Falling behind on your bills can be very stressful, but falling behind on your mortgage can be downright frightening. The thought of losing your home may be so overwhelming that you try to avoid even thinking about it. But that’s never the best approach.
If you’re having trouble keeping up with your mortgage, this booklet will give you strategies for getting back on track.
How Does It Work?
How long it takes a lender to foreclose on your home, and the steps they must take to do so, varies by state. Foreclosure laws are specific to the state in which the property is located. States usually have either judicial foreclosure proceedings or non-judicial or statutory foreclosure proceedings. In judicial foreclosure states, the mortgage holder must take you to court and get the court’s order to foreclose. If you’re working with an attorney, this may give you an opportunity to stay in your home longer, or even stop the proceedings.
In non-judicial or statutory foreclosure states, lenders may be able to foreclose without going to court, which can be faster and easier for the lender. Some states allow a combination of both, depending on how the contract is written.
For information on state foreclosure laws, visit: www.foreclosures.com or talk with a consumer law attorney in your area.
While the rules regarding foreclosure proceedings vary by state, here’s what you can generally expect if you fall behind on your mortgage payments.
If you haven’t made your payment by the 15th day after the due date, you’ll be assessed a late fee, which is usually 4% of the loan amount. If you have still not paid by the second month, you’ll likely get a phone call and/or letter to find out what’s going on.
Lenders can usually begin the foreclosure process after you have missed a few payments. If you can’t work out an arrangement with the lender to catch up, they may then send a Notice of Acceleration, which basically tells you that you now must pay the loan in full if you want to keep your home. Getting one of these letters is serious, because lenders may not be willing – or obligated – to work out a payment arrangement with you.
In some states, borrowers still have an opportunity to “redeem” the property by paying the amount due plus costs for a certain period after foreclosure.
Important: Many states allow lenders to collect a “deficiency judgment” if the home is sold for less than the full balance due, or for less than market value. This may leave the former homeowner with a debt that must be paid even after the home has been sold.
A foreclosure remains on your credit report for seven years from the date of the foreclosure and is considered a very serious negative mark.
http://www.consolidatedcredit.org/debt-learning-center/avoid-foreclosure.aspx
Wednesday, September 5, 2007
Twenty Years Later, Buying a House Is Less of a Bite
PORTLAND, Me. - Despite a widespread sense that real estate has never been more expensive, families in the vast majority of the country can still buy a house for a smaller share of their income than they could have a generation ago.
A sharp fall in mortgage rates since the early 1980's, a decline in mortgage fees and a rise in incomes have more than made up for rising house prices in almost every place outside of New York, Washington, Miami and along the coast in California. These often-overlooked changes are a major reason that most economists do not expect a broad drop in prices in 2006, even though many once-booming markets on the coasts have started weakening.
The long-term decline in housing costs also helps explain why the homeownership rate remains near a record of almost 69 percent, up from 65 percent a decade ago.
Nationwide, a family earning the median income - the exact middle of all incomes - would have to spend 22 percent of its pretax pay this year on mortgage payments to buy the median-priced house, according to an analysis by Moody's Economy.com, a research company.
The share has increased since 1998, when it hit a low of 17 percent before house prices began rising sharply in many places. Although the overall level has reached its highest point since 1989, it remains well below the levels of the early 1980's, when it topped 30 percent.
"This is a good deal - a good, fair price," Dale Ruttenberg, a 53-year-old bar manager said of a tan one-bedroom bungalow, with a remodeled kitchen and finished hardwood floors, that he is buying for $211,000 after having rented in Portland for most of the last decade. "Within a couple hours of being here, it was like, 'I'm home.' "
In high-profile places like New York and Los Angeles, home to many of the people who study and write about real estate, families buying their first home often must spend more than half of their income on mortgage payments, far more than they once did. But the places that have become less affordable over the last generation account for only a quarter of the country's population.
Elsewhere, families tend to spend far less on housing. In Dallas, the share of income needed to buy a typical house has fallen to 13 percent this year, from 14 percent in 1995 and 31 percent in 1980. In Tampa, it has dropped to 21 percent, from 26 percent in 1980. Even in New England, where the soaring prices of the last decades have frustrated many young families, house values have still not reached the heights of the early 1980's, when calculated as a share of income.
