To buy or not to buy that is the question. There are reasons for or against homeownership on both sides of the fence. So here are the pros and cons of buying a home. You decide... Pros: 1. It Costs Less- With record low interest rates, and low home prices a mortgage payment on a house can be less than a rental payments. 2. Equity -If you own a home rather than rent you are building equity. If you pay rent you have nothing to show for it. If you own a home you are building equity. Even if housing prices stay flat part of your mortgage payment goes towards the principal balance and eventually you will own the home. Cons: 1. You Could Get a Better Money Return-A home may not be the best return on your money. You may find a better return on capital in the stock market. If you are just looking at it in a strictly financial way there are better investment strategies. Historically, the S&P 500 has returned an average of 13.4% -- 4.8% higher than the 8.6% average return on housing. 2. It is a Big Commitment-You can't just sell your house and move quickly. It is a long term decision. If you job requires frequent moves this can be a significant consideration. Now that you have seen some of the pros and cons the decision is ultimately up to you and what is best in your circumstance. The pros cannot be disputed. Low rates and prices almost make buying a no-brainer if it fits within your financial situation.
The love letter is back! What is a love letter in real estate? When the market is hot and competition for desirable homes is high buyers can gain an advantage by writing the seller a love letter. You may be wondering why in the world would I write a love letter to a seller? The answer: you want an advantage in a competitive real estate market. What should I put in my love letter? Compliment the seller on their home Tell the seller why you love the home Compliment the neighborhood Make it personal Be genuine Love letters often appeal to a seller's emotions and often especially if the owner has lived in the home a while the decision to sell a home is a very emotional process. If you find yourself in a bidding war or want to land the perfect home it may be a love letter that makes all the difference.
A house needs to be sold three times when it is on the market. First it needs to be sold to other agents so they will want to show and sell the home. Second it needs to be sold to buyers and lastly to the appraiser. Even if the buyer is willing to pay a certain price for a home they usually need a mortgage. That means it is actually the bank who is buying the home. The bank wants to protect their investment so they do an appraisal. When the appraisal comes back low or as an under-appraisal deals can fall apart. If you are a seller or a buyer you need to know how to protect yourself from short appraisals? Here are some suggestions from Bankrate.com for buyers and sellers. If you're a buyer: -- Tell your lender to find an appraiser who comes from your county, or perhaps a neighboring county. -- Request that the appraiser have a residential appraiser certification and a professional designation. Examples include the Appraisal Institute's senior residential appraiser, or SRA, or member of the Appraisal Institute, or MAI, designations. -- Meet the appraiser when he or she inspects the home and share your knowledge of recent short sales and foreclosures that might skew the comps. "Many appraisers are just pulling up data out of MLS (Multiple Listing Service) or off the deed at the courthouse and not checking it out," Sellers says. "Most good appraisers will appreciate the information." And yes, you can speak with your appraiser; the prohibition only applies to your lender. If you're a seller: --·Get an appraisal before you list a home. Search for a qualified appraiser in your area on the Appraisal Institute website. -- Use the appraisal to set a realistic listing price for your home. -- Give a copy of your pre-listing appraisal to the buyer's appraiser. The more professional appraisers will understand that you're just trying to add more data and another perspective. -- Question a low appraisal. There's always a chance the appraiser or a supervisor will take into account new or overlooked information.
When it comes to mortgages there is a lot to know and a lot of choices. One loan that was popular before the housing crisis was the interest-only loan. An interest-only loan is an adjustable-rate loan with an initial fixed period when only interest is due. They are typically available in 5-, 7- or 10-year terms. Economists blame interest-only loans for the foreclosure crisis citing they were issued too freely. Today, interest-only loans are more difficult to obtain. Borrowers were using interest-only loans to qualify for a more expensive home and when the interest-only term ended the payment went up leaving many homeowners unable to afford the mortgage payment. Interest-only loans are now being used by wealthy borrowers as a financial tool to help them manage irregular cash flow, reap a tax benefit, or free up cash for investment elsewhere. Lenders that offer interest-only loans have strict qualifying standards. They generally require 30 percent equity in a property, and a minimum FICO score of 720. Lenders also look at the ability to pay back the loan is based on the fully amortized payment, not the interest-only payment.
A home is a very big purchase in your life and one of the most important things you can do before you buy your new home. It can be difficult to find a qualified home inspector. You will want to make sure to do your homework before paying for a home inspection. Here are some tips to help you get on the right track and finding the right home inspector. Ask for opinions. Ask your friends and your real estate agent who they recommend who have had an inspection recently. You can also ask the inspector for references. Word of mouth is always a great way to find a reliable professional. Check with your lender Some lenders or loan types require a certain type of inspection. You will want to make sure your inspector qualifies and you obtain the necessary type of inspection. Ask what the inspection covers No two home inspections are the same so you will want to be sure to know what you are paying for. Ask questions like:
What systems are covered in the home inspection?
Are there some services that require an extra fee?
Ask for an example or outline of the inspection report.
Ask for a resume or background questions
Where was the inspector trained?
Does he or she attend continuing education classes?
Does the inspector belong to a professional organization?
If so, what are the requirements for membership? Entry should require more than just an application fee.
Does the inspector carry Errors & Omissions insurance? This type of malpractice insurance may come in handy if the inspector overlooks a major problem.
At the inspection
A home inspection is not only a time to find the potential pitfalls it can also be a time to learn about your new home. Make sure to attend the inspection yourself. Witnessing problems first-hand will give you a better grasp of the home.