Other Factors about Rent Vs. Buying

I would like to take a moment to point out that, as you might expect, whether buying or renting makes more sense for you depends on a number of individual factors, including your local housing market. Here are some of the other points ...

• Tax deduction: This infographic didn’t figure in the fact that you can deduct your mortgage interest from your taxes. This is an itemized deduction that can lower your taxable income. Realize, though, that your interest payment goes down as the years progress, so the benefit you get from this diminishes. Property taxes can also be deducted on your tax return, and that can be a benefit of homeownership.
• Appreciation: Your home may not always appreciate in value. Indeed, a recession can set you back a long way on the path to appreciation. Whether your home truly appreciates in value depends a great deal on your local market.
• Home improvements: It’s important to note that even though home improvements can add value to your home, it is not an increase that equals 100% of what you spent. If you spend $1,000 on home improvements, your home may only increase in value by $700 or $800. Rarely do improvements add to the value of your home to the amount you spent on them.
• PMI: This infographic leaves off PMI. If you don’t put 20% down, you have to pay for private mortgage insurance, and that adds another cost to home ownership.
• Rental utilities: Unfortunately, the infographic fails to take into account that many renters have to pay their utilities. This is a cost of renting that needs to be considered, as does the difference between how much utilities will cost in your new home.
• Investing in something else: If you can rent for much less than a mortgage, it is possible to the difference into another investment. Indeed, since by the time you pay interest and pay for increased utilities and maintenance on a home, it is possible that you will not actually, dollar for dollar, break even on your home — even if it does appreciate in value. Some maintain that you are better off investing your money in bonds, index funds or something else likely to offer better returns.

As always, you need to run the numbers for yourself, since situations are different, and market conditions vary.  If I can help you along the way I would love the opportunity to sit down and discuss this with you!

Rent or Buy?

Items to Consider for First Time Home Buyers

First time home buyers or people who have either lived at home or rented for a few years are usually shocked at some of the expenses associated with owning a home. This is not intended to discourage people from purchasing a home. Rather this is a concerted effort to properly inform people of some of the unexpected items that come with owning a home.

Home Owner’s Association-Certain neighborhoods have an association that oversees the homes. Homeowners pay an annual fee in order to continue living in the area. In addition any type of remodeling or change to the home must be approved by the association.

Home Inspection-Whether the home is brand new or 20 years old it is always a good idea to get an unbiased opinion about the structure of the home. An inspector can look over every nook and corner of the home to make sure there are no problems or no potential problems on the horizon.

Property Taxes-Property taxes differ from state to state. Some properties may have to pay a few thousand dollars every year while some may only have to pay a few hundred. This is very important since a lapse in paying property taxes can result in losing the home to the state. The safest approach is to request the lender to set up an escrow so that the taxes are paid automatically every year.

Home Owner’s Insurance-Home owner’s insurance must be maintained by the borrower or the lender will enforce their own insurance which is typically much higher than traditional insurance policies. It is good to have insurance in order to provide protection against burglary, weather damage and home problems such as electrical fire or burst water pipes.

Avoiding 5 Common Mistakes Among First Time Home Buyers

One thing is for sure, buying your first home is an exciting adventure. If thought-out properly it can be one of the most rewarding purchases you will ever make. However, sometimes the excitement gets in the way of good judgment. If you’re a first time home buyer, be aware of these common mistakes.

Making a decision only on feelings – When looking at a home, it is vital that you like the home and the area. However, it is a bad idea to buy more than you can afford simply because you love the neighborhood park or a pretty flower bed. Consider the finances along with the emotions.

Get pre-approved FIRST – It is a bad idea to look at a number of houses, fall in love with one and then find out that it will cost over $300 per month more than you anticipated. Getting approved for a mortgage loan first means you will only look at homes in your price range.

