If you are anywhere near the thought of buying a house, you should do it right now. Today.
Rates are crazy low, home prices are crazy low, and supply far exceeds demand. There is no better time. And we’re not the only one saying this.
Remember John R. Talbott? He wrote “The Coming Crash in the Housing Market” (2003) and “Sell Now! The End of the Housing Bubble” (2006). Well, guess what he’s saying now? Buy, buy, buy! Or refinance, refinance, refinance!
Talbott makes some great points about how current home prices compare to construction and replacement costs and how incomes are currently comparing to rent prices. If you’re on the fence about buying or refinancing, reading the complete article may help you make up your mind.
Then call one of our Broker Experts, who can tell you how all this applies to your specific situation.
The purchase of a home is, in the majority of cases, the single most expensive and complicated transaction a person will ever experience. On top of that, people typically only have the experience one, two, or three times during a lifetime, so they never get accustomed to the process. Also, requirements for a real estate transaction changes over the years. Because of this, there are many benefits of working with a buyer’s agent who can successfully guide, advise, and navigate the path to home ownership.
A buyer’s agent utilizes their knowledge of the real estate market to help their client acquire their home. By using years of first-hand experience in the home buying trenches, the buyer’s agent offers advice on fair market value, how to best negotiate all the terms, and how to complete all of the necessary documentation. This experience is extremely valuable given all the possible variables in real estate. And, as a typical home buyer, this is experience that is impossible to gain in just a couple personal transactions.
There are literally hundreds if not thousands of possible pitfalls in a real estate transaction which must be navigated. An experienced buyer’s agent will be able to walk you through episodes that just might include the following:
- The seller did not make the agreed upon repairs.
- The seller is out of town and cannot be reached and there is a fire hydrant in the middle of the driveway that must be moved.
- There is a heavy rain and there is water in the basement the day before closing.
- The buyer makes a large purchase prior to closing and no longer qualifies for the mortgage.
- There are multiple out-of-town owners on the deed and they must all sign closing paperwork.
- The home is offered as a short sale and it takes six months to be approved.
- The home is a foreclosure and the bank is difficult to reach.
- Termites are found.
- The seller’s agent is not communicating well, causing information to lapse or not be conveyed to the seller.
- The buyer moves in and discovers damage that was not disclosed.
- They buyer’s funding is delayed so the closing and possession dates must be adjusted.
And this is just a short list; it could go on and on. The role of the buyer’s agent is to manage the transaction, providing solutions to each of the problems and minimizing stress for the buyer by keeping their client informed. The benefit of working with a buyer’s agent is to have a professional facilitate the purchase of one’s largest asset.
During a real estate transaction, there are many different service providers a buyer must contend with. You will at least have to deal with the mortgage company, the seller’s agent, one or more title companies, the buyer agent’s broker, the appraiser, the inspection companies, and various repairmen. If any one of these providers drops the ball, the closing may be delayed or even canceled.
A good buyer’s agent will have systems in place to manage and track the progress of each of step of the purchase, all the while keeping their client, you, informed.
Interview several buyer’s agents and choose the one who gives you a concise, well-laid out plan from start to finish. A good buyer’s agent will have your best interests at heart to make your home buying experience a success.
If you have plans to buy a home at the beach, in the mountains or in the desert for your retirement years, you might be tempted to take the plunge and buy your future home now while interest rates and home prices are low.
Financial experts say However, people in this 
age group should be aware of the risks of tying up money and perhaps losing flexibility with a second home purchase.
While there’s no denying that we are in experiencing historically low interest rates and low home values right now, anyone considering buying a second home before they retire needs to run the numbers. People get stars in their eyes sometimes at the prospect of retirement, but the reality is, they may not be able to afford to buy another home right now.
Future retirees are better off maxing out their 401(k)s and make sure they have adequately insured their future before thinking about buying retirement homes.
Financing another home before retirement
For 50- and 60-somethings with plenty of discretionary income, buying a home with cash is an option. Others need financing.
There are three basic options for financing a home.
The home can be financed as an owner-occupied home if the buyer lives in it as a primary residence, as a second home or as an investment.
Second-home financing means you will need to qualify to pay the mortgage on both your current home and your second home. If you need some additional income to qualify for the loan, you can rent the property, and a lender may use some of your rental income for a loan approval.
Some lenders suggest that financing a property as a second home rather than as an investment property is the better option because interest rates, qualification guidelines and down payment requirements are generally more lenient on second homes than on investments. An investment loan always requires a down payment of at least 20 percent or 25 percent.
