When buying a home, there are a lot of things to look at to ensure you make the right decision. It is a significant investment on your part as a buyer, so one of the things you need to be aware of is the cost involved in buying the home.
You’ll need to consider the down payment. While just a fraction of the selling price, it will still be a significant amount. Your lender will set the down payment they require, depending on the type of loan you’re seeking.
If you’re financing more than 80 percent of the value of the property, you may need to pay for private mortgage insurance. This is required by lenders as a form of protecting the property. If you do not want this extra cost, you can opt to put down a higher down payment which is usually 20 percent of the selling price to avoid PMI. Aside from saving money on private mortgage insurance, you can also request a better interest rate if you put down more cash up front.
You’ll also need to consider loan fees. This is labeled by different names by different lenders but it will usually be a form of payment for the processing of your loan. Be prepared for this as it will always be a part of what you will be paying once you take out a loan with a lender like a bank or any financial institution.
The lender may also require you to have the property inspected before you buy it. Of course, you would need to pay the person or firm that would do the inspection. You should also add other things like the money you would use when going around looking for a property or visiting your real estate agent.
Setting your budget is one of the first things you need to do when buying a house, so use these tips as a guideline for getting started.
There are m
any reasons people invest in real estate, but the general consensus is to make money. With interest rates at record lows and the inventory of homes for sale at a record high, it is an excellent time to begin to invest in real estate.
Getting started as an investor in the housing market is not as hard as many believe, especially if a few simple guidelines are followed. Let’s take a look at the very basic strategies you’ll want to have in place before you make the commitment to invest:
Money
Successful investors in real estate will take action to get a line of credit in place. This begins with creating a working relationship with one or two loan officers at a lending institution. The loan officer will review the investor’s credit scores, analyze debt-to-income ratios, review other investments, and provide input as to the best forms of credit the investor should utilize. The line of credit will usually be in the form of a mortgage.
Depending on whether or not the investor is purchasing the property as a primary residence or as a simple investment, the interest rate will vary. Usually if the property is being purchased as an investment and not a primary residence, the lender will require a larger down payment, especially if this is a first investment property. The interest rate will also typically be at least one percentage point higher when borrowing funds for an investment property versus an owner occupied property.
Agent
Successful home investors develop a strong working relationship with a trusted real estate agent. The agent provides information on real estate trends, fair market value of properties, leads on properties that are good deals, and up-to-date lists of HUD homes and foreclosures.
A real estate broker will prepare and handle all of the paperwork, contracts, and disclosures. He or she will also manage communication between all the parties involved in the transaction. The real estate agent’s role is invaluable to the successful home investor. To get started, interview several real estate agents to discover the one, or two, who will best provide information and assistance. As a buyer’s agent, the commission is usually always paid by the seller, so it does not cost the investor any more to use a buyer’s agent.
Location
Choosing the right location to purchase is critical, especially if reselling or renting the property after purchasing. Look out for locations that don’t suit your use of the property. If you’re buying a house to rent to a family, beware of run down neighborhoods, construction sites, busy streets, proximity to industrial properties, and general undesirable atmospheres. However, if you’re looking to get in on the redevelopment of an abandoned area or building, then by all means do your homework and buy in before prices rise once the rejuvenation is complete.
This is where a real estate agent comes in handy again. A good real estate agent knows what’s happening in their town. If there is a group of small houses for sale in the proximity of a school, your agent will know this ‘hot spot.’ If there are apartment buildings being sold now as condos, your agent will know all about it. Don’t look at a house for sale without considering the surroundings very carefully. That location translates into dollars for the investor.
Repairs
When investing in real estate, be crystal-clear as to the cost of any and all repairs and necessary remodels to be conducted on the home being purchased. And, don’t forget the maintenance. Investors are usually great at costing-out the upfront expenses, like repairs, but can sometimes be short-sighted when it comes to the long haul drain of routine maintenance. The uninformed investor will overlook this area, underestimating theses costs, and end up losing money instead of seeing a positive return on investment. Repairs and maintenance to consider before investing include, but are not limited to the following:
- Roof condition
- Structural condition
- Foundation condition
- Heating and air conditioning unit issues
- Plumbing issues
- Grounds condition and drainage issues
- Windows and doors condition
- Electrical fixtures and wiring condition
- Bathroom and kitchen fixtures condition
Successful real estate investors understand the importance of surrounding themselves with professional people who understand the business of real estate. This ensures they will receive excellent advice. Don’t go it alone when investing in real estate, whether it’s your first time or your hundredth time. Start right by hiring the best real estate professionals, and enjoy a profitable investment.