"Over 20 years, affordability has definitely improved because interest rates are much lower," said Kenneth T. Rosen, chairman of the Fisher Center for Real Estate and Urban Economic Research at the University of California, Berkeley. Houses have also grown bigger during that time, he said, so people are getting more for their money.
Here in Portland, a smaller version of the big-city real estate boom has been in full swing until just the last few months. House prices have jumped since 2000, hundreds of new real estate agents have gotten their licenses and an old factory along the waterfront, once famous for making bright-red hot dogs, is set to be replaced with condominiums.
With many suburban houses now selling for $300,000 and up, young families have a much harder time buying their first home than they did a few years ago. Still, housing has been less expensive this year - as a share of local incomes - than at any point during the 1980's, according to Moody's Economy.com.
Beyond cost, many families who simply could not have bought a house 10 or 20 years ago find themselves able to do so, thanks to changes in the ways banks lend money. In the past, a home buyer often needed to make a down payment equal to 20 percent of a house's value to get a mortgage; today, little or no down payment is common.
The most money that Tim W. Gilbert has ever had in his possession was $15,000, he said, in the form of a check for a job he had done as a carpenter. But he and his wife, Marjorie, were still able to buy a 1936 Cape Cod-style house this year for $176,000 in Poland, about 45 minutes north of Portland.
They took out two mortgages rather than making a down payment and they use Mr. Gilbert's $5,000 or so in pretax monthly income to cover $1,600 in mortgage, tax and insurance payments. Ms. Gilbert, a writer, home schools their daughters, ages 4 and 6. "I paid rent for 18 or 19 years," Mr. Gilbert, 38, said. "We waited years and years. We wanted to make this happen."
http://www.nytimes.com/2005/12/29/realestate/29afford.html?ex=1293512400%26en=c879fd45fe416f13%26ei=5088%26partner=rssnyt%26emc=rss
A sharp fall in mortgage rates since the early 1980's, a decline in mortgage fees and a rise in incomes have more than made up for rising house prices in almost every place outside of New York, Washington, Miami and along the coast in California. These often-overlooked changes are a major reason that most economists do not expect a broad drop in prices in 2006, even though many once-booming markets on the coasts have started weakening.
The long-term decline in housing costs also helps explain why the homeownership rate remains near a record of almost 69 percent, up from 65 percent a decade ago.
Nationwide, a family earning the median income - the exact middle of all incomes - would have to spend 22 percent of its pretax pay this year on mortgage payments to buy the median-priced house, according to an analysis by Moody's Economy.com, a research company.
The share has increased since 1998, when it hit a low of 17 percent before house prices began rising sharply in many places. Although the overall level has reached its highest point since 1989, it remains well below the levels of the early 1980's, when it topped 30 percent.
"This is a good deal - a good, fair price," Dale Ruttenberg, a 53-year-old bar manager said of a tan one-bedroom bungalow, with a remodeled kitchen and finished hardwood floors, that he is buying for $211,000 after having rented in Portland for most of the last decade. "Within a couple hours of being here, it was like, 'I'm home.' "
In high-profile places like New York and Los Angeles, home to many of the people who study and write about real estate, families buying their first home often must spend more than half of their income on mortgage payments, far more than they once did. But the places that have become less affordable over the last generation account for only a quarter of the country's population.
Elsewhere, families tend to spend far less on housing. In Dallas, the share of income needed to buy a typical house has fallen to 13 percent this year, from 14 percent in 1995 and 31 percent in 1980. In Tampa, it has dropped to 21 percent, from 26 percent in 1980. Even in New England, where the soaring prices of the last decades have frustrated many young families, house values have still not reached the heights of the early 1980's, when calculated as a share of income.
"Over 20 years, affordability has definitely improved because interest rates are much lower," said Kenneth T. Rosen, chairman of the Fisher Center for Real Estate and Urban Economic Research at the University of California, Berkeley. Houses have also grown bigger during that time, he said, so people are getting more for their money.
Here in Portland, a smaller version of the big-city real estate boom has been in full swing until just the last few months. House prices have jumped since 2000, hundreds of new real estate agents have gotten their licenses and an old factory along the waterfront, once famous for making bright-red hot dogs, is set to be replaced with condominiums.
With many suburban houses now selling for $300,000 and up, young families have a much harder time buying their first home than they did a few years ago. Still, housing has been less expensive this year - as a share of local incomes - than at any point during the 1980's, according to Moody's Economy.com.
