Oct
11
Filed Under Real Estate | Comments Off
Marci McFarland asked:
Buying a house is a wonderful thing - or it should be. Exercising a little common sense and controlling the demon of IwantitIwantitnow can make a big difference, not only to your home ownership experience, but also to your credit, stress level and budget.
Your first step is to make nice with the credit bureau. You should be getting reports from all of the major credit bureaus - Equifax, TransUnion, etc. to make sure that your credit report is A) good. B) not marred by a mistake, old indiscretion or identity theft and C) improvable if it isn’t already sparkling. If there’s anything that is currently bogging your credit down, you won’t get as good a rate as you could if your credit looks shiny and clean. There’s a lot you can do to improve it, including getting help (although you may want to think twice about going to a credit counselor, because that goes on your report and doesn’t look that great - unless your credit is horrible to begin with). A surprisingly short period of work can result in a significant jump in your credit rating.
Save for a down payment and the costs of purchasing a home. While 0% mortgages are available, it’s hard to find such an animal that won’t put you in the poorhouse with the jumped-up interest. Even $5000 can make a big difference for you. The ideal is 20% of the home’s value, but, let’s face it, not too many people have the wherewithal to do that in the timeframe that they have. The attendant costs of buying a house - home inspections, various fees, etc. - alone can take a big chunk out of your savings. The larger the down payment, the smaller the loan, which means less interest.
The long run counts when it comes to houses. Try not to think of it as a status symbol - “Look! I’ve finally grown up! I own PROPERTY! (yay!)”, you’re obtaining both a place to live and a close to life-long responsibility (if you choose to keep owning your living space). If you play your cards right, you also get equity, which is like having a part of your rent deposited in your savings account. Since everybody has to live somewhere, it makes sense that you live somewhere that gives you a return on the money you spend every month. However, it also means that missing a payment means more than just eviction.
It makes sense to purchase a house. The problem that people have is looking to where they want to be instead of looking where they are. Buying a house based on where you think or hope you might be in five or ten years is not in your best interests. You could suffer setbacks, you could lose your job, real estate value could plunge into the toilet… it’s not a great idea to put the maximum amount of your paycheck into a house, depending on raises or job improvement to eventually make it affordable. It’s a lot easier to put a house up for sale, search for, find, pack and move into a newer, larger house than it is to pull your credit out of the latrine because you bought a house that you couldn’t afford today at standard interest rates.
It’s hard to resist buying what you really want, when it’s handed to you on a silver platter and that’s exactly what a lot of loan companies do, especially for buyers who have less-than-stellar credit. However, think about it - you might enjoy your McMansion for a little while, but what are you going to do when your rates change or become unmanageable? Lenders are an unforgiving lot - one payment missed can mean that they can foreclose on your home, ruin your credit and your life. Some unscrupulous companies have done this to hundreds of people who were unable to keep their dream homes from the tight fist of real life.
Let’s suppose you buy a house that is well within your means. You also start saving towards - ideally you already have - a nest egg that will carry you through at least a month or two of no income. You’re set if something happens because you’ve already looked ahead to the time when you get laid off or finally tell your boss where to put the finger he’s been shaking in front of your nose for the last two-and-a-half years. The odds of you getting another job in the same pay range are usually pretty good if you’ve kept your nose clean and haven’t robbed any banks in the recent past.
One of the great things about buying well within your means is that you will have a lot more money to spend every month that isn’t getting ****** into your mortgage. Homes, even condos and town homes, require regular amounts of maintenance. Appliances bust, tiles sometimes break and carpets can need replacing. Imagine actually having enough money to pay for these! Also, replenishing your savings after a home purchase is a smart idea, for the rainy days that are closer to hurricanes.
Forget the “quick path to owning your own home”. Working to attain decent credit, saving up money for a down payment and the associated costs of home purchasing and buying a home well within your means is really the fastest way to successful home ownership and will repay the sacrifices you make with an affordable home that will eventually bring the castle you dream of, down to earth.
SANDY
Buying a house is a wonderful thing - or it should be. Exercising a little common sense and controlling the demon of IwantitIwantitnow can make a big difference, not only to your home ownership experience, but also to your credit, stress level and budget.
Your first step is to make nice with the credit bureau. You should be getting reports from all of the major credit bureaus - Equifax, TransUnion, etc. to make sure that your credit report is A) good. B) not marred by a mistake, old indiscretion or identity theft and C) improvable if it isn’t already sparkling. If there’s anything that is currently bogging your credit down, you won’t get as good a rate as you could if your credit looks shiny and clean. There’s a lot you can do to improve it, including getting help (although you may want to think twice about going to a credit counselor, because that goes on your report and doesn’t look that great - unless your credit is horrible to begin with). A surprisingly short period of work can result in a significant jump in your credit rating.
