The Columbia SC home buying market is full of experience as a dynamic, ever-changing process. Because it’s a “slice of life,” shopping for a home can often present you with challenges at best and disappointments at worst. To be prepared for the challenges and to minimize the disappointments we’ve identified five ways you can re-position your home search requirements – and make it a more enjoyable and more successful project.
The Neighborhood or Market: Regroup, rethink or retreat.
If you’re consistently unable to find the “just-right” home you’re looking for in the neighborhood or market you’ve identified as where you’d like to live, do a quick reassessment. Perhaps you’ve set your sights in the Columbia SC home buying market too high and can’t find the size, quality or style home in the price range you hoped. Conversely, maybe you keep looking at homes you can most comfortably afford, but they don’t meet your family’s needs. It may be time to take a closer look at other neighborhoods to see what they have to offer.
After some regrouping and rethinking, you can do a little more research in other neighborhoods. You may discover neighborhoods that were initially ruled out now present new opportunities. For example, you may find that a price tag of, say, $400,000 in one neighborhood or nearby market may provide “more bang for the buck” than that same $400,000 in a trendier neighborhood. If you still can’t find a suitable home, it could be time to retreat – meaning your expectations versus the reality of the housing market are out of line. You’re either expecting too much for where you’re looking, or need to reconsider what you’re willing to pay for what you want.
Consider Cosmetic Attention: No, not for you… for the house!
Let’s be honest, the choice between buying a “move-in ready” home that’s new or already been renovated versus one that needs remodeling is a virtual no-brainer. The time, talent, money and desire to undertake a home remodeling is often lacking among most people in the Columbia SC home buying market. As a result, there are homes in the market with attractive, popular locations that are 40 years old or more. Those homes won’t command nearly the attention and interest than the newer one – or remodeled one – a few blocks away. If you’re up for the challenge, however, older homes may be worth a look. You may find the money you can save in the difference in the sales price can be used to update the property. Best of all, most of the homes may require little more than some cosmetic attention – like fresh paint and refinished hardwood floors.
Put Your Heads Together: Get on the same page.
Many times, couples in the Columbia SC home buying market find themselves at odds over what they want in a home. He wants a bonus room to convert into a man-cave or an in-home office. She wants a larger laundry room or an additional guest bedroom. Being able to understand what each other wants and needs is not only the key to compromise, but it can save time and aggravation during the search for the home that satisfies both parties.
See if You Can Come up With More Money: Explore your options.
While we certainly don't recommend taking on a higher payment than you can comfortably afford, there are ways to use some creativity with the down payment or financing. Often homebuyers have difficulty with the remaining 5% or so of the down payment. Unfortunately, that 5% can prevent them from reaching their budget goals, and kill the deal.
There are options, however. If possible, look into getting assistance from family members to use as part of the down payment. If that isn’t an option, there are lenders that offer mortgages with low down payments. Remember, just because one lender doesn’t offer a particular program you’re looking for, it doesn’t mean another bank won’t. Shop around – you may find just the solution you’re seeking.
Don’t Force the Timing: It’s either right or it’s not.
The Columbia SC home buying market isn’t right for everybody, all the time. With interest rates having been near all-time record lows for several months prior to their recent increase, real estate experts were saying it was the best time in decades to buy a home. While interest rates were low, home prices – and rental rates – were on the rise, making it difficult for first-time borrowers to afford down payments. So, many prospective homeowners were relegated to remain on the sidelines. The simple truth is this: The timing is only “right” when it’s right for you and your particular financial situation. So, don't force the timing. Homes are bought and sold every day and mortgage financing is available. Chances are, that’s not going to change – no matter who wins the presidential election!
There’s absolutely nothing wrong with putting the brakes on your home search for a little while if that’s what you feel compelled to do. Too often, prospective homeowners are pressured into making a decision based on market conditions. Sometimes they’re pressured because an apartment lease is coming due and they need to renew or move. Again, if you don't feel ready to jump into the Columbia SC home buying pool, don’t. Many people find waiting can help them in the long run. It can give them added time to save money or decrease debt to afford a larger down payment. Other people use that time to work on improving their credit score. In addition, some prospective home purchasers simply may elect not to buy a home because they may be planning to relocate in a relatively short time. No matter what your reason for deciding against buying – it’s your decision. You may even look back and think it was the smartest thing you ever did. When it comes to buying a home or not buying, smart decisions are good decisions.
Read more about home buying tips in the section of articles on Columbia SC Home Buying Tips just below our Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.