Don’t budget for just the mortgage payment – One of the biggest pitfalls of new homeowners is the fact that they did not prepare for other costs. Replacing the roof, fixing a bad water heater, fixing or replacing a air conditioner or heater are normal expenses for homeowners. Understand that you will need to set aside some money each month for home repairs and maintenance.

Inspect the home thoroughly – There is nothing wrong with having a good heart and trusting the seller is telling the truth about the home’s condition. There is also nothing wrong with paying for a home inspection to make sure everything is in good working order.

Buying at the upper end of your budget – Just because your income will allow you to buy a $275,000 does not mean you should get something that expensive. Consider that you will want some new furniture, possible redecoration in the future and other goals like retirement and vacations. If most of your money goes towards your home, then you will not be able to enjoy life.

How to (we will) Market Your House

Home Marketing Tips - How to Market Your House

1. Photograph the Front

 

Most home buyers begin a home search online, so good photos are essential. Listings without a photo or with only an exterior shot are often passed over and ignored. Buyers are visual. Follow these tips and your house photo will look ten times better than the competition's:

• Crop out sidewalks and streets.
• Remove vehicles from driveway / front of home.
• Shoot up-close & angled photos.
• Avoid shade on the house.
• Clear away vegetation blocking front door or path to door.
  



2. Exterior Photographs

If you own a condo or townhome without a yard, then take pictures of the clubhouse, pool, spa or tennis courts. If you have a yard, however, buyers will want to see it.

• Emphasize space and shoot long.
• Mow the lawn & trim bushes.
• Remove evidence of pets.
• Put away children's toys.
• Avoid shooting into the sun.

3. Interior Photographs

Take photographs of every room. Even if you suspect the room won't photograph well, shoot it anyway because the photo quality just might astonish you and be useable.
 

• Open drapes & blinds
• Turn on lights.
• Focus on interesting details like the condition of a wood floor or a fireplace mantle.
• Remove trash cans & close toilet lids in bathrooms.
• Use floral arrangements in kitchens & dining rooms.
• Avoid shooting into mirrors because your image will reflect.

4. Virtual Tours

Virtual tours aren't just to showcase million-dollar homes anymore. Every home should have a virtual tour, even if it's only two spins. Buyers love, love, love virtual tours.

• A good virtual tour will grab a buyer by the hand and lead her from room to room, showing a 360-degree view.
• Depending on the tour company, you can add sound, music or an exciting, professionally written description that scrolls with the movement of the tour.
• Virtual tours can also include individual photos available for download or to print.

5. Signage

Signage encourages home shoppers to immediately call you or your agent. It's free advertising! If your home is a corner lot, put up two signs.

• Some homeowner associations prohibit real estate signs.
• Some HOAs allow only window signs.
• Try talking to a neighbor whose home is located at the corner of a busy street, asking for permission to put a sign in that yard with an arrow pointing toward yours.
• Agent signs should include the phone number of the closest office (if the brokerage operates multiple offices) and the agent's cell or voice mail number.
  
  

6. Print Advertising

Print advertising reaches buyers who read newspapers. Online ads reach the rest. If your neighbors say, "Everywhere I look, I see your home advertised," you're doing a good job. Puts ads in:

• Major newspapers. Find out which days pull the most readers. Typically it's Sunday but some newspapers also publish "picture classifieds" on other days.
• Local newspapers. You can probably run a larger ad for less money that will more closely target those looking in your area.
• Real estate publications. Check on press date; can you wait?
• Every Web site you can find. Most online listings are free.
  

7. Direct Mail

If you're an unrepresented seller, you can buy mailing lists from list brokers. If you are represented by an agent, ask about a direct mail program. I prefer oversized four-color postcards because they are inexpensive to mail and eye-catching. Here are three places to mail:

• Neighbors. Everybody has friends and relatives who might want to move near them.
• Agents who represent buyers in your neighborhood.
• Buyers who live in other areas and often relocate to your neighborhood.
  

8. Open Houses

Not every home is suitable for an open house due to location or other factors, and sometimes the only way to determine that is to try it. If nobody comes, that's probably a good indication. However, if your home is located near a high traffic area where buyers often swarm, then it's a good candidate.