People getting ready to retire might want to consider the benefit of buying homes before they stop working because a mortgage approval could be more difficult to obtain without an income.
Most financial planners will tell potential retirees that buying a second home is not for people who are just getting by. This should only be a choice for people with the income and assets to handle it.
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Step by Step Closing for Buyers and Sellers
When you have found the home of your dreams, or sold your home, you as the buyer or seller will have to appear at a meeting in which all of the final legal details will be handled, this is known as the closing.
Others in attendance are the real estate agent(s), lender and a closing agent. The meeting usually occurs either at an agent’s office, escrow agent’s office, attorney’s office, or at a lending institution such as a bank or mortgage company.
The main emphasis is to review all of the paper work, and to sign the different forms for financing, and to transfer title to the new owner. For the buyer and seller, knowing what to expect can ease concerns on the process of closing.
Typically the buyer will have more of a role to play in the process of closing on a house. However, the seller will have an important role as well. Usually a review of the settlement statement is presented first for both to agree upon and sign. You will need to be sure about the terms and agreements before you sign.
Next the buyer will be required to show proofs of required mortgage related or homeowner insurance, and that all necessary inspections have been completed according to the guidelines of the contract. All parties must be in complete agreement over terms and sign the documents.
Once this phase is completed both parties will present a certified check for the entire amount of the closing costs. The lender will present the funds paid to the closing or escrow agent, also if there are any funds due they will be submitted at that time to the lending agent.
Depending on the requirements you agreed to as a buyer, your bank or mortgage company may have stipulated that you will need to set up an escrow account to pay your property taxes, or may be your designated home insurance provider out of this account, this will be handled at the closing for your new home.
Other issues such as the recording of the deed will be discussed. Don’t be surprised if you are informed that you don’t have legal claim to the property until it is officially recorded at your local courthouse. It is to be understood that you may not move in until you have legal ownership of a clear title, and this process can take from a few days to over a week. This is why disbursement of funds to anyone involved in the transaction will not be paid until the deed recording is completed.
If you’re the buyer you will need to know what forms you will be required to sign. Take a few moments and write down a check list, and bring along copies of any paper work you have been required to sign or review. An important document known as the Truth in Lending statement will contain vast amounts of financial information for the buyer. This statement will contain information such as your interest rate for the mortgage, amount of cash financed, and your monthly payment schedules along with the total amount paid based on the length of your loan.
Detailed information will be found in other paper work for the buyer too. The mortgage note and other assigned specifications will spell out in specifics terms such as how and where the note is to be paid, and the institutions right to reclaim their rights to the property. This legal documentation will also explain that you’re to meet other specific requirements, such as paying any necessary insurances and taxes yearly, that is of course if you are allowed to pay this independently, and is not part of an escrow account.
The value and importance of a good real estate agent or broker is quickly appreciated at the closing. Many of the processes involved are explained by a caring and competent professional before the closing ever takes place. Make sure though that you do your part by taking the time to ask any questions you have with your real estate broker, and studying, if necessary, your part of the process, whether you’re the buyer or seller.
Home buying and selling can be a pleasant experience for all involved without a lot of hassle and grief. Just make sure you approach it with the right attitude and guidance.
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Time For a Year-End Tax Review
Many of us experience events throughout the year that might require us to go back and review our current financial plans. Life changing events such as marriage, divorce, new additions to the family, job loss, retirement and death are all perfect examples of situations that will likely require revision, or even radical revamping, of your current plan. When it comes to financial, insurance, estate and tax issues, many of us are procrastinators. However, if you make it a goal to complete a simple year-end checklist now, you could save yourself money and time, and gain the piece of mind that comes from knowing your family is well taken care of.
If you’ve just been tossing your receipts into a shoe box all year long, now would be a good time to sort through them and organize them according to categories such as job-related expenses, education or job-hunting expenses and charitable contributions, just to name a few. If you’re self-employed or own a small business, now might be the time to invest more money into your work by purchasing a new computer system, office furniture or a work vehicle. All of these items can be granted quite an attractive deduction come tax time.
If you’re one of the lucky ones and the stock market was good to you this year and you have some capital gains from your investments that are going to be exposed to taxes, a prudent year-end plan should include taking the time to sort through your accounts, and using a strategy known as tax-loss harvesting. This technique involves selling the losers in your portfolio to offset any realized gains. If you wait 30 days and obey the requirements of the wash-sale rule, you can then buy back the securities, if you wish.
Don’t be afraid to generate large capital losses, because there is no limit to the amount that can be offset against capital gains. You can claim an additional $3,000 loss on your federal taxes, and then carry forward the remaining loss into future tax years.