Here are a few Columbia SC home buying tips for renters to consider if you're ready to take the big step toward home ownership. In addition to the basics like saving up for a down payment and deciding on a housing budget, there are other important considerations to address.
Renters have become accustomed to paying a fixed amount of money during their rental term. For the most part that amount rarely changes until it’s time to renew the lease. For homeowners, it can be a slightly different story. There are four major components that comprise a homeowner’s monthly house payment. The monthly payment is made up of principal, interest, taxes and insurance, or PITI. Let’s take a brief look at each.
Grasp the entire cost of owning a home
A mortgage payment is the combination of principal and interest – the principal is the actual dollar amount borrowed from the mortgage lender, and the interest is the cost that’s charged for the money borrowed. On a home mortgage loan, the principal portion of the monthly payment reduces the outstanding balance of the loan. The interest is charged on the amount of principal still owed as the loan is slowly reduced. For a more in-depth look, search online for a mortgage loan calculator for an amortization schedule showing what portion of the monthly payment will be applied to principal and what amount goes toward paying interest.
The taxes in the PITI acronym are real estate property taxes. The property taxes are determined and assessed by the county or municipality in which the home is located. While real estate taxes vary throughout the country, most experts agree the average tax bill equates to between 1%-1.5% of the value of the home. Real estate taxes are payable annually, however, depending on the type, amount and loan-to-value ratio (LTV) of the mortgage lenders may require you to include 1/12 of the estimated property taxes in each monthly payment. When the taxes are due and payable, the lender will pay the taxes out of the escrow fund.
Insurance coverage is a requirement by most every mortgage lender. The lender will require the borrower to have sufficient coverage to repair or rebuild the home – their collateral, or security for the principal they loaned – in the event of a fire or other peril. As is the case with real estate taxes, insurance premiums can also be required by the mortgage lender to be paid monthly into an escrow account.
Lastly, here’s another of our Columbia SC home buying tips designed to help understand the full cost of home ownership. If a prospective purchaser is considering buying a condo, there most likely will be an additional component to the PITI mentioned above: Monthly Homeowners Association (HOA) dues. The HOA fees help pay for those areas of the condo complex that are for the benefit of all the owners or residents. Examples are parking lots, landscaped areas, pools and clubhouses. In addition, the fees collected are designed to pay for routine maintenance such as painting the building’s exterior or replacing the roof. While most HOA fees are for condo complexes, more and more neighborhoods with common areas requiring upkeep and maintenance are forming homeowners associations, which will require dues.
Understand the tax benefits of owning a home
One of the most important Columbia SC home buying tips to be aware of involves your income taxes. Aside from the annual appreciation most homes enjoy, the most popular advantage of homeownership is the tax savings. Mortgage loan interest and real estate property taxes can be deducted from your adjusted gross income on your income tax returns each year. That, of course, reduces your taxable income – and your resulting tax liability.
Know the comparison math
A popularly used relationship – and argument for buying a home versus paying rent – is the cost comparison of what a homeowner pays in PITI and what a tenant pays in monthly rent. While in theory the concept is good, the most accurate comparison is to analyze the after-tax savings of owning a home versus renting. For example, a $300,000 home may cost (after taxes) $1,215 PITI each month. Compare that to an apartment or home that rents for $1,200. On the surface the math may imply purchasing a home is a better investment. However, remember this illustration is based on a down payment of 20%, or $60,000.
Understand mortgage options and programs
Among vital Columbia SC home buying tips is how to best and most affordably finance the purchase of a home. While 20% has traditionally been the amount most Americans assume is needed for a down payment, it’s largely a misconception. There are loan programs available today for borrowers with as little as a 3% down payment. As mentioned above, depending on the type of mortgage loan and the LTV ratio, a borrower will have to pay their property taxes and insurance premiums each month into an escrow. In addition, if the down payment is less than 20% or if the LTV ratio is more than 80%, private mortgage insurance will be required. Mortgage insurance protects the lender against the borrower defaulting on the monthly payments. Annual mortgage insurance premiums cost roughly .85% of the mortgage amount, so that needs to be figured into the monthly payment in addition to PITI.
Using the example of the $300,000 home above, the monthly PITI (and mortgage insurance) would be roughly $1,995 with a 3% down payment with a 30-year fixed rate mortgage based on current interest rates. After taxes and all deductions, the total monthly housing cost would be around $1,600. Best of all, the down payment would only be $9,000 – plus whatever loan closing costs the purchaser would be required to pay.