Save for a down payment and the costs of purchasing a home. While 0% mortgages are available, it’s hard to find such an animal that won’t put you in the poorhouse with the jumped-up interest. Even $5000 can make a big difference for you. The ideal is 20% of the home’s value, but, let’s face it, not too many people have the wherewithal to do that in the timeframe that they have. The attendant costs of buying a house - home inspections, various fees, etc. - alone can take a big chunk out of your savings. The larger the down payment, the smaller the loan, which means less interest.
The long run counts when it comes to houses. Try not to think of it as a status symbol - “Look! I’ve finally grown up! I own PROPERTY! (yay!)”, you’re obtaining both a place to live and a close to life-long responsibility (if you choose to keep owning your living space). If you play your cards right, you also get equity, which is like having a part of your rent deposited in your savings account. Since everybody has to live somewhere, it makes sense that you live somewhere that gives you a return on the money you spend every month. However, it also means that missing a payment means more than just eviction.
It makes sense to purchase a house. The problem that people have is looking to where they want to be instead of looking where they are. Buying a house based on where you think or hope you might be in five or ten years is not in your best interests. You could suffer setbacks, you could lose your job, real estate value could plunge into the toilet… it’s not a great idea to put the maximum amount of your paycheck into a house, depending on raises or job improvement to eventually make it affordable. It’s a lot easier to put a house up for sale, search for, find, pack and move into a newer, larger house than it is to pull your credit out of the latrine because you bought a house that you couldn’t afford today at standard interest rates.
It’s hard to resist buying what you really want, when it’s handed to you on a silver platter and that’s exactly what a lot of loan companies do, especially for buyers who have less-than-stellar credit. However, think about it - you might enjoy your McMansion for a little while, but what are you going to do when your rates change or become unmanageable? Lenders are an unforgiving lot - one payment missed can mean that they can foreclose on your home, ruin your credit and your life. Some unscrupulous companies have done this to hundreds of people who were unable to keep their dream homes from the tight fist of real life.
Let’s suppose you buy a house that is well within your means. You also start saving towards - ideally you already have - a nest egg that will carry you through at least a month or two of no income. You’re set if something happens because you’ve already looked ahead to the time when you get laid off or finally tell your boss where to put the finger he’s been shaking in front of your nose for the last two-and-a-half years. The odds of you getting another job in the same pay range are usually pretty good if you’ve kept your nose clean and haven’t robbed any banks in the recent past.
One of the great things about buying well within your means is that you will have a lot more money to spend every month that isn’t getting ****** into your mortgage. Homes, even condos and town homes, require regular amounts of maintenance. Appliances bust, tiles sometimes break and carpets can need replacing. Imagine actually having enough money to pay for these! Also, replenishing your savings after a home purchase is a smart idea, for the rainy days that are closer to hurricanes.
Forget the “quick path to owning your own home”. Working to attain decent credit, saving up money for a down payment and the associated costs of home purchasing and buying a home well within your means is really the fastest way to successful home ownership and will repay the sacrifices you make with an affordable home that will eventually bring the castle you dream of, down to earth.
SANDY
Oct
7
Filed Under Real Estate | Comments Off
Joe Pinto asked:
There is an old English proverb that says: ‘A man’s home is his castle.’ It means once you are in your own home you can pull up the drawbridge and you need not answer to anyone. It is a refuge; it is not a rental property where you can be thrown out for making a noise or having a cat. A home is a haven; it is more than an investment portfolio.
So the property market is taking a slight price hiatus… those of us who panic may end up selling our homes and then what will we do with the money? Put it in the bank? Put it into stocks and shares? Is that smart?
Even though house prices have almost doubled in the last ten years, many home owners are groaning about the price decreases that are occurring in some areas.
In fact, some share prices still have not fully recovered from the last stock market crash we saw. In one year, certain infamous stocks plunged from $90.00 per share to $1.00 per share; that made a $300,000.00 investment dwindle to the price of a washing machine! When a share price can go from $68.00 in February to $49.00 in June and then to $27.00 in September, and on down, it makes the realty market look like a pretty good bet.
In fact, owning a home is a completely different type of investment to investing in stocks and shares. Overall, real estate has always grown in value, in spite of interruptions to the profit and loss. When you invest in a property, you can see something tangible that you have bought - usually land and a house. In almost all cases it is your actual place of abode - you are utilizing your money as a home, it is representing a quality of life; it is not just money you have dumped somewhere to accrue savings, as if in a savings account.