Beyond cost, many families who simply could not have bought a house 10 or 20 years ago find themselves able to do so, thanks to changes in the ways banks lend money. In the past, a home buyer often needed to make a down payment equal to 20 percent of a house's value to get a mortgage; today, little or no down payment is common.
The most money that Tim W. Gilbert has ever had in his possession was $15,000, he said, in the form of a check for a job he had done as a carpenter. But he and his wife, Marjorie, were still able to buy a 1936 Cape Cod-style house this year for $176,000 in Poland, about 45 minutes north of Portland.
They took out two mortgages rather than making a down payment and they use Mr. Gilbert's $5,000 or so in pretax monthly income to cover $1,600 in mortgage, tax and insurance payments. Ms. Gilbert, a writer, home schools their daughters, ages 4 and 6. "I paid rent for 18 or 19 years," Mr. Gilbert, 38, said. "We waited years and years. We wanted to make this happen."
http://www.nytimes.com/2005/12/29/realestate/29afford.html?ex=1293512400%26en=c879fd45fe416f13%26ei=5088%26partner=rssnyt%26emc=rss
Tuesday, September 4, 2007
Ten Tips for the First Time Home Buyer
If yes, buying your first home is one of the most exciting things you will ever do. If you have spent years living in apartments, there is nothing more satisfying than owning your own property.
The home buying process can be a little lengthy and confusing, so I've put together the following tips that will help a first time home buyer get through a sometimes difficult and very stressing process.
The first thing a first time buyer should do is talk to a real estate agent about the home buying process. It should not be a sales meeting and you should be able to find an agent that will agree to meet with you about the basics without having to sign a sales agreement with them.
If you can’t find a good agent to talk to, you might want to consider talking to a loan officer at your bank or a mortgage broker.
An equally important tip for a first time home buyer is to get their finances in order before they apply for a mortgage. Order a copy of your credit report so you can check it for accuracy.
Mistakes are common and you want to make sure that there is no fraudulent activity. You have the right to dispute errors on your credit report. If you come across something that you know is an error, circle it and send it to the reporting agency along with a letter of dispute.
Next, first time home buyers should really study the mortgage industry. Take the time to really get familiar with the mortgage lending process. It could save you a lot of time and money!
You need to be able to find the right loan and lender most suitable for your needs. Familiarize yourself with industry terms like debt to income ratio and adjustable rate mortgage. Learn the difference between pre-approval and pre-qualified. It will all seem foreign at first, but taking the time to learn the business will spare you from headaches in the future.
Also, you need to figure out what your wants and needs are. What kinds of amenities are you looking for? How many bedrooms do you want? Do you want one story, but prefer a two story home? First time home buyers also need to consider the size of the down payment and figure out what they need to do to come up with the money for it.
You must also learn about how real estate agents work. There are buyer’s agents and seller’s agents. The goal of the seller’s agent is to get the price that the seller most desires. However, a buyer’s agent’s responsibility is to negotiate the best deal for the buyer. So, it can be in your best interest to go with a buyer agent arrangement.
The best way to find the right agent is to ask your friends for suggestions. They have all probably been in the same boat, so they can probably recommend a good real estate agent. When meeting with a potential agent, pay attention to how they treat you.
Make sure they listen to you when you talk about what you want. Also, how are their follow up skills? Do they take the time to return your calls or emails? If they don’t take the time to respond, move on. There is a better agent out there for you.
When looking for a home, consider all of the possibilities. Look up real estate agent’s websites. Don’t rule out For Sale by Owner Properties and foreclosed homes. Housing and Urban Development (HUD) homes can often be found for very reasonable prices.
However, it is important to find an agent that is approved to sell HUD homes if you choose to take that road to home ownership. Better yet, you need to find one that is well versed in the HUD property buying process, as it can be very complicated.
Even as a seasoned real estate sales pro I always felt like a dummy whenever I pursued buying or selling HUD properties. It really is a specialty unto itself, so finding an agent who knows the process can make your HUD property buying experience a more successful one.
Now, before you even think about making an offer you need to consider the resale value. You might plan on being there for a long time, but you just never know. You might opt for a different climate to alleviate your allergies or you could simply be transferred by your company. You want to pick a good location that will be attractive to others, so when it's time to resell and move on it will be as desirable to others as it was to you.
Another issue that cannot be ignored is the deed restrictions, which govern what you can and cannot do with the property. If it has always been your dream to have a pool, you need to make sure that you don’t buy a home in a subdivision that won’t allow it because of deed restrictions.
