

Leave Yourself Some Emergency Funds

While it is definitely important to put a large down payment, you still need to make sure that you have some cash available for emergency situations. Try to have three to six months worth of expenses in your bank account after you put a down payment on the new house.

Try to Get a Fixed Rate Mortgage

One last thing you need to think about before purchasing a home is that you should try to get a fixed rate mortgage. Interest rates are currently at all time lows, so it would be wise to lock yourself into these low rates if at all possible.

The main thing that you need to remember when it comes to purchasing a home is that you do not need to rush into this kind of decision. As long as you take your time and get your finances in order, everything should eventually fall into place.

Seller’s Market? Why It’s Still a Good Time to Buy

What’s behind the recent rise in housing prices and tentative recovery seen in housing markets across the country? Well, a lot of things. But according to the New York Times, one of the biggest factors is the buying mood generated by a vast increase in consumer confidence.

The confidence that Americans have about the future of the economy and their own finances is at a 5-year high, which means they’re shopping for long-term investments like houses. You might think the resulting increase in prices is a reason to wait a while before you hunt for real estate, but the opposite is true.

Even in this newfound seller’s market, buyers are at an advantage, and there are important reasons why you shouldn’t putt off buying a home.

1. Prices Have Tons of Room to Grow

Stories in the media about increasing prices don’t really tell the whole story. Homes are still historically cheap – costs are lower than they were just two years ago. Mortgage rates are at 4.6 percent, and while they’re climbing higher all the time, remember that the long-term average in the United States is 8 percent.

Not only are these still incredibly favorable prices, but they’re also expected to hold steady. Most experts agree that the surge in the market is temporary, and the levels reached in summer 2013 should last for the rest of the year, if not beyond.

There’s a long way to go before home-buying becomes out of reach for the average American, and right now it’s still more attainable than usual.

property purchase

2. Buying is Cheaper than Renting

No matter where you live in the United States, it’s nearly 40 percent cheaper to buy than it is to rent, especially if you stay in your house at least 7 years. While home prices are recovering, rental prices are skyrocketing too, and they’re only going to rise further.

In about 80 of the biggest housing markets in the country, rates would have to be higher than 10 percent for renting to make more financial sense than buying. So if you’re not currently a homeowner and you’re worried about costs, it usually doesn’t pay to avoid shopping for homes. You’re throwing money away by not making the investment.

3. Investors May Leave the Market

With the number of foreclosures rapidly decreasing, homebuyers may no longer have to compete with real estate investors as much as they did in recent years. In early 2013, real estate investors accounted for 20 percent of home sales, according to the Wall Street Journal.

That’s still a historically high number, but it’s decreased over 3 percent in just a few months. In the future, an investor might be far less likely to swoop in with a cash down payment and make it harder for buyers to find the right property for them. With mortgage rates slowly going back to normal, it simply makes far less sense than it used to.

It’s great to see the housing market start to recover, but both buyers and sellers need to view it from a historical perspective. These are still great times to buy a house, and they might be better now than they will be for a while. Selling is getting easier, but that just means your real estate investment has a much better guarantee of paying off.

Is Buying a House Right for Me?

With the downturn in the real estate market, many people have since asked themselves if it’s actually better to rent an apartment or a house rather than buying one. There are many reasons for a person to choose one action over the other, and these reasons will generally depend on a person’s economic situation and where they live.

Benefits of Renting

One of the best advantages of renting over buying is the fact that someone else is responsible for the maintenance of the house. If something goes wrong with the plumbing, all you’ll usually need to do is call the landlord or a dedicated maintenance number in order to take care of things.

Likewise, you’ll never have to mow any grass or worry about any exterior landscaping or caretaking. If you own your own home, you’ll spend countless hours as well as a lot of money fixing every single problem that crops up. Whether there’s a water heater on the fritz, a bit of peeling paint in the living room or a broken window, you won’t have to lift anything more than your dialing finger if you’re a renter.

Owning a home can be a huge time investment as well. Not only are you financially responsible for any repairs and changes that need to be made, but you’ll also have to take the time to perform these tasks yourself.

Another huge advantage that renting will give you is the lack of a large, costly down payment. Typically, the minimum down payment for a house can start at about $10,000. And if you want to owe less on your mortgage and pay costs that run similar to monthly costs in rent, you’ll need to shell out an even bigger down payment.