• Place open house signs throughout the area directing buyers.
• Advertise in the newspaper.
• Advertise open house times online.
• Invite the neighbors; they're going to come anyway.

 

Why Some Homes Sell Faster

 

 

 

20 Tips to Buying a New Construction Home

20 Tips to Buying a New Construction Home

1. Use your own Broker/Agent
ALWAYS use your own Broker/Agent; doing so will help ensure that you get what you want. Understand that the sales reps you meet at a new construction community are likely really representatives of the Seller – the Builder, corporate owners, developers, whomever – that are there to present their product, answer your questions … and do the best job for the Seller that they can.

YOU want the same thing, but from your standpoint. You want to see the product, get your questions answered, but have your needs be number one. By using your own Broker/Agent, you can be assured that there’s no conflict of interest.

Most importantly, if at all possible, be sure to contract with a Broker/Agent before you start shopping. Often the policies at a community require that your agent be present at the first showing and then at every showing. If they’re not, you may find yourself working with the site rep even if you didn’t intend to do so. And your agent, who comes along later, may not get paid either – or perhaps will be paid a significantly less amount because the site rep was the person who registered you. 

2. Don’t expect price reductions
Yes, it does happen. But overall, remember that Builders, etc., have established a set of prices that they feel best makes their product (the houses) marketable with an expected profit margin. Furthermore, lowering the price on a house drops the comparable value of other houses in the community, thus bringing the entire suite of houses down in price. Typically a pre-sale home … one that has not yet been built … will be slightly higher in price than a home that the builder erected as a “spec” house – one that was built to attract Buyers to the site. Note also, that very often homes that have not sold for a period of time will not drop in price – they actually go up in price at a new home development, thus supporting the builder’s position that materials and labor costs increase. 

3. Look instead for builder concessions in the form of additional upgrades
Rather than price reductions, you may be able to gain a few upgrades from the Builder at no cost, or for less money. Perhaps the Builder would be willing to include a fence, landscaping, upgraded carpeting, or appliances as part of your purchase without charging you extra. 