Home inspections are an important part of the equation. Talk to your agent to find out when the inspection will be performed. It varies state to state. Sometimes the inspection will be right before the contract is signed and other times, they are performed right after an offer is made.
Finally, make sure you stay on top of things. Any number of problems can crop up at the last minute and delay the purchase of your home. If you aren’t sure about something with the paperwork, don’t be afraid to ask questions. Purchasing a home is a time consuming task, but it is well worth it when you have your own "home sweet home."
http://www.real-estate-marketing-talk.com/first-time-home-buyer.html
The home buying process can be a little lengthy and confusing, so I've put together the following tips that will help a first time home buyer get through a sometimes difficult and very stressing process.
The first thing a first time buyer should do is talk to a real estate agent about the home buying process. It should not be a sales meeting and you should be able to find an agent that will agree to meet with you about the basics without having to sign a sales agreement with them.
If you can’t find a good agent to talk to, you might want to consider talking to a loan officer at your bank or a mortgage broker.
An equally important tip for a first time home buyer is to get their finances in order before they apply for a mortgage. Order a copy of your credit report so you can check it for accuracy.
Mistakes are common and you want to make sure that there is no fraudulent activity. You have the right to dispute errors on your credit report. If you come across something that you know is an error, circle it and send it to the reporting agency along with a letter of dispute.
Next, first time home buyers should really study the mortgage industry. Take the time to really get familiar with the mortgage lending process. It could save you a lot of time and money!
You need to be able to find the right loan and lender most suitable for your needs. Familiarize yourself with industry terms like debt to income ratio and adjustable rate mortgage. Learn the difference between pre-approval and pre-qualified. It will all seem foreign at first, but taking the time to learn the business will spare you from headaches in the future.
Also, you need to figure out what your wants and needs are. What kinds of amenities are you looking for? How many bedrooms do you want? Do you want one story, but prefer a two story home? First time home buyers also need to consider the size of the down payment and figure out what they need to do to come up with the money for it.
You must also learn about how real estate agents work. There are buyer’s agents and seller’s agents. The goal of the seller’s agent is to get the price that the seller most desires. However, a buyer’s agent’s responsibility is to negotiate the best deal for the buyer. So, it can be in your best interest to go with a buyer agent arrangement.
The best way to find the right agent is to ask your friends for suggestions. They have all probably been in the same boat, so they can probably recommend a good real estate agent. When meeting with a potential agent, pay attention to how they treat you.
Make sure they listen to you when you talk about what you want. Also, how are their follow up skills? Do they take the time to return your calls or emails? If they don’t take the time to respond, move on. There is a better agent out there for you.
When looking for a home, consider all of the possibilities. Look up real estate agent’s websites. Don’t rule out For Sale by Owner Properties and foreclosed homes. Housing and Urban Development (HUD) homes can often be found for very reasonable prices.
However, it is important to find an agent that is approved to sell HUD homes if you choose to take that road to home ownership. Better yet, you need to find one that is well versed in the HUD property buying process, as it can be very complicated.
Even as a seasoned real estate sales pro I always felt like a dummy whenever I pursued buying or selling HUD properties. It really is a specialty unto itself, so finding an agent who knows the process can make your HUD property buying experience a more successful one.
Now, before you even think about making an offer you need to consider the resale value. You might plan on being there for a long time, but you just never know. You might opt for a different climate to alleviate your allergies or you could simply be transferred by your company. You want to pick a good location that will be attractive to others, so when it's time to resell and move on it will be as desirable to others as it was to you.
Another issue that cannot be ignored is the deed restrictions, which govern what you can and cannot do with the property. If it has always been your dream to have a pool, you need to make sure that you don’t buy a home in a subdivision that won’t allow it because of deed restrictions.
Home inspections are an important part of the equation. Talk to your agent to find out when the inspection will be performed. It varies state to state. Sometimes the inspection will be right before the contract is signed and other times, they are performed right after an offer is made.
Finally, make sure you stay on top of things. Any number of problems can crop up at the last minute and delay the purchase of your home. If you aren’t sure about something with the paperwork, don’t be afraid to ask questions. Purchasing a home is a time consuming task, but it is well worth it when you have your own "home sweet home."
http://www.real-estate-marketing-talk.com/first-time-home-buyer.html
Ten Things To Avoid If You’re A Home Buyer
Are you a home buyer looking to purchase a home sometime soon?