If you invested the same amount in stocks and shares you would own a small part of a company, but the company that you have invested in is completely independent of your control. You have no control over your share of the money that you gave to that company. You can sell your stock, but you can also sell your house. With a house purchase, you have some other measures of control over your own funds.
For instance, if you see the interest rate falling, you can go to your bank and change to the lower interest rate. If you see the interest rate rising, you can get a fixed mortgage to lock in the rate. You can evaluate whether or not it is worth paying the penalty if there is one. You can tighten your belt and rent out a room, or sacrifice the rec room and convert it to a studio suite. You can rent out the whole house and move to a small apartment.
There is one thing you cannot do and that is to guarantee the cash value of your house. In this area you have no control. Certain things, like weather (in New Orleans), or war, or - as in this case - Government, will affect the money value of the house.
However, you can improve the value of your home, some renovations and improvements will increase your house value by as much as 80% of your remodeling cost when you sell your home. (The main five renovations that are reported to give this high percentage of returns are: bathrooms, decks, kitchens, vinyl sidings and window replacements).
You can get tax breaks on your home. You can get capital gains tax subsidy, if you make a profit, as well as interest deductions and property tax write-offs all from the IRS.
Housing has almost always beaten inflation by one or two percent (there is only once in the last thirty-five years that it has not). You will probably loose more money, pro rata, selling your RV than you would on selling your home.
Your home is your roof over your head and if you keep the same roof over your head through this storm, you will probably still be ahead of the game. Real estate is a slow profit, you must keep it many years, but in the meantime it has warmed you, sheltered you and given your children the safe freedom of a yard to play in. It is an asset in your life in more ways than mere financial value.
TYRONE
There is an old English proverb that says: ‘A man’s home is his castle.’ It means once you are in your own home you can pull up the drawbridge and you need not answer to anyone. It is a refuge; it is not a rental property where you can be thrown out for making a noise or having a cat. A home is a haven; it is more than an investment portfolio.
So the property market is taking a slight price hiatus… those of us who panic may end up selling our homes and then what will we do with the money? Put it in the bank? Put it into stocks and shares? Is that smart?
Even though house prices have almost doubled in the last ten years, many home owners are groaning about the price decreases that are occurring in some areas.
In fact, some share prices still have not fully recovered from the last stock market crash we saw. In one year, certain infamous stocks plunged from $90.00 per share to $1.00 per share; that made a $300,000.00 investment dwindle to the price of a washing machine! When a share price can go from $68.00 in February to $49.00 in June and then to $27.00 in September, and on down, it makes the realty market look like a pretty good bet.
In fact, owning a home is a completely different type of investment to investing in stocks and shares. Overall, real estate has always grown in value, in spite of interruptions to the profit and loss. When you invest in a property, you can see something tangible that you have bought - usually land and a house. In almost all cases it is your actual place of abode - you are utilizing your money as a home, it is representing a quality of life; it is not just money you have dumped somewhere to accrue savings, as if in a savings account.
If you invested the same amount in stocks and shares you would own a small part of a company, but the company that you have invested in is completely independent of your control. You have no control over your share of the money that you gave to that company. You can sell your stock, but you can also sell your house. With a house purchase, you have some other measures of control over your own funds.
For instance, if you see the interest rate falling, you can go to your bank and change to the lower interest rate. If you see the interest rate rising, you can get a fixed mortgage to lock in the rate. You can evaluate whether or not it is worth paying the penalty if there is one. You can tighten your belt and rent out a room, or sacrifice the rec room and convert it to a studio suite. You can rent out the whole house and move to a small apartment.
There is one thing you cannot do and that is to guarantee the cash value of your house. In this area you have no control. Certain things, like weather (in New Orleans), or war, or - as in this case - Government, will affect the money value of the house.
However, you can improve the value of your home, some renovations and improvements will increase your house value by as much as 80% of your remodeling cost when you sell your home. (The main five renovations that are reported to give this high percentage of returns are: bathrooms, decks, kitchens, vinyl sidings and window replacements).
You can get tax breaks on your home. You can get capital gains tax subsidy, if you make a profit, as well as interest deductions and property tax write-offs all from the IRS.
Housing has almost always beaten inflation by one or two percent (there is only once in the last thirty-five years that it has not). You will probably loose more money, pro rata, selling your RV than you would on selling your home.
Your home is your roof over your head and if you keep the same roof over your head through this storm, you will probably still be ahead of the game. Real estate is a slow profit, you must keep it many years, but in the meantime it has warmed you, sheltered you and given your children the safe freedom of a yard to play in. It is an asset in your life in more ways than mere financial value.
TYRONE