Giving to Others
If you have children or grandchildren, you may (depending on the state in which you live) also receive a state tax deduction for your contributions to a 529 college savings plan. And, let’s not forget that your charitable contributions are usually, partially, tax deductible. When you give to a charity, make sure you get a receipt you can use come tax time.
If you’re computer savvy, consider buying a tax software program such as TurboTax or TaxCut to play around with just so you can see the various deductions allowed and the potential savings available.
Getting Your Estate In Order
A key part of estate planning that many of us overlook is the matter of beneficiary designations. From time to time it is a good idea to verify that these designations are still as you would like them to be. At a minimum, your estate-planning checklist should include reviewing the beneficiary designations for your IRA accounts and life insurance policies and checking the validity of your will.
You may also want to look into adding a “transfer-on-death” (TOD) feature to taxable accounts in order to have them avoid probate in the event of your death. While you have these documents out it would be a good idea to check that your current life insurance coverage is adequate for your present circumstances. Are you underinsured? Are you over-insured? If you are attempting to reduce the value of your estate for estate-tax planning purposes, consider using your annual $13,000 tax-free gift per person in 2011.
Other Overlooked Areas
As the year goes by it’s not uncommon to forget to make your retirement plan contributions, or fail to set aside enough money to maximize the contribution. Since the maximum contribution limits have changed over the past couple of years, and will continue to change in the upcoming years, you’ll want to check with your financial planner to make sure you are contributing the correct amounts. If you recently turned 50, you should be eligible for a larger contribution amount, known as a “catch-up” contribution. Also, if you are age 70.5 or older, you need to make sure you’ve taken your required minimum distributions (RMD) from your tax-deferred retirement plans, such as IRAs and 401(k)s.
Finally, depending on your credit history, you might want to check your credit rating and credit report by going to a reputable online site such as myFICO, which offers you your FICO score plus credit reports from all three credit bureaus for a fee.
In Summary
Along with making a year-end financial ‘to-do list,’ to help you stay on top of the matters we’ve covered here, you should also take some time to prepare your new household budget for the year ahead. Once you have a system in place, the process will become easier every year. You may find it hard to get motivated to tackle some of these tasks, especially during the holiday season, but the potential tax savings and other benefits covered here could be history once December 31st has come and gone. So roll up your sleeves and get to work – you’ll be glad you did come April next year.
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Don’t Wait For Interest Rates to Bottom Out
Whether you’re considering buying your first home, or thinking about refinancing a home you already own, the only pressure you should find yourself under now is to find the right interest rate and to close on that rate as soon as you possibly can to take advantage of the record low rates we are seeing right now.
If you’re thinking of refinancing, with rates as they are now, you might be able to lower your interest rate by one full percentage point or more. If that’s the case, and the costs to refinance are low, you can immediately take advantage of that lower rate. Then, if rates go down further, you can always consider refinancing again.
If you’re shopping for a home and will need a new mortgage, there has never been a better time to buy than now. Inventory is plentiful, and mortgage rates have never been so low. As a general rule, you should never try to time the market — that’s how you miss getting a great rate.
To find a great mortgage, you should talk to at least one national mortgage lender, one local lender, a credit union and a mortgage broker. Ask your friends which bankers and brokers they have used; if they had a good experience with that person or company, give them a call as well.
Anyone who has ever bought a home will tell you, emotion plays a big role in the decision. However, if you don’t approach the home buying process logically, you could end up making some major mistakes.
Probably the biggest area most Columbia SC home buyers make mistakes with is when it comes to choosing the right mortgage.
The first thing you must do is get a good mortgage broker. There are many lenders available for a mortgage if you have decent credit, and it can be very confusing if you are going it alone. A mortgage broker has experience and connections to find you the very best rate available. The value of the home you are purchasing is only part of the cost, and even a small difference in mortgage rates can make a huge difference in savings.
Get pre-qualified for your home loan. There’s nothing worse than finding your dream house, only to realize you can’t afford it. Before you look for a house, get pre-qualified, or better yet, get pre-approved. Have all the pertinent information, such as, employment history, credit history and outstanding debts available, because your mortgage broker is going to need them. The best mortgage lender will then be able to tell you exactly how much you will qualify for.
Keep an eye on the economic market. Buying a home when the market is lean like it is now is a very smart move, if you can afford it. Home values rise and fall with the economy, so if you buy a home when the economy is low, chances are very good the home will increase in value and you’ll realize that appreciation later on.
There are many more important home buying tips, and we have them on this site. Just click the home buying tips link under our categories section to find more important home buying tips.