7 Reasons to Own Your Own Home

 

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.

 

2. Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS^Ò found that a typical homeowner has approximately $50,000 of unrealized gain in a home.

 

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

 

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

 

5. Predictability. Unlike rent, your mortgage payments don’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

 

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

 

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

 

To calculate whether renting or buying is the best financial option for you, use this calculator courtesy of Ginnie Mae:

http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

5 Reasons You Need a REALTOR^Ò

 

1. A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.

 

2. Selling or buying a home is time consuming. Even in a strong market, homes in our area stay on the market for an average of ____ days. And it usually takes another 60 days or so for the transaction to close after an offer is accepted.

 

3. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with someone who speaks that language.

 

4. REALTORS^Ò have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. That’s why having an expert on your side is critical.

 

5. REALTORS^Ò provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, homeselling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you.

 

6. REALTORS^Ò are members of the NATIONAL ASSOCIATION OF REALTORS^Ò, a trade organization of more than 1 million members nationwide. REALTORS^Ò subscribe to a stringent code of ethics that helps guarantee the highest level of service and integrity.

 

 

 

10 Steps to Prepare for Homeownership

 

1.   Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

 

2.   Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.

 

3.   Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

 

4.   Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.

 

5.   Get your credit in order. Obtain a copy of your credit report.

 

6.   Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.

 

7.   Organize all the documentation a lender will need to preapprove you for a loan.

 

8.   Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.

 

9.   Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

 

10.        Find an experienced REALTOR^Ò who can help you through the process.

 

 

 

How Big a Mortgage Can I Afford?

 

Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.

 

This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.

 

Rent: _________________________

 

Multiplier: X       1.32

 

Mortgage payment: __________________

 

Because of tax deductions, you can make a mortgage payment—including taxes and insurance—that is approximately one-third larger than your current rent payment and end up with the same amount of income.

 

For more help, use Fannie Mae’s online mortgage calculators at

http://www.fanniemae.com/homebuyers/calculators/index.jhtml?p=Resources&s=Calculators

 

 

 

 

 

 

Your Property Wish List

 

While your opinions on the type of home you want to own may change during the homebuying process, use this easy checklist to help you prioritize and make the shopping process less time consuming.

 

• How close do you need to be to: (a) public transportation _______ (b) schools _______
  (c) airport _______ (d) expressway _______ (e) neighborhood shopping _______
  (f) other_______?
• What neighborhoods would you prefer?
• What school systems do you want to be near?
• What architectural style(s) of homes do you prefer?
• Do you want a one-story or two-story house?
• How old a home would you consider?
• How much repair or renovation would you be willing to do?
• Do you have special facilities or needs that your home must meet?
• Do you require a fenced yard or other amenities for your pets?

 

Prioritize each of these options into	Must have	Would prefer
Yard (at least_________)
Garage (size________)
Patio/Deck
Pool
Bedrooms (number_________)
Bathrooms (number_________)
Family room
Formal living room
Formal dining room
Eat-in kitchen
Laundry room
Basement
Attic
Fireplace
Spa in bath
Air conditioning
Wall-to-wall carpet
Hardwood floors
View
Light (windows)
Shade

 

Tips for Finding the Perfect Neighborhood

 

The neighborhood you choose can have a big impact on your lifestyle—safety, available amenities, and convenience all play their part.

 

1. Make a list of the activities—movies, health club, church—you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you’re considering to engaging in your most common activities.

 

2. Check out the school district. The Department of Education in your town can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. If you have school-age children, also consider paying a visit to schools in the neighborhoods you’re considering. Even if you don’t have children, a house in a good school district will be easier to sell in the future.

 

3. Find out if the neighborhood is safe. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type—burglaries, armed robberies—and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?

 

4. Determine if the neighborhood is economically stable. Check with your local city economic development office to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don’t necessarily diminish value, but they do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months?

 

5. See if you’ll make money. Ask a local REALTOR^Ò or call the local REALTOR^Ò association to get information about price appreciation trends in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good an investment your home will be. A REALTOR^Ò or the government planning agency also may be able to tell you about planned developments or other changes in the neighborhood—like a new school or highway—that might affect value.

 

6. See for yourself. Once you’ve narrowed your focus to two or three neighborhoods, go there, and walk around. Are homes tidy and well maintained? Are streets quiet? Pick a warm day if you can and chat with people working or playing outside. Are they friendly? Are their children to play with your family?

 

 

 

Tips on Buying in a Tight Market

 

Increase your chances of getting your dream house instead of losing it to another buyer, with these easy steps.

 

1. Get prequalified for a mortgage. You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.

 

2. Stay in close touch with your real estate sales associate to find out first about new listings that come on the market. And be ready to go see a house as soon as it goes on the market.

 

3. Scout out new listings yourself. Look at Internet sites, newspaper ads, and drive by the neighborhood frequently. Maybe you’ll see a brand-new “for sale” sign before anyone else.

 

4. Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.

 

5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal. In a tight market, you’ll lose out.

 

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

 

7. Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy anything. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.

 

 

 

 

 

5 Common First-Time Homebuyer Mistakes

 

 

1. They don’t ask enough questions of their lender and miss out on the best deal.

 

2. They don’t act quickly enough to make a decision and someone else buys the house.

 

3. They don’t find the right real estate professional who is willing to help you through the homebuying process.

 

4. They don’t do enough to make their offer look good to a seller.

 

5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

 

Reprinted with permission from Real Estate Checklists and Systems (www.realestatechecklists.com)

 

 

 

10 Tips for First-Time Homebuyers

 

 

1.        Be picky, but don’t be unrealistic. There is no perfect home.

 

2.        Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.

 

3.        Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs.

 

4.        Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.

 

5.        Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.

 

6.        Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?

 

7.        Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.

 

8.        Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.

 

9.        Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.

 

10.    Get help. Consider hiring a REALTOR^Ò as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.

 

 

 

 

10 Things to Take the Trauma Out of Homebuying

 

1.            Find a real estate professional who’s simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It’s critical that the practitioner you choose is both skilled and a good fit with your personality.

 

2.            Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.

 

3.            Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.

 

4.            Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.