4. Builder incentives in the form of interest rates, etc., may not be coming from the builder
Lots of new communities boast incentive programs that cite things like “3.75% financing for 30 years” or “Zero Closing Costs.” What’s important to know is that the Builder may not be the one actually paying those closing costs, or reducing the interest rates. Typically, those types of incentives are coming from the Builder’s preferred lender who is counting on a sufficient number of loan transactions in order to recoup the cost of the incentives.
While Builders can’t require you to use their preferred lender in order to purchase a home from them, they can require you to use their lender in order to gain the benefit of the incentive. You’ll want to check with your own lender first to see if they’ll match the incentive or can give you a benefit in another fashion before deciding to switch gears and go with the Builder’s lender. Remember that nothing’s really free, so be a bit cautious when making decisions like this one. 
 5. Expect to use the builder addendum
In almost every case, new construction homes require the use of a Builder’s contract or at least a lengthy addendum in addition to the typical purchase forms used by a Broker/Agent. Generally those Builder forms include language specific to the terms of the building process and can be many many pages long full of tightly packed terms. While much of the language is common sense, be sure to read the contract thoroughly yourself (as will your Broker/Agent) and then consult with a qualified real estate attorney if you have questions or concerns. Agents, even those sales reps for the Seller, aren’t allowed to (and shouldn’t) attempt to advise you or interpret what those custom forms really say. 
6. Builder warranties vary
Not all builder warranties are the same. Some builders warrant their work from top to bottom for several years, some only for one. Many builders will offer a warranty of up to about 10 years for structural-type issues, with other warranty time frames for things like plumbing leaks. In addition, you’ll find that your new home will likely have individual warranties for appliances, roofs, windows, etc. Be sure to carefully review the warranty offered by the builder of your desired home before signing the final contract for your Purchase. 
7. The floor plan isn’t the floor plan
The little floor plan you see when viewing your potential home at the builder site isn’t an exact representation of what your home may look like. For example, you may see a nicely drawn oval bathtub with rounded edges on the drawing only to find out when the home is almost finished that the actual tub is rectangular. Room sizes are close estimates, but usually measurements are rounded. Sometimes the location of outlets will move around. Sometimes your chosen particular lot requires other modifications in order to fit the home properly. 
8. Rarely can you modify the floor plans
Unlike building a custom home, most community sites where several homes are being built by the same or a group of builders are based on a preapproved set of plans that have already received the stamp of approval from the local building authorities. Conversely, in a custom home situation, your set of plans can be modified prior to building or even during the construction process if you want to pay the extra associated costs.
In these preapproved communities, fewer options for modifications are generally allowed. Doing so would significantly increase the amount of time the builder wants to spend on any one house, while also increasing his/her costs. Changes to floor plans, even to add extra outlets, etc., must be included in the particular permit and approved, which can involve new drawings and perhaps repeated permit processes. If you do want to make changes, be absolutely certain you’ve worked this out as part of your purchase contract.
9. Expect changes
While everyone starts out thinking all of the choices have been made, finishes chosen and the idea that the new home will look just like the model, realistically suppliers run out of or change products or prices, thus affecting the appearance of your home. Builders typically reserve the right to substitute materials and finishes, sometimes leading to surprises. Try to tour a finished home or two and do ask lots of questions about the sorts of things that the builder might substitute. It’s nice to know upfront what you might expect! 
10. Expect about 5 months after permit or approximately 100-120 days after lumber drop
Every builder, City, County, etc. has different time frames that historically work for them when completing a home. For most builders in the greater Auburn Washington area, I’ve found that it takes approximately four months for a builder to complete a home after lumber drop – i.e., the date on which that huge stack of wood is delivered to your home site. Remember that lumber drop occurs after the construction permit from the city/county/etc. has been received by the builder … and after the foundation is complete. Those two tasks can add another month or even two to the process. 
11. Add an extra month or so to the anticipated build-out time
As part of your pre-sale purchase, the Builder and/or sales rep will provide an estimated date of completion for the building of your new home. What’s important to remember is that the estimate is just that – a projection of when the home will be complete and ready for occupancy providing everything goes according to plan. Realistically, however, plans don’t work out exactly on time. In my experience, I’ve found it best to add about an extra month to the whole thing. Go ahead and include the Builder’s date in your contract, but in your heart expect delays. 
12. Be sure to include your Broker/Agent in every walk through; cc them on all conversations, etc.