Know you credit score inside and out
Since credit scores are very important when it comes to qualifying for the lowest interest rates on home mortgages, it’s important for prospective homebuyers to know as much about their credit as possible. If you’re a first time homebuyer and only have a few accounts, consider opening one or two new accounts. Be aware, however, that your credit score may decrease from 10-15 points when you open an additional account. Over time, though, as you demonstrate a good repayment history the score will increase. Just understand, this takes time, it doesn't go up in a week or a month.
Read more about home buying tips in the section of articles on Columbia SC Home Buying Tips just below our Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.
Here's an important Columbia SC home buying tip. A home search can often be fraught with unexpected costs – not only for first-time buyers, but even for the most seasoned home purchasers. If you’re in the process of looking for your first home, there are a few things you should know to keep hidden or surprise costs to a bare minimum. Unexpected costs can catch you completely off guard. More importantly, they can very quickly leave you under water on your new purchase right from the start. Let’s take a look at a few of these costs and how to best avoid them.
Columbia SC Home Buying Tip: Keeping Costs Down
Of course, there’s really only one sure-fire way to be completely prepared for all the hidden costs of buying your first home – expect the unexpected and have enough cash to pay for the surprises. However, that’s easier said than done.
As you're probably aware, first-time home buyers should know the money they will spend on the purchase of their home won’t be limited to just the down payment. On top of the down payment are costs like homeowners insurance and loan closing costs. While they are a little easier to plan for since they’re an integral part of the home buying and mortgage lending process, others are less obvious.
For example, let’s say the previous owners of your home moved out and took the refrigerator with them. You have to have a refrigerator, so you’ll likely buy one to replace it. Unless you negotiate specifically what items are included in the sales transaction ahead of time, you could be caught unaware. In addition, you could be on the hook for certain immediate home improvements that must be made. And while a few hundred dollars here and there may not seem like a lot individually, collectively the cost can add up fast – especially considering you plunked down most of the cash you had on the down payment and closing costs.
To make the situation even scarier, the relatively minor costs mentioned above could be the least of your financial concerns. When you buy your first home – or any home – you should hire a home inspector to give your home a thorough walk-through. A trained home inspector will look for foundation problems, rotten wood, and electrical or plumbing issues. The good news is if a home inspection uncovers a potential problem, you’ll at least be aware of it and can get a cost estimate to repair it – if you decide to continue your plans to purchase the home. If the repair costs are a deal-breaker and you're unable to negotiate with the seller to pay for them, you can usually back out of the contract.
Often, first-time home buyers elect to feather their new nest with all the creature comforts they want in their first home. If you enjoy cable television, for example, make sure your home is wired for cable. In addition, seemingly little things like new drapes or window treatments can be costly, so take them into consideration when it comes time to think about how to decorate favorite rooms in your new home. Lastly, if it’s your first home you’re probably migrating from being a tenant to being a homeowner, which means you’ll probably be faced with higher utility bills. Your new, modest 1,800 square foot home will likely cost more to heat and cool than the two-bedroom second floor apartment you moved from. Plus, you’ll probably be paying for other utilities your old landlord may have paid before, such as water, garbage pickup or homeowner’s association dues.
The absolute best way to be ready for unexpected expenses is this Columbia SC home buying tip: Plan ahead. The first step is to come up with a budget before you begin your home search. If you’re looking for homes within your budget that may require improvements, find out what those improvements will cost and determine if you can afford them. Many first-time home buyers have been disappointed – or downright shocked – when they discover a home improvement project they thought could be performed for a few hundred dollars may actually end up costing several thousand. Another Columbia SC home buying tip: There’s no limit as to how prepared you can be. For example, say you find a home you like that’s priced considerably lower than others in the neighborhood because of its age. While you may save a good bit of money on the listing price, you may end up paying more in the long run due to nagging, needed improvements that may occur, or the realization your homeowner’s insurance is higher because of the home’s age.
That’s why it’s best to be prepared. Do some research on homeowner’s insurance and comparable sales in the neighborhoods you’re interested in. Decide how much you can comfortably afford for a down payment, then assess how much cash you may have left for any improvements or incidental costs. Then – and only then – will you know whether you can afford a slightly higher-priced home that may require some additional work, new carpet or new kitchen appliances.
So, before you enter the market, remember this Columbia SC home buying tip: Know what to expect. That alone will give you a tremendous advantage when it comes time to weigh the pros and cons of buying a particular house, and what the costs may be to either repair it, improve it, or make it comfortable and acceptable for your own individual tastes. Planning ahead will not only protect you from unexpected monetary surprises, it will make your home buying experience more enjoyable and more profitable in the long run. Remember, buying a house is an important financial move, but it’s not worth depleting all your savings to the point where you can’t enjoy your new home.
