buying a house http://www.wisebread.com/taxonomy/term/821/all en-US Everybody's Wrong About How Much House You Can Afford http://www.wisebread.com/everybodys-wrong-about-how-much-house-you-can-afford <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/everybodys-wrong-about-how-much-house-you-can-afford" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_moving_house_93431053.jpg" alt="Learning how much house you can really afford" title="" class="imagecache imagecache-250w" width="250" height="143" /></a> </div> </div> </div> <p>A home is one of the most expensive &mdash; and most emotional &mdash; purchases you'll ever make. That high cost and high emotion combination can be dangerous, tempting you to spend so much on a house that it ends up owning <em>you</em>.</p> <p>Instead, buy a house you can actually afford. What is a reasonable cost, you might ask? For starters, ditch the conventional homeownership wisdom, and consider this plan to help you buy a home you can truly afford.</p> <h2>A Reasonable Percentage</h2> <p>I've spent a lot of time crunching numbers to come up with <a href="http://www.mattaboutmoney.com/resources/">recommended cash flow guidelines</a>, showing how much various sized households with various levels of income can afford to spend on everything from clothing to vacations. All that spreadsheet time gave me more than a headache; it gave me a deep appreciation for the importance of keeping housing costs under control.</p> <p>Here's what I found: If you're going to be able to save for emergencies and near-term purchases, invest for longer-term needs such as retirement or your kids' college costs, live generously, and enjoy some financial breathing space, you have to keep your total housing costs (mortgage, property taxes, homeowner's insurance, and association fees, if applicable) to no more than 25% of monthly gross income. Preferably, no more than 20%.</p> <p>Even more radically, I recommend that two-income couples run the numbers on what they can afford based on just <em>one</em> of their incomes.</p> <p>I know this all probably sounds ludicrous, but hear me out.</p> <h2>But I Qualify for More!</h2> <p>Mortgage lenders will typically allow you to devote 28% of your gross income to housing costs. They assume you'll have other debts as well and will be fine with that as long as it takes no more than 36% to 40% of your gross income to cover your housing costs and these other debts.</p> <p>But mortgage lenders aren't the ones who'll be making the payments. You will.</p> <p>Keeping your monthly housing costs within the parameters I suggested, and holding no other debt, will do wonders for your solvency and stress level.</p> <h2>Why Not Use Two Incomes?</h2> <p>If you're a double-income household, think twice before basing your housing decision on both incomes.</p> <p>If you don't have kids but would like to someday, and if one of you would like to step out of the paid workforce for a period of time in order to be home with your kids, it'll be a lot easier to transition to that life if your home doesn't require two incomes.</p> <p>That was the single best financial advice my wife and I received before we got married. Following that advice meant renting for the first 10 months of our marriage and then buying a condo in what our realtor optimistically described as &quot;an up and coming neighborhood&quot; in Chicago.</p> <p>After our first child was born and my wife left her job to be home full-time, the financial transition wasn't very difficult at all.</p> <p>The key to getting acclimated to living on one income is not getting acclimated to living on two incomes in the first place.</p> <p>If you don't plan to have kids, or if you do but you both plan to continue working full-time, it can still be dangerous to buy a house that requires two incomes. What if one of you loses your job?</p> <p><em>Choosing</em> to transition from two incomes to one because one parent wants to stay home for a period of time is one thing. Being <em>forced</em> to make that transition because one spouse goes through an extended time of unemployment is far more painful.</p> <h2>What If You Already Have a Two-Income House?</h2> <p>Very often, when people say they can't afford to save, invest, or support charitable causes they care about, it's because they're spending too much on housing.</p> <p>If you're in that situation, consider something radical. Consider moving to a home you can more easily afford.</p> <p>There's nothing easy about moving. I realize that. But I know two couples that have sold homes they realized they really couldn't afford. In both cases, moving was difficult, time-consuming, and even embarrassing. But both couples are so happy to have made the move. It's been better for their finances and their marriages.