As indicated in Tip #1, your Broker/Agent is a critical part of your purchase team. With that in mind, be sure that you’ve asked your Agent to attend every walk through and meetings with the builder, and that you’ve included them in email conversations, etc. Note that some builders really try to restrict Agent attendance, but in my experience, you need an extra, knowledgeable set of eyes and ears to help keep things on track. You’ll want to negotiate or handle any restrictions they may have to this at the time you work through your Purchase agreement. 
13. Don’t expect perfection
As much as we feel we’d like to control every piece of the building of our new home, realistically the house won’t be perfect when it’s complete. For example, the quality of wood used to frame the walls of your home is just not what it used to be. You’ll see knot holes, crooked boards, perhaps what look like curious framing practices, and so on. Unless you see significant problems, however, remember that each step of the build process has been inspected not only by the foreman in charge of your project, but also by the local building inspector who should be keeping an eye on things to be sure that the local building codes have been met. If you do see problems, be sure to bring them to the attention of your own Broker/Agent who will assist you in working out any issues with the builder. 
14. Walking the site will get you into trouble
Stay away from the construction site, especially during working hours. There are a lot of physical hazards involved – workers are carrying lumber, shooting nails, stringing wires, spraying drywall compounds, etc. Most job sites require workers and visitors to wear hard hats in an attempt to prevent injuries.
Equally as important is the fact that you don’t really want to disrupt work flow. You want your house finished. By getting in the way of the current project, you’ll cause inordinate delays. Those workers can’t make changes and, as odd as it may seem, probably won’t even talk with you. They’re there to do their jobs, not chat with the Buyer.
Your purchase contract will probably state that you cannot visit the site without making an appointment with the seller rep who will then set up an appointment with the project superintendent or foreman. And then, of course, you’ll also want your Broker/Agent to also be in attendance so that there’s a good record of who said what and when. (Your Broker/Agent should also be conversant and knowledgeable enough with the process to help interpret what’s going on and what could be done to satisfy everyone involved.) 
15. Be nice to the foreman!
You may only meet the construction foreman for your home build a few times, but these folks are gold when it comes to completing what you need. They’re usually very nice … but very busy … trying to coordinate several projects all at the same time and making sure that everything is done correctly. Remember, they have a critical job to do, but you want them to also be your advocate. They want the job done right too! 
16. Take lots of pictures
Each time you have the chance to take a walk through of the home or when you do visit the home site, be sure to take your camera along. I can almost guarantee that you’ll want to hang a shelf on a wall at some point – and wouldn’t it be great to know approximately what’s behind that drywall? Not only that, it’ll be fun to look back at the process … later.
17. Ask for leftover paint, vinyl, granite tiles, carpet scraps, etc.
Most of the bigger builders will put together a very nice box of touch-up paint for you as normal practice, but if you can, you may want to also request that leftover vinyl flooring, the sink cut-out from your granite counter, and the leftover hardwood flooring pieces and carpet remnant be left for you. These can be helpful patching materials when accidents happen and it’s nice to have everything match. Note that many of the finishing steps are done by subcontractors, however, and it may just not be possible to capture any of the leftovers. In addition, significant leftover materials may be used in other homes or even returned to the supplier. It never hurts to ask! 
18. Do your own inspection
More precisely, prior to closing on the purchase of your home, be sure that your purchase contract allows you to bring in a qualified home inspector to test the various workings of your home … checking outlets, plumbing fixtures, walking the roof, the crawlspace and attic, and so on. Typically the items found on your independent inspection will be repaired by the Builder, but will not affect timely close of your purchase. Builders often retain a time period after closing to repair defects. 
19. The “certificate of occupancy” is probably not a certificate at all
The final step before the Builder releases the home to you for closing of your purchase will involve receiving signatures on the final inspections by the City/County, etc. thus allowing the home to be occupied. The term “certificate of occupancy” is a phrase used to indicate that the final signature was received and you’re ready to go! 
20. Move-in day is the sweetest day on earth
Well, of course it is for every Buyer for every home … but there’s just nothing like the unparalleled excitement that seems to surround moving in to a brand new home in which you made all your own choices. On the day before the furniture arrives, buy a roll or two of that tacky carpet protector stuff or paper to cover the walking paths on the rugs and floors so that you and the movers don’t track the great outdoors into your new home.
… And then take a moment for a big smile! Take a few minutes to sit on the floor, on the deck, on the sofa in the middle of the room (because you can’t figure out where to exactly position it) and reflect on what you’ve accomplished. This was a BIG deal!