Unfortunately, for many individuals and families, saving this kind of money is impossible. Several people will also argue that, in the long run, it’s far cheaper to rent than to buy. This argument, however, depends on the area in which you live, as well as several other factors.

There are several calculators online though that can help you determine whether or not it will be cheaper for you to buy or rent in a particular area.

Let’s also not forget one of the major reasons that the world was plunged into a recession: the housing bubble. Do you really want to be responsible for a mortgage that you might not be able to afford in the coming years?

Investing in a home isn’t worthwhile if you end up losing your home to the bank. Many people also forget the fact that owning a home will result in the need to pay property taxes as well. Before buying a home, you’ll need to make sure you can afford a monthly mortgage, all house maintenance, utilities, and property taxes.

Not only does renting give you a bit more financial freedom, but it gives you the freedom to be mobile as well. If you want to move to the other side of town because it would put you closer to all the places at which you like to hang out, pack up and find a new apartment over there.

Changing cities to follow a job is also much easier when you rent. If you owned a home, you’d have to find someone to rent the home out to, or you’d have to sell it. Not only would both of those options likely be time consuming, but they also come with their own expensive costs.

As long as you have the freedom to leave your lease or let it run out, you can live anywhere you want with no strings attached.

Benefits of Buying

With all that being said, there are still many reasons a person would want to own a house. For many, it’s the sense of independence that comes with ownership. You won’t always be able to sign a lease with a landlord who will allow you to fix your place up the way you want to.

If you want to install some new cabinets or fixtures, knock out some walls to make a more open floor plan or paint your walls, you might be out of luck if you rent. When you own your home, however, you can make all of the changes you can afford.

Similarly, you might want to buy a home if you want some outdoor space or if you own pets. Many apartments or rentable places won’t allow pets. And if you’re looking to plant a vegetable garden, assuming you’re lucky enough to have space, you might want to make sure you have your landlord’s “OK” first.

Another great reason to own your own home is that you’re earning equity. While you might have all types of financial freedoms and the ability to move when you’re renting, all of that money is going to someone else’s bank account.

While paying a mortgage might not seem to be much different from paying rent, you’re actually making an investment in your future.

Although you stand to pay extra because of property taxes, interest payments on your mortgage and maintenance, you aren’t completely throwing that money away. And one of the best parts is that you won’t need any sort of surety bond or payment bond later on.

While it might be a bit of a silly reason, there’s also a huge psychological boost when you own your home. You can come home at the end of the day and be in the sanctuary of something that is completely yours. That’s a good feeling for a lot of people, and it is something that a renter will never have.

Also, owning your own place will typically prevent you from having to deal with noisy, disruptive or unpleasant neighbors. For many people, owning a home is still part of the American Dream.

If you’re considering buying a home, make sure you take a look at these tips and do a bit of research before you make your decision. Owning a home is an expensive, time-consuming investment, so be sure you’re ready for the challenge before you take the plunge!

Take the Stress Out of Buying a Home with These 4 Tips

The purchase of a home is a monumental decision that can bring unforgettable benefits. Even when families are ready to take the plunge and start evaluating the market, anticipation can be stressful, especially considering economic conditions.

Fortunately, an article from CBS News noted that at the end of last year, the housing market was beginning to show promise after several years of a downward trend.

Specifically, the article noted that home construction increased, along with selling prices and pending sales. Plus, housing sales climbed more than 25% compared to the same period of 2011.

These signs are hopeful, but there are still a few ways that potential homebuyers become trapped by confusion and uncertainty. Follow the tips below to get off to a strong start whether you’re purchasing for the first time or not.

If You Find a Dream Home, Try Not to Delay

Some people make the mistake of being too cautious about market conditions and end up sacrificing an ideal residence because they got cold feet, or became too caught up in forecasts. Data from the National Association of Realtors says that the housing market usually doesn’t change significantly overnight, and if a home is as good as it seems, it won’t remain available for very long.

Think Broadly

A home can be more than just a place to live. When chosen well, it provides opportunities. Some people decide to buy a house after they’ve been bolstered by a new job or a relationship milestone, like getting married.

