Considerations when Home Buying.

Considerations When Home Buying

What To Consider When Home Buying.

When it comes to when you want to buy a home there are several things to consider. If you are contemplating buying a home, you should know and review the advantages and disadvantages of this big step you are about to embark on. As a long term investment, it’s great to buy a home. It’s a great financial decision.

On an average, homeowners see roughly a 7% growth annually. In my opinion, buying a home is not a very good short-term investment because you’re going to pay anywhere from 2% to 5% of the purchase price, be sure to understand your closing costs.  Consider a home investment as a long term asset that gains equity over a period of time.

The main reason why I believe home ownership is a good long term investment is that the longer you keep the asset (house) in good standing, you’re building equity. As you also pay off the mortgage on the property, your building equity as well. With less of your payment going solely on the interest of the loan but toward the actual price of the loan.

Some experts suggest habituating the home for at least 5 years to see an ROI. But if you’re going into real estate ownership to build wealth using this formula, there are a few things to consider while making this decision.

  • Your Home is not an Asset

Assets are things which generate cash flow for you, while liabilities generate expenses, or negative cash flow. I’m sure you’ve heard that houses are assets because property values gradually appreciate over a period of time. In reality though, the only time your home will become an asset is when you decide to put the property up for sale.

Yes, you’re building equity by living in the home and paying the mortgage on the property. But, every month it’s something that takes money from you, not put money in it. Only when you can sell the property does it become an asset.

While owning the house, you have to pay for all the repairs needed to keep the home in good standing. So naturally, the longer you own the property, the more you’re going to spend on it for repairs. Not to mention the mortgage, HOA fees, renovations, general lawn care, utilities, home owner’s insurance and of course taxes. These are just some of the responsibilities associated with home ownership.

Here’s an interesting, realistic ideal situation regarding home ownership. Say you purchased a house 15 years ago for $200,000. You may be able to sell it today for $400,000. You’ve financed the whole amount with a 6% APR loan for 30 years. You will have spent $157,936 on interest and $57,902 on the principal of your loan for a total of $215,838. Plus, you still owe $142,098 to pay off the bank. Now look at the total when you add all of your other monthly expenses into the equation.

Even if you were able to sell the property for the purchase price. You would still be in the hole considering inflation and time value of your investment. The money you invested then doesn’t have the same purchasing power as it does fifteen years later. Your home is an asset, but your mortgage is the liability. Because a mortgage is debt, you’ll need to pay it off before your home is really considered an asset. Because you’re not paying for it monthly. The only expenses are the costs of operating the home and taxes.

Selling your home has advantages as well. Once being, a profit from your investment. Unfortunately, there’s a tax involved with selling you home. It’s called capital gains tax. Capital gains tax is a fee that you pay to the government when you are selling your home, or anything else of value, for more than you invested in it.

There are two types of capital gains tax associated with real estate; they’re called “Short-term gain and Long-term gains”. Short term gains are when you pay taxes on property owned for less than a year. These are generally higher because they are taxed at the same rate as ordinary income. Long term gains are when you hold the property longer than a year before deciding to sell a home. You’ll get a benefit of a reduced tax rate that usually doesn’t exceed 20%.

 

Buying a home is a great decision if you’re thinking long term. The longer you live in it, the more benefits you’ll be rewarded. For one, every time you pay your mortgage note, you’re building equity, which creates a higher value. Two, you’ll experience better tax benefits in the longer term whenever you decide to sell a home. In conclusion, think long term buying a home.

meeting your realtor

Selling Your First Home? What You Need To Do Before Meeting With An Agent

Preparing For Your First Visit With Your Listing Agent

 

If this is the first time you are selling a home you may have a few questions about what to do before your first meeting with an agent. Knowing what to bring with you to that first appointment and what to expect can save you time upfront and get the process going much faster.

 

Your To-Do List

 

Do You Have a Clear Title?

 

Your listing consultation will include questions about the status of your property. Your agent will need to know if there are any liens or loans out against the home outside of your mortgage. You may think you know the answers, however, unless you bought the home brand new there could be something hidden that you are unaware of which could affect the outcome of the sale. You can check with the Clerk of Court to get information about any claims from previous contractors or creditors. Downloading needed documents is easy with a fee of one dollar per page.

 

Understanding your mortgage and credit numbers

 

Finding out your credit score, how much you owe on your mortgage, and your interest rate before you meet with your agent will get things moving quickly. Once your agent knows what you have left to pay, your interest vs. principal amount, and if you are current on your payment, they can then help you determine what you can expect from your property sale. The more information you can provide, the better.

 

Get an inspection

 

Realty Times tells sellers to have a home appraiser do the check before you meet with your selling agent. If you find that there are repairs needed and know the repair costs this will allow you and your agent to decide who should cover the fixes and how to set the price accordingly.

prepping your home fo sale

To get top dollar for your home, it should be in tip top shape

 

Get Your House Ready For Sale

 

Your listing may go quicker when you have all the information you need up-front. To stay ahead of the game, make sure your home is spotless from top to bottom. Removing accessories that are bold or custom will be a huge factor when you have an open house.

Buyers want to envision their family in this space, not yours. Colors make a huge impact and using neutral tones is a good idea and take out pet and children’s items to appeal to a larger group. Doing this before you meet with your agent will speed up the process.

 

  • -Paperwork To Take To Your First Appointment
  • -Contingency reports concerning removals
  • -Inspection report
  • -Comparisons you found
  • -Mortgage paperwork
  • -Loan information
  • -Bank statements for at least three months
  • -Credit report
  • -Photos of the property, before and after repairs or upgrades
  • -Mandatory disclosure statements
  • -Title report
  • -Ideas for marketing the home

 

Meeting With Your Agent and Questions You Should Ask

 

How Much Is It Worth?

 

Knowing what other homes in your community sell for is an excellent way to help you decide what price you should set on your property. Your Agent will find other homes with similar floor plans, the same square footage, and in the general area to help figure out approximately what your home will be worth when you place it up for sale. It is commonplace that your agent should talk about a comparative market analysis during your first appointment.

 

Best time to list my home?

 

CNBC says that March and April are the best times to sell a home. Buyers are not waiting for kids to get out of school to shop for a home. Many individuals are wary of missing out on the perfect home since inventories are low in several markets.

 

Do I have to hire a staging expert?

 

At least thinking about hiring someone to stage your home is a good idea says experts at Realtor.com. People who have homes with modern furnishings and a consistent design sell properties faster. While you do not have to hire the design expert, you can use the consultation to get ideas about how to make your home more appealing to buyers.

 

Should I worry about curb appeal?

 

Improving the way your entrance looks is one of the best ways to invite people into your home when you are selling it. Consider planting fresh flower beds, replacing mulch, fixing cracks in the sidewalk, painting the front door, making symmetrical additions, adding new couch pillows, replacing door hardware, painting your mailbox, and adding large house numbers to the home. A pergola or arbor provides a shady area to relax. Bright, green lawns always entice open house guests to spend time touring your home.

 

Being prepared for your listing appointment can help you speed up the process of getting your home on the market. Selling something you have an emotional attachment to is hard enough without delaying the transaction.  

Although there is generally not too many closing costs for the seller — be sure to get an estimate.  In addition, you will want to ask your agent about any additional costs that you may not be aware of. Once you get through the first appointment, your real estate agent will guide you through the rest of the home sale. Making a list of any additional questions and concerns you may have to get answers during your initial visit will keep you and your agent from playing phone tag later.