Building a Home vs Buying a Home

The decision as to whether buying or building your own home is right can be a difficult one to make. When trying to decide which avenue is best, it can be helpful to think about your budget, lifestyle and the location you’re interested in so that you can make an informed choice.

Amenities

One of the biggest factors that determine how well you like a home is its amenities. Before you begin looking at houses, it can be helpful to decide which ones are most important to you. You have a lot more freedom to choose the features you like when building your own home, because existing houses may not have all the ones you are looking for.  Even so, some of them could also include amenities you might not have considered otherwise, so you could just be pleasantly surprised whenever you’re out and about touring properties.

Budget

Building a home is often overlooked because it is typically thought of as being more expensive. That’s not necessarily the case, as a number of things can play a part in the cost of building your own home.  Land prices, zoning ordinances and the availability of materials all play a role in the overall cost.  In many cases, it could be just as cost-effective to have a new home built rather than purchasing an existing one. 

Location

You’ve often heard that location is one of the biggest considerations when it comes to real estate, and the right location can play a big part in deciding whether to buy or build. If you have a particular location in mind, zoning laws or a scarcity of land could make building your own home prohibitive. That’s not true in all areas, as new developments in cities such as Birmingham, AL, Nashville, TN, and Huntsville, AL are constantly being developed. Some of these communities offer more solitude than homes in more established neighborhoods, yet are close to local businesses and attractions. Since your home is supposed to be a peaceful place to relax in, buying a home in one of those newer communities could make perfect sense.

Repairs and Maintenance

People are often unprepared for the repairs and maintenance required from being a homeowner. Making needed repairs should be carefully considered when buying a home, since they can catch you off guard financially. When building your own home, choose a reputable contractor so you can be sure there will be no defects in the quality of the workmanship. Many builders offer home warranties, and this can help alleviate stress, because you can be sure you won’t have to worry about repairs for some time.

Don’t automatically rule out building a new home until you have carefully considered all your options. Building and buying both have their advantages and disadvantages, and knowing what the pros and cons are can help you make a more informed decision.

 

5 Things To Know For Buying A Home After A Shortsale And Foreclosure

1. Know that there's going to be a waiting period.  I think this is probably one of the most important things to know, that's why I'm going to talk about it first. The reality is that after you face short sale or foreclosure you can not turn around and buy another home anytime soon. It's best to know this going into it, and wrap your mind around this fact now instead of later finding out and being discourages. Typically with short sales history you can not buy another home till 3 years after you short sale is final.

2. Know that having a short sale/foreclosure on your credit history wrecks it. Anytime you go through something like this your credit is going to be tainted, ruined and will probably have to be re built. Foreclosures stay on your credit history for 7 years. After a few years you will need to rebuild your credit.  I suggest to speak with someone who is knowledgeable in this  to help you re build your credit. They will offered tips and suggestions to help you get started and get your credit back on track where it needs to be in order to finance a loan for the purchase of a home.

3. Know that you're going to have to save money. Buying a home always requires money. But, buying a home after a short sale requires even more. Maybe you bought your first home at zero down besides your earnest money. Next time around when thinking about buying after a short sale meet with your broker to see what financing is available to you.   FHA financing requires a minimum of 3.5% down. Plus, you may want to consider and plan for the fact that you may or may not have to contribute to your closing costs which is another 3-4%. Another thing to consider depending on the area and what the market is like where you live you might have to replace appliances right away or do other improvements right away to make the home livable. So, the more you can save the better in this case.

4. Know that you NEED to do your Homework & Ask A lot of Questions. Buying a home requires a lot of information I have learned. There's tons of forms to gather, paperwork to gather and then on top of that more to sign, etc. When buying a home after a short sale the rules are different than when you bought the first time. Do you home work!  Research your area, ask a lot of questions of your realtor & broker. Know that there isn't a silly question, and all the ones you do as will help to make things less complicated for you.

5. Be Ready for anything!
I'm always going to be on the side of encouragement and being positive when it comes to this process. But that doesn't mean you shouldn't be realistic as well. In this type of transaction anything can happen, closing dates can get pushed back, loans can fall through, interest rates can change from what you thought you'd get, etc.  I don't want you to think nothing will work out, but I'm just encouraging you to ask a lot of questions of your lender, broker, title company agents and realtors so that you are prepared for anything that might happen.

Enjoy the process!
Buying a home can be stressful, time consuming and sometimes take longer than you think.
My last piece of advice is to enjoy the process whatever it is. If you're buying a home after a short sale history chances are you've already waited a long time to be in the buying position again. Know that you are blessed with this amazing opportunity, embrace it and enjoy it as much as you can.