If so, there are several things you should avoid when you enter the home buying process. And if you aren’t careful to avoid them it is possible that your closing will be delayed or even canceled. Your adherence to the following rules will put the keys to the house in your hands quickly.
First, don’t damage your debt to income ratio by making a major purchase before closing. If you decide you can’t live without that brand new Benz, you might have to wait on owning a home. The bank could easily determine that your sky high car payment would hinder your ability to pay your mortgage. Wait until after you get the house to do some spending. No one expects a brand new house full of furniture and a sports car in the driveway unless you are a famous sports figure or Donald Trump.
Secondly, don’t change jobs if you don’t have to. The lenders like to see consistency versus constant job hopping. If you are just miserable with your job, maybe you can switch to a different job within the same field. Or you can tough it out until you have the house and then start putting out resumes.
Also, a home buyer should never surrender their earnest money to a For Sale by Owner Seller. There isn’t anything stopping the sellers from spending the money before the transaction goes through. If the deal should fall through you’ll have to fight tooth and nail to get that deposit back. You should put the deposit into a trust account. You should be able to find an attorney willing to hold the deposit for you until the transaction is finalized. Your contract needs to state what will happen to the deposit in the event that the transaction falls through.
In addition, never let emotions guide you. Stay practical and realistic during the home buying process. Some sellers are willing to fix some of the problems with the home and others may not be as willing. Don’t let that refusal close the door on your dream home. Conversely, you shouldn’t let your loyalty to the home blind you to costly repairs down the road. You certainly don’t want to be in a money pit.
Furthermore, don’t forget to have the utilities activated. The utility companies might need a few days to switch the service. Don’t forget to cancel the service at the old residence. That seems simple enough, yet many people forget that step entirely.
Another costly mistake a home buyer might make is forgetting to secure hazard insurance. Talk to your insurance company right away because the lender will want to see proof of coverage for the new home at closing. Failing to line up the insurance will lead to delays in closing.
You should not get too personal with the seller. After all, this is a business transaction, so it should be treated professionally. If you get into too many personal discussions, you might say something that could be taken the wrong way by the seller. You might have been joking about the ugly green carpet in the guest bedroom, but the seller might have taken that as offensive. In the end, it could hurt the dynamics of the transaction. You should be friendly, but professional.
If the appraisal comes in too low, don’t freak out. There are several solutions to this dilemma. The seller might be willing to come down on the price of the home. The buyer can put more money down if they are committed to that home. The buyer and seller can negotiate the deal or the appraisal can be disputed.
Don’t forget to use your agent. It is the agent’s job to keep up with the daily details of the deal, including the lender, the seller, and the seller’s agent. It is also your agent’s responsibility to set up a final walkthrough prior to closing.
Lastly, don’t forget to take care of your end of the deal. You must be on the same page as the lender. Provide them with the paperwork they need and answer their questions in a timely manner. Failure to do so will keep you from opening the front door of your new home.
These are some of the most common mistakes home buyers make. Educating yourself about the process will ensure a smoother transaction and a definite housewarming party.
http://www.real-estate-marketing-talk.com/home-buyer.html
If so, there are several things you should avoid when you enter the home buying process. And if you aren’t careful to avoid them it is possible that your closing will be delayed or even canceled. Your adherence to the following rules will put the keys to the house in your hands quickly.
First, don’t damage your debt to income ratio by making a major purchase before closing. If you decide you can’t live without that brand new Benz, you might have to wait on owning a home. The bank could easily determine that your sky high car payment would hinder your ability to pay your mortgage. Wait until after you get the house to do some spending. No one expects a brand new house full of furniture and a sports car in the driveway unless you are a famous sports figure or Donald Trump.
Secondly, don’t change jobs if you don’t have to. The lenders like to see consistency versus constant job hopping. If you are just miserable with your job, maybe you can switch to a different job within the same field. Or you can tough it out until you have the house and then start putting out resumes.
Also, a home buyer should never surrender their earnest money to a For Sale by Owner Seller. There isn’t anything stopping the sellers from spending the money before the transaction goes through. If the deal should fall through you’ll have to fight tooth and nail to get that deposit back. You should put the deposit into a trust account. You should be able to find an attorney willing to hold the deposit for you until the transaction is finalized. Your contract needs to state what will happen to the deposit in the event that the transaction falls through.