</p> <p>Keeping your housing costs reasonable is an essential part of wise money management. That means keeping your housing costs to no more than 20% to 25% of monthly gross income &mdash; and preferably basing that on one income. It's a radical idea, but it may just enable you to enjoy your home without financial worries. And that's worth more than extra square footage any day.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/everybodys-wrong-about-how-much-house-you-can-afford">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-buy-a-house-without-a-mortgage">4 Ways to Buy a House Without a Mortgage</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-millennials-can-do-to-buy-a-house-within-the-next-decade">5 Things Millennials Can Do to Buy a House Within the Next Decade</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/moving-dont-skimp-on-these-critical-expenses">Moving? Don&#039;t Skimp on These Critical Expenses</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-location-isnt-king-how-to-choose-income-rental-property">When Location Isn&#039;t King: How to Choose Income Rental Property</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing affordability buying a house cash flow expenses incomes mortgages new house single income Wed, 09 Nov 2016 09:30:07 +0000 Matt Bell 1827232 at http://www.wisebread.com 12 House-Hunting Red Flags You Can't Ignore http://www.wisebread.com/12-house-hunting-red-flags-you-cant-ignore <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-house-hunting-red-flags-you-cant-ignore" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_mortgage_trap_63718741.jpg" alt="Learning house hunting red flags you can&#039;t ignore" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've found the home of your dreams. The price is right, the time is right, and you have the down payment ready to go. But before you get your heart set on the property, you need to be aware of some red flags that could make you change your mind. Here are 12 potential issues that should give you cause for concern.</p> <h2>1. Some Part of the Property Is Off-Limits</h2> <p>When you go to an open house, you expect it to be, well, open. The homeowner wants to sell the property quickly, and creating any kind of hurdle, be it locked doors or bolted sheds, is a warning that something may be wrong. It could be that the person showing the home simply wants to keep some valuables locked away. If you're interested in the home, ask to come back later to see what's behind those closed doors, with an escort. If they still say no, you've got your red flag. And if it remains locked during the inspection, run away. There could be anything waiting for you, including bugs, water damage, faulty electrics, or any number of hazards.</p> <h2>2. The Neighborhood Is a Ghost Town</h2> <p>Depending on when you visit the home, and where the home is, you will see various things happening in the streets &mdash; kids playing, people out mowing the lawns, and a general feeling of regular activity. If the neighborhood is deathly quiet, take a closer look. Why is it so quiet? If you start seeing a lot of &quot;For Sale&quot; signs, and see that some properties are in a state of disrepair, you could well be moving into a place that most people are trying to escape from. Ask around, and talk to neighbors if you can. It may just be it's a very quiet neighborhood. But it could also be a place that is quickly becoming abandoned.</p> <h2>3. Popcorn Ceilings</h2> <p>Used in homes between the late 1950s, through to the late 1980s, popcorn ceilings were a trend that thankfully died out. Aside from being horrendously ugly, and difficult to paint, they could also pose a serious health hazard. Many popcorn ceilings contain white asbestos fibers, and that is nothing you want to mess around with. It takes a professional crew hours to remove it, and the charge can be up to $3 per square foot. Multiply that by all the rooms in the house that have the tacky popcorn ceilings, and you could be looking at thousands of dollars in labor. If you see it, ask the seller if they can have the popcorn texture removed on their dime. Or, ask for a reduction in the house price to deal with the costs of removing it.</p> <h2>4. Strange Smells and Unusual Stains</h2> <p>Where there is a funky smell, there is usually an underlying cause. It could just be some weird cooking that happened the night before, but chances are, it's something ingrained in the home. You may be smelling mildew, mold, or water damage in the floors and ceilings. Get your nose inside areas where smells can be hiding, like closets, cabinets, and the corners of basements and attics. And if you smell nothing but air fresheners in every room, the seller may be trying to cover up an offending odor.