Read more about home buying in the section of articles on Columbia SC Home Buying Tips just below Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.
The Columbia SC home buying market is comprised of prospects looking to buy. Some of them are empty-nesters planning to purchase their downsized “forever home.” Others are moving up, looking for a larger home in a more popular neighborhood. Still others may be shopping for their very first home, after weighing their options of continuing to pay rent versus building equity in a home of their own. Regardless of your motivations for entering the Columbia SC home buying market, we all want to make sound investments when purchasing real estate. Let’s examine a few ways you can increase the chances for making the right purchase.
Columbia SC Home Buying Market: It's an Investment
Most people who are looking to buy a home have at least a general idea of how long they plan to be in the home they will buy. If you’re planning to stay in your home for the next 5-7 years you’ll likely want to look at the buying process a little differently than if you were searching for a home in which to retire. It’s important for a shorter-term home purchase with a duration of 5-7 years to be positioned as a springboard for additional buying power for the next home you’ll want to buy. Here are a some suggestions to make this strategy a little easier.
Choose the Right Home
Select a home with better potential for a greater resale value. Start your home selection process with the first rule in real estate: Location, location, location. No matter how many improvements you may make during the time you’re living in your home, the one thing that will always remain constant is its location – good or bad. As you begin your home shopping adventure, compile information from a variety of sources. Many municipal government entities publish master development plans that can be accessed online. Researching them will give you an idea of upcoming projects like additional phases of construction in a certain neighborhood, road improvements or potential rezoning plans. Pay particular attention to the timeframes for any projects to determine if and how they may affect you if you purchase a home in that neighborhood. In addition, weigh the pros and cons of the proposed work that is planned. Will a new road near your neighborhood be a good thing or a bad thing? It may improve access, but it will likely increase traffic, too. With that in mind, here’s our next suggestion for making a good decision as you enter the Columbia SC home buying market…
Columbia SC Home Buying Market: Investigate the Neighborhood
You can gain a wealth of information by talking to the residents of a neighborhood in which you’re thinking of buying. Visit a nearby grocery store, park, or bank and strike up a conversation with the employees or patrons and ask how they like living in the neighborhood. As you drive through the neighborhood, stop and ask residents working in their yards or walking their dogs and ask about their likes and dislikes. Most people are more than willing to give their opinions to prospective neighbors. Armed with that information, try to determine if the neighborhood is at its prime, past its prime, or up and coming. Is it where you want to raise your family for the next 5-7 years?
Know Your Limitations
Once you find a house you’re interested in, assess what improvements need to be made. Next, be honest with yourself in your abilities to take on the projects necessary versus hiring a home improvement contractor. Remember this: Smaller improvement projects usually yield a higher return on investment – primarily because they are less apt to create budget overruns and completion delays. In addition, you’ll be faced with the age-old decision that many prospective homeowners face – are you prepared to invest the time, energy and sweat equity to perform the improvements, or should you pay more and hire a contractor? An even bigger dilemma may be whether you move on to a different house that’s more to your liking that may be more expensive.
Columbia SC Home Buying Market: The Return on Investment
If you’re thinking of buying a home and living in it for 5-7 years, we suggest stronger consideration be given to the return on investment. Why? Simply because most home improvement projects will be one-time only events. If your project ends up being a disaster and needs to be repaired or redone, you have less time to recoup your investment than if you were performing an improvement project on a forever home.
While you’re living in the home, keep in mind that any home improvement projects are done with one main goal – to provide a higher return on investment at a later date. Of course, you want to enjoy your time in the home, so we’re not suggesting you can’t make improvements that will increase your comfort level. However, any substantial improvements should be performed for what they may ultimately do for the home and its resale value.
Make Smart Choices
Once you decide on a house to buy, remember this Columbia SC home buying market advice. There will be, no doubt, a list of things around the house you’d like to repair or modify to fit your specific needs. Make sure you concentrate on the projects that increase the return on your investment. Remodeling Magazine’s Cost vs. Value Report from last year says the highest return on investment will probably be enjoyed on smaller projects designed to enhance the curb appeal of your home. Examples are replacing the front door, the garage door and exterior siding. Most exterior projects yield a nice ROI, and simple projects like painting, changing door or cabinet hardware or light fixtures can provide your house with a customized facelift – minus the high labor costs.