In addition, never let emotions guide you. Stay practical and realistic during the home buying process. Some sellers are willing to fix some of the problems with the home and others may not be as willing. Don’t let that refusal close the door on your dream home. Conversely, you shouldn’t let your loyalty to the home blind you to costly repairs down the road. You certainly don’t want to be in a money pit.
Furthermore, don’t forget to have the utilities activated. The utility companies might need a few days to switch the service. Don’t forget to cancel the service at the old residence. That seems simple enough, yet many people forget that step entirely.
Another costly mistake a home buyer might make is forgetting to secure hazard insurance. Talk to your insurance company right away because the lender will want to see proof of coverage for the new home at closing. Failing to line up the insurance will lead to delays in closing.
You should not get too personal with the seller. After all, this is a business transaction, so it should be treated professionally. If you get into too many personal discussions, you might say something that could be taken the wrong way by the seller. You might have been joking about the ugly green carpet in the guest bedroom, but the seller might have taken that as offensive. In the end, it could hurt the dynamics of the transaction. You should be friendly, but professional.
If the appraisal comes in too low, don’t freak out. There are several solutions to this dilemma. The seller might be willing to come down on the price of the home. The buyer can put more money down if they are committed to that home. The buyer and seller can negotiate the deal or the appraisal can be disputed.
Don’t forget to use your agent. It is the agent’s job to keep up with the daily details of the deal, including the lender, the seller, and the seller’s agent. It is also your agent’s responsibility to set up a final walkthrough prior to closing.
Lastly, don’t forget to take care of your end of the deal. You must be on the same page as the lender. Provide them with the paperwork they need and answer their questions in a timely manner. Failure to do so will keep you from opening the front door of your new home.
These are some of the most common mistakes home buyers make. Educating yourself about the process will ensure a smoother transaction and a definite housewarming party.
http://www.real-estate-marketing-talk.com/home-buyer.html
Buying a First Home - A Tutorial for First-Time Home Buyers
I painfully remember buying my first home. Specifically, I remember visiting dozens of websites to find the information I needed, thinking to myself "somebody should roll all this up into one website."
That's what I've created in Home Buying Institute, a one-stop shop for anyone buying a first home (and hungry for information). By adding new articles and resources on a daily basis, I'm able to offer first-time home buyers what I never had -- a complete and convenient home buying education.
Buying a First Home - The Various Stages
You'll find the information on this website is organized in a way that logically coincides with the home buying process. It starts with financial self-assessment and ends with the real estate closing process. In between, you'll find a complete education that will be a huge help when buying your first home.
First-Time Home Buying Selections
Below, I've gathered below some of the home buying articles I think you should start with. I consider these articles to be required reading for anyone buying their first home. I've selected articles that (A) focus on first-time home buyers, (B) offer plenty of helpful information, and (C) cover each step of the home buying process.
So without further ado, here is my list of required reading for first-time home buyers.
http://www.homebuyinginstitute.com/homebuyingprocess_article12.php
That's what I've created in Home Buying Institute, a one-stop shop for anyone buying a first home (and hungry for information). By adding new articles and resources on a daily basis, I'm able to offer first-time home buyers what I never had -- a complete and convenient home buying education.
Buying a First Home - The Various Stages
You'll find the information on this website is organized in a way that logically coincides with the home buying process. It starts with financial self-assessment and ends with the real estate closing process. In between, you'll find a complete education that will be a huge help when buying your first home.
First-Time Home Buying Selections
Below, I've gathered below some of the home buying articles I think you should start with. I consider these articles to be required reading for anyone buying their first home. I've selected articles that (A) focus on first-time home buyers, (B) offer plenty of helpful information, and (C) cover each step of the home buying process.
So without further ado, here is my list of required reading for first-time home buyers.
http://www.homebuyinginstitute.com/homebuyingprocess_article12.php
Renting vs. Buying a Home - How to Decide
Renting vs. buying a home is a decision that many home buyers face. There's certainly no shortage of advice on the subject of renting vs. buying a home, but the final decision can become more difficult to come by for home buyers.
One of the best ways to determine if you should rent or buy a home is to look at the pros and cons on each side of the issue. After reviewing the pros and cons, you can determine which option makes the most sense for you.
