FAQ
Buyer's most frequent questions and answers
You can find out by asking yourself these questions:
– Do I have a steady source of income? Is my current income reliable?
– Do I have a good record of paying my bills?
– Do I have money saved for a down payment?
– Do I have the ability to pay a mortgage every month, plus additional costs?
The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.
Your home should fit way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities – things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a ‘wish list.” Minimum requirements are things that a house must have for you to consider it, while a “wish list” covers things that you’d like to have but aren’t essential.
There isn’t a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn’t mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don’t want to worry initially about upkeep and repairs.
When you visit a builder’s model and purchase a home from the “on site agent” you are not receiving representation. The “on site agent” works directly for the builder and is obligated to work in the builder’s best interest. This leaves you in a very unfavorable position. I suggest you always take your agent along when shopping for a new home. It is the best way to prevent getting into a situation that you may regret.
In addition to comparing the home to your minimum requirement and wish lists, consider the following:
– Is there enough room for both the present and the future?
– Are there enough bedrooms and bathrooms?
– Is the house structurally sound?
– Do the mechanical systems and appliances work?
– Is the yard big enough?
– Do you like the floor plan?
– Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to better answer these questions.)
Many people are under the opinion that they will save money by purchasing directly from the owner. Actually, if you think about it, why do you think the owner is selling by himself? He is trying to save money! Another good reason to reconsider when thinking this way, the owner usually picks a price that they like, or need to get in order to get into the next home. This price more often than not has nothing to do with recent sold comparables in the neighborhood. Bottom line, beware when purchasing a “for sale by owner”, you just don’t know what you are getting into!
If you truly want to protect your investment, than let your buyer’s agent assist with the sale. The agent can perform the normal pricing and negotiating tasks for you, and most likely the owner will pay your broker a fee. That way you can have the best of both worlds.
Yes, however no house is perfect in every way. There will always be something that is not exactly right or in accordance with your criteria. If you are able to find a home with 3 out of 5 of the features you need most, this may be the house for you.
Waiting will only widen the gap of affordability. My suggestion is to carefully review your needs and to settle into a home that you can sell in a couple years. Once you are in a home, it should appreciate, helping you build equity and bringing you closer to your “dream home”. Many people who have wonderful homes did not get there with the first try. They purchased and rolled over their equity every few years, until they accumulated enough to go for the “perfect home”. All this takes some planning and of course, patience!
Remember when you are a home owner you gain advantage in several ways:
reduction of mortgage amount – gaining equity
your home appreciates with the market – you ride up with the values rather than staying static
home ownership offers a significant tax benefit – you get to write off the interest deduction
the most important reason of all – pride of owning something!
Of course. But you don’t want the most expensive home. You want the home that is best suited to you. We may make less on commission from your home purchase, but the positive feedback we get and the number of referrals that you offer makes up for any financial loss.
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs that are needed.
The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you.
There are mortgage options now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you’ll also need money for closing costs, moving expenses, and – possibly -repairs and decorating.