In summary, find a home with the best potential resale over the next 5-7 years. Have a plan of attack when it comes to neighborhood selection and improvements you want to make. Follow these suggestions as you enter the Columbia SC home buying market and you’ll probably be happier with your purchase – and your investment – when the time comes to sell your home.
Read more about home buying in the section of articles on Columbia SC Home Buying Tips just below Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.
The Columbia SC home buying market is showing no signs of slowing down. In a recent survey conducted by TD Bank, 56% of homeowners across the nation feel it’s a ”good time” to buy a home. If you’re among those that are ready to start the home buying process for the first time, there are a few tips we’d like to share that may make your search more enjoyable, less stressful and ultimately successful. Let’s take a look at some of the first-time home buyer “rookie mistakes,” and how to avoid them.
Columbia SC Home Buying: Things to Remember
Watch your finances before buying a house. Keep an eye on your credit. Remember, taking on too much new debt or making a large purchase like a new car prior to the loan closing is a very bad idea. Your debt-to-income (DTI) ratio is one of the major considerations mortgage lenders analyze before the final approval process. Most people aren’t aware that lenders regularly review all the financial criteria used in the loan underwriting again before the loan closing takes place to ensure nothing has substantially changed. So, if you’re contemplating a new purchase, make sure you wait until after you’ve closed your loan and moved into your new home. Even then, make sure you can afford that new car, new furniture or second honeymoon. The last thing you want to do is create a financial bind immediately after you’ve bought a home.
Get pre-approved for a mortgage before you start your home search. Often, first time homebuyers erroneously assume they can afford at least what they’re currently paying in rent. While that may be true, it’s best to sit down with a mortgage lender and get pre-qualified – that is, receive an early, non-binding commitment from the lender as to what they will likely be willing to loan you based on your credit score, DTI ratio and other lending criteria. Many sellers these days don't want their home being shown to anyone not already pre-qualified to purchase their home. Most real estate agents won’t show potential homes without a pre-approval.
Don’t choose the priciest home you can afford. Most real estate experts advise against buying the most expensive house you can find and qualify for right out of the gate. Remember, just because you can afford it doesn’t necessarily mean you should buy it. Home ownership often requires unexpected expenses as time goes on. Repairs, insurance premiums and deductibles, real estate property taxes and other potential surprises always come at the worst possible time. If you’ve spent all your savings for the down payment of your home, you may not have anything in reserve to take care of these or other homeowner emergencies.
Don’t prioritize the home over the neighborhood. It’s human nature for first-time homebuyers to get excited about the possibility of finding their dream home in the most popular neighborhood. Once they realize how far outside their budgets dream homes can be – especially in affluent markets – they often make the mistake of looking for that same dream home in a neighborhood that may not be as good.
Don’t be pressured, take your time and be smart. Another Columbia SC home buying tip for first-time buyers is to slow down and take your time. While in today’s often-hectic market many buyers have to act fast to get what they want, the key is not to be pressured into making a decision you may regret later. Educate yourself as to what’s available in the housing market and what the median sales prices are. Remember, knowledge is power, and the more you know about what you want and what you can expect in the real estate market, the better your chances of making a wise purchase.
Don’t rely too much on the Internet. The Internet has revolutionized the way prospective home buyers search for homes and get other information like mortgage financing tips, credit scores and more. However, it shouldn’t take the place of physically meeting or speaking with professional real estate agents, lenders and others during the Columbia SC home buying process.
Don’t forget to visit and revisit the house you want to buy. Remember, the location of your house is fixed and will never change. For that reason, visit the neighborhood at different times of the day and night to see what’s going on around you. Is there a particularly loud bar or music venue nearby that you weren't aware of? If the house is located near an airport, what’s the traffic like at various times of the day? The more visits you make to the house and the neighborhood, the more you’ll be able to know what it will be like if you buy.
Don’t skip the home inspection. Sometimes excited first-time home buyers think skipping the home inspection may be an easy way to save money. Besides, you’ve fallen in love with the home and there’s absolutely nothing that could possibly change your mind, right? Then you move in and are faced with maintenance or repair issues that could cost hundreds or thousands of dollars – a problem that may have been avoided with a home inspection.
Don’t be indecisive. While we mentioned above not to move too fast and take your time before making a decision to buy, it’s just as important to actually make a decision when you have to.
Some first-time home buyers run the risk of losing a chance to buy a particular property they like to another buyer if they don’t make a decision to act quickly. Although shopping around in the Columbia SC home buying market is usually a wise move, remember that indecision in a seller’s market means you probably won’t get the house you want.
Read more about home buying in the section of articles on Columbia SC Home Buying Tips just below Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.