The question of renting vs. buying a home usually centers on the following topics:
* Financial considerations (costs)
* Tax benefits
* Overall life plan
Financial Considerations of Buying a Home
For a lot of home buyers, the financial considerations are the most important factors in making the decision. Many potential home buyers are shocked to learn they can buy a home for nearly the same amount as (or even less than) what they pay in rent each month. When the money is nearly equal, the question of whether to rent or buy a home becomes a lot easier to make!
The Home Equity Factor
When buying a home instead of renting, you also benefit from the equity that builds in your home. As a renter, you pay for the right to live in the home for a period of time, but that's it. At the end of the lease period, you have nothing to show for it expenditure, other than the fact you lived in the home for that period of time.
Homeowners build equity as the amount they owe on their home decreases and the value of their home increases. Equity contributes a lot to a person's overall financial picture. For instance, the ability to take out home-equity loans is a major financial benefit to buying a home.
Tax Benefits of Owning a Home
Home ownership comes with significant tax benefits. It's wise to speak to your accountant or tax advisor about the benefits of owning a home and paying a monthly mortgage (instead of a rental payment). Home buyers often receive tax deductions and can also build up equity in their home. This brings greater financial freedom and opportunities.
The Big Picture
A lot of people who choose renting over buying make the decision based on misinformation. For instance, they may think that buying a home is beyond their financial reach, when it's really within reach. When choosing between renting and buying a home, the best thing to do is research your options, speak to professionals, and then make an informed decision.
http://www.homebuyinginstitute.com/homebuyingprocess_article16.php
One of the best ways to determine if you should rent or buy a home is to look at the pros and cons on each side of the issue. After reviewing the pros and cons, you can determine which option makes the most sense for you.
The question of renting vs. buying a home usually centers on the following topics:
* Financial considerations (costs)
* Tax benefits
* Overall life plan
Financial Considerations of Buying a Home
For a lot of home buyers, the financial considerations are the most important factors in making the decision. Many potential home buyers are shocked to learn they can buy a home for nearly the same amount as (or even less than) what they pay in rent each month. When the money is nearly equal, the question of whether to rent or buy a home becomes a lot easier to make!
The Home Equity Factor
When buying a home instead of renting, you also benefit from the equity that builds in your home. As a renter, you pay for the right to live in the home for a period of time, but that's it. At the end of the lease period, you have nothing to show for it expenditure, other than the fact you lived in the home for that period of time.
Homeowners build equity as the amount they owe on their home decreases and the value of their home increases. Equity contributes a lot to a person's overall financial picture. For instance, the ability to take out home-equity loans is a major financial benefit to buying a home.
Tax Benefits of Owning a Home
Home ownership comes with significant tax benefits. It's wise to speak to your accountant or tax advisor about the benefits of owning a home and paying a monthly mortgage (instead of a rental payment). Home buyers often receive tax deductions and can also build up equity in their home. This brings greater financial freedom and opportunities.
The Big Picture
A lot of people who choose renting over buying make the decision based on misinformation. For instance, they may think that buying a home is beyond their financial reach, when it's really within reach. When choosing between renting and buying a home, the best thing to do is research your options, speak to professionals, and then make an informed decision.
http://www.homebuyinginstitute.com/homebuyingprocess_article16.php
The Home Buying Process: Your 14-Point Path to Success
I remember going through my first home buying process. I also remember the confusion and frustration of not having a "big picture" in my mind of how the process should work. That's why I'm giving you what I never had, a start-to-finish road map of the process.
Home Buying Process - By the Numbers
In reality, there's no way to predict exactly how the process will go for you. There are too many variables along the way. But there's a general pattern to the process, and that's what we will examine here.
1. Decide to buy a home
It all starts with this spark. And since you're reading this article, we can assume you're already past this point.
2. Conduct a financial self-assessment
Some people put this step later in the home buying process. But it belongs at the beginning. Before you start looking at houses and shopping for mortgages, you need to take a good look at your financial situation. You can start by ordering a copy of your credit report, and reviewing it for errors.
3. Make a home buying wish list
Once you have an idea how much you can afford, start writing down the things you'd like in a house: style, size, features, location, price, etc. Prioritize each item as either a "must have" or "would like to have."
4. Get pre-approved for a loan
Pre-approval is the process of applying for a loan and getting approved for a certain amount before having a purchase agreement (contract). Having a pre-approval letter also shows sellers you're serious about buying their house.