Despite the recession and declines in home prices, Americans still view homeownership as being important to the economy and the American family, according to the “Housing 360 Survey” conducted among more than 3,005 homeowners and renters across the U.S.
“We thought people would be soured after watching home values fall but instead we found the typical American still places high value on homeownership,” said Frank Anton, CEO of Hanley Wood, LLC, the nation’s premier media and data research company serving the housing and construction industries. “We found this holds across all demographic groups and across the country, even in hard-hit places like Nevada and Arizona where there have been 50 percent or more declines in value. The increase in the rise of rental rates in many markets is one factor driving people to consider buying.”
The survey found that despite the recession and housing crisis, homeownership is still very important—that both renters and homeowners feel it is a good time to buy a home and 19 percent of homeowners and 29 percent of renters are considering buying a home in the next two years. In fact, the survey findings support that up to two million potential home buying consumers are waiting to jump into the market when the time is right.
The “Housing 360 Survey” answers why renters and homeowners are not buying. For homeowners, there is no urgency to buy, and given the turmoil in the markets, many of them are happy where they are. For renters, there is also no urgency to purchase a home. There are major problems they are facing: First, they have the challenges of being able to qualify for a mortgage and raise the down payment. And second, they have concerns about the economy and their jobs.
The survey covers 70 questions relating to Americans’ decision-making process and attitudes on homeownership, renting, remodeling, financing, home buying, gasoline prices, household relationships, and retirement planning. Sixty two percent of respondents were first-time homeowners. The survey found 89 percent of owners and 59 percent of renters feel that homeownership is important to the American family while 87 percent of owners and 73 percent of renters feel homeownership is important to the economy overall.
Some significant findings in the survey include:
- Now is a good time to buy. 72 percent of owners and 59 percent of renters think now is a good or very good time to buy.
- New and existing homes both attractive. 29 percent of owners and 12 percent of renters would prefer to buy a new home. 34 percent of owners and 41 percent of renters would prefer to buy an existing home. People prefer new homes because they are new and there is less maintenance. They prefer existing homes because they are more affordable and they want to live in an existing community.
- Renting is a preferred choice for many. People rent for financial reasons, for convenience and for flexibility.
- Doubling up trends increased. 30 percent of respondents are “doubling up” – living with adult children or parents.
- Now is a good time to remodel. 42 percent of owners say now is a good time to remodel. Top remodeling priorities are maintenance and energy efficiency. Most homeowners will pay for remodeling from personal savings.
- Staying put in retirement. 60 percent of homeowners plan to stay in their current home for their entire retirement.
All data is courtesy of the “Hanley Wood Housing 360 Survey”.
You will hear it said that today we are in a buyer’s market. The current real estate market is primed for buyers to purchase due to a huge inventory of homes to choose from and low interest rates. If considering buying a home, now may just be the time to take action.
Before answering “Is now the right time to buy?” some homework will be necessary. There may be a surplus of homes on the market, but buying a house will depend on the financial situation of the individual buyer. Take these steps to craft a plan of action to make buying a home now, or in the future, a positive and lucrative experience.
Step One – Contact a Trusted Loan Officer
A loan officer will be able to review income, financial history, credit reports, and other documentation and advise the buyer on how much of a loan they can qualify for. There are literally hundreds of loans available, which is why consulting a loan officer is a smart thing to do. A loan officer understands the various products available and will present one or more options that best suit each individual buyer. Should the buyer not qualify for a loan at this time, they will come away from the experience with an understanding of what actions they need to take in order to qualify in the future.
Step Two – Hire a Buyer’s Agent
A buyer’s agent is an agent who works on behalf of the buyer, representing the buyer. The services should include negotiating for the buyer, consulting the buyer, listening to the buyer’s wants and needs, assisting in identifying the potential of a property, showing the houses to the buyer, providing market analysis on houses the buyer is interested in, determining fair market value, and assisting in the completion of documents to purchase the house. The initial consultation should help you determine if the agent is someone you can work with. A buyer should interview two or three buyer’s agents in order to find the best fit for them personally and professionally.
Step Three – Consult Other Recent Buyers
This may include family members, friends, and co-workers. They will each have different experiences depending on a variety of factors, but it is good to start becoming familiar with what occurs during a real estate purchase. People do love to talk about their experiences buying a house, and it’s your job as a home buyer to listen closely. Take it all in, then make a determination based on facts.
Is now the right time to buy? The answer may be “Yes!” But first the buyer must understand how much of a home they can afford as well as the ins-and-outs of the real estate process. Consult a buyer’s agent who understands what you, the buyer, wants. Because, in a buyer’s market, there are hundreds of options available to the buyer who is prepared and has a plan of action in place.