Whether you’re looking for an easy commute into Washington, DC and settle in Alexandria, Virginia, or want to live out an aspiration of cultivating a home vegetable garden in Portland, Oregon, consider the things that matter most in life and ponder ways that your residence can turn unfulfilled passions into realities. When you have a lot to look forward to, anticipation can eventually outweigh stress.

Don’t Become Too Swayed by the Opinions of Outsiders

Since buying a home is such a huge decision, many people spend a lot of time collecting opinions about whether a residence is as great as it initially seems.

It’s natural to want reassurance that the choice you’re making is a strong one, but remember although people like co-workers and out-of-state relatives might have good suggestions, they aren’t the ones who’ll ultimately be living on the property. Make your needs a priority, even if it means gently declining the advice of a well-meaning person.

Keep Things in Perspective

Some degree of buyer’s remorse is almost inevitable because the price tag of a home is so high compared to other expenses. Don’t be alarmed if you feel some sense of regret, but also force yourself to think of the house as an investment.

As long as you’ve been thinking about the other parts of the purchase process, you shouldn’t dwell on whether you might have made a huge mistake in finalizing a purchase.

However, remember to factor in upkeep when you’re setting and sticking to a budget. Even when you buy a new home, it’s still necessary to take care maintenance periodically. When you do that, you’ll have an even better chance of a handsome return on investment.

If you think you’re ready to explore the exciting world of homeownership, you’ll probably feel some stress, but with these suggestions, you can keep a sense of panic at bay and look forward to the future.

Competing With All-Cash Buyers

We often hear phrases like “Cash is King” and “Money walks,” somewhat trite but true aspects of an active economy. However, when it comes to the housing market, the cash is king mentality has taken on a whole new meaning. In many cities, and even state-wide, a large percentage and even the majority of all housing sales are going to cash purchasers.

In Nevada, 58% of all housing sales in June were done in cash – the highest cash-based sales state in the country and Miami / Ft. Lauderdale saw 64% cash sales in the same time span.

What this means to you:

First, and foremost, it is important to understand that while this is a growing trend, it has not affected all regions of the country nor decimated the housing market.

However, it does mean that many home buyers are no longer competing with other potential buyers via mortgage rates and initial down-payments but with investors able to buy properties outright in cash.

In regions where cash sales are higher, it will be more difficult for a homeowner with a mortgage to obtain their ideal house. Investors are then able to sit on the houses if they choose and help drive the cost and demand for housing if they choose.

However, it is not solely large investment firms able to broker all-cash deals; retirees and people who sold their homes for a lump sum are able to complete all-cash transactions just as readily and in places like Miami, with its higher than average population of retirees, most of the all-cash transactions are done by individual buyers.

Will All-Cash Sales Continue to Grow?

There is no guarantee that all-cash sales will continue to grow nor is it likely that they will disappear altogether. There are no regulations against all-cash sales as they are perfectly legal and viable. Investors with the ability and funds are likely to buy as much real estate as they are able, particularly in regions hardest hit by foreclosures.

However, as potential profits start to balance out, it is more likely that the level of all-cash sales will balance out. The market will be driven mostly by the demand and the opportunity to produce a profit on the house.

However, while certain regions and cities may have peaked at record-level cash deals, nationwide the average has dropped from 31% to 30% in the past year.

Are All-Cash Sales Dominant Everywhere?

Fortunately for home buyers looking for a mortgage and not paying in cash, there are many regions throughout the United States that deal very little with all-cash investors and individual buyers.

Many states, including Texas, Utah, and New Mexico, have virtually no all-cash deals. Furthermore, all-cash deals are less common outside of major urban sprawls and cities, as well as cities and regions that have not suffered heavily from foreclosures.

Be Vigilant and Do Your Homework:

All-cash deals are perfectly legal, and part of a healthy real estate market. Investors can purchase homes and protect them from becoming run-down or delinquent if they are in a region without a strong buying market. It is important that potential home buyers who require a mortgage examine the region they are looking to buy in.

Higher percentages of cash deals mean a greater chance of losing a potential house because it is easier for the banks and mortgage holders to deal with cash investors.

This can cause a lot of difficulty and strain on the home buyer but can be alleviated by understanding the market you are looking to buy in. Cash deals also have the potential to temporarily inflate the market value of houses in a region which could decrease in the years to come.

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

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