5. Find a real estate agent
It's rarely a good idea to buy a first home without professional help. If you're an investor and you've purchased a half-dozen homes in the past, you might be comfortable enough to go it alone. But when buying your first home, it's in your best interest to hire an agent.
6. Begin House hunting
Now comes the fun part, the house-hunting process. If you follow the steps I've outlined here, you can shop confidently (knowing that you have a pre-approval letter, a price range, and an agent to represent you).
7. Make an offer
How much you offer will depend on the asking price, the market, comparable sales in the area and other factors. Your offer might be accepted, rejected or countered. You might be the only buyer, or you might have to compete with others. You won't know until the time comes, which is another reason to have an agent help you.
8. Request approval for the loan amount
If the seller accepts your offer, you must then go back to your chosen mortgage lender and submit paperwork for loan approval. In most cases, it's easiest to return to the lender who gave you the pre-approval letter, but it's not mandatory.
9. Get a home appraisal
Your lender will require a home appraisal to make sure the home is worth the price you've agreed to pay. In the event that you can't make your mortgage payments, the lender will foreclose on the home and resell it. It's not a pleasant thought, but it's reality. So the home appraisal is how the lender protects its own interests.
10. Get approved for the loan
If the house appraises at a value equal to your loan amount (and provided all other factors are well and good), your mortgage lender will then approve the loan.
11. Get a home inspection
On average, home inspections cost between $300 and $600. That's a small price to pay for the peace of mind it brings. Get a home inspection as soon as possible after the sellers accept your offer, and make the contract contingent upon the inspection. That way, if the inspector finds a problem you're unwilling to accept, you have a legal way out of the contract.
http://www.homebuyinginstitute.com/homebuyingprocess_article1.php
Home Buying Process - By the Numbers
In reality, there's no way to predict exactly how the process will go for you. There are too many variables along the way. But there's a general pattern to the process, and that's what we will examine here.
1. Decide to buy a home
It all starts with this spark. And since you're reading this article, we can assume you're already past this point.
2. Conduct a financial self-assessment
Some people put this step later in the home buying process. But it belongs at the beginning. Before you start looking at houses and shopping for mortgages, you need to take a good look at your financial situation. You can start by ordering a copy of your credit report, and reviewing it for errors.
3. Make a home buying wish list
Once you have an idea how much you can afford, start writing down the things you'd like in a house: style, size, features, location, price, etc. Prioritize each item as either a "must have" or "would like to have."
4. Get pre-approved for a loan
Pre-approval is the process of applying for a loan and getting approved for a certain amount before having a purchase agreement (contract). Having a pre-approval letter also shows sellers you're serious about buying their house.
5. Find a real estate agent
It's rarely a good idea to buy a first home without professional help. If you're an investor and you've purchased a half-dozen homes in the past, you might be comfortable enough to go it alone. But when buying your first home, it's in your best interest to hire an agent.
6. Begin House hunting
Now comes the fun part, the house-hunting process. If you follow the steps I've outlined here, you can shop confidently (knowing that you have a pre-approval letter, a price range, and an agent to represent you).
7. Make an offer
How much you offer will depend on the asking price, the market, comparable sales in the area and other factors. Your offer might be accepted, rejected or countered. You might be the only buyer, or you might have to compete with others. You won't know until the time comes, which is another reason to have an agent help you.
8. Request approval for the loan amount
If the seller accepts your offer, you must then go back to your chosen mortgage lender and submit paperwork for loan approval. In most cases, it's easiest to return to the lender who gave you the pre-approval letter, but it's not mandatory.
9. Get a home appraisal
Your lender will require a home appraisal to make sure the home is worth the price you've agreed to pay. In the event that you can't make your mortgage payments, the lender will foreclose on the home and resell it. It's not a pleasant thought, but it's reality. So the home appraisal is how the lender protects its own interests.
10. Get approved for the loan
If the house appraises at a value equal to your loan amount (and provided all other factors are well and good), your mortgage lender will then approve the loan.
11. Get a home inspection
On average, home inspections cost between $300 and $600. That's a small price to pay for the peace of mind it brings. Get a home inspection as soon as possible after the sellers accept your offer, and make the contract contingent upon the inspection. That way, if the inspector finds a problem you're unwilling to accept, you have a legal way out of the contract.
http://www.homebuyinginstitute.com/homebuyingprocess_article1.php
Subscribe to:
Posts (Atom)