</p> <h2>5. Recent Painting and Decorating</h2> <p>To be fair, some homeowners want to freshen the place up before selling it, to get a better price and a quicker sale. But look at the type of redecorating that has happened. If it looks consistent throughout the home, or one room has been completely redone, then that's probably fine. But if you're seeing little patches of new paint and paper, they may be covering something the seller wants to hide. If you see some major construction work has just happened, you must get it inspected thoroughly. If the renovations were done in a hurry, and didn't have permits, they could be dangerous, or even deadly. It's not unusual for load-bearing walls to be removed, to open up a layout, causing serious structural problems.</p> <h2>6. Poor Upkeep and Maintenance</h2> <p>Unless you're buying a brand-new home, you will be living in a house that has been lived in before. We all hope the current owner has done his or her best to keep the property in tiptop condition, but it's not always the case. So, look for signs of a lazy homeowner. Are several doors really tough to open and close? Are some of the light switches and sockets cracked or broken? Do you see wallpaper peeling at the corners, or burned out bulbs that haven't been replaced? All of these can signal a homeowner who didn't maintain the property, and could signal bigger issues that you will only find after moving in.</p> <h2>7. Faulty Wiring</h2> <p>It's not as easy to spot as a couple of dangerous loose wires sticking out of the wall; faulty wiring can be lurking behind switches and faceplates. When going through the home, check all of the switches, even on the garbage disposal. If there are issues, like flickering lights, circuits that buzz and hum, excessive heat, or just switches that do not work, it could be a sign of larger electrical issues. Old wiring that has to be brought up to code can be costly, and should be a burden on the seller, not you.</p> <h2>8. Signs of Pests</h2> <p>As you walk through the property, look for telltale signs of bugs and rodents. Are there mouse traps hiding in the corners of the garage? Do you see shelves full of pest control products? What about droppings? Do you see a lot of dead bugs on the window ledges and in the basement and attic? Any of these signs, and many more, can be an indication of a pest problem that could be costly. If it's termites&hellip;very costly.</p> <h2>9. Old Heating and Cooling Systems</h2> <p>When the house was built should help you figure out if the heating and cooling systems should have been replaced by now. In some cases, they should have been replaced multiple times. The average life span of a furnace and air conditioner is 13&ndash;20 years, depending on the make and model. If you're looking at a home that was built in the 1980s, those systems should have been replaced twice. So, take a close look at the age of the units, or ask the seller to tell you how old those items are. To replace them both can cost many thousands of dollars. Also, ask for them to be turned on. If you notice strange sounds, they may be in need of repair or full on replacement.</p> <h2>10. Heaving Closets and Storage Spaces</h2> <p>One of the big complaints many homeowners have is storage space, or the lack of it. If the home doesn't have a basement or attic, you should definitely check out the state of the cupboards, and the garage. Can they even get a car into the garage? If it's full of their things, chances are, you are going to have storage issues, too. If the cupboards are threatening to pour the contents all over you when you open the door, that's another big red flag. Of course, they may be hoarders, but if you see that it's just regular items that are jammed into every available corner, you have a storage problem on your hands.</p> <h2>11. Rugs and Wall Coverings Everywhere</h2> <p>Homeowners can get pretty creative when it comes to hiding stains, holes, and damage. If you notice area rugs in every room, lift them up. It could be that the rugs are disguising unsightly carpet stains, or damaged floor coverings. If you see walls covered in posters, frames, hangings, and even drapes, look behind them, too. They may be hiding a whole host of problems, including wet rot or dry rot.</p> <h2>12. Cracks</h2> <p>Most homes develop a few hairline cracks over the years, as the house settles on the foundation. But cracks in the walls and floors that are greater than a third of an inch wide are a cause for concern. It's highly possible the house has serious structural problems, and you may have to foot the bill for some very costly repairs and foundation work.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/12-house-hunting-red-flags-you-cant-ignore">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy">How to Evaluate a Neighborhood Before You Buy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you">Thinking of Skipping the Home Inspection? Here&#039;s What It Will Cost You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youre-ready-to-make-an-offer-on-a-house-now-what">You&#039;re Ready to Make an Offer on a House: Now What?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-stage-your-home-without-hiring-a-pro">8 Ways to Stage Your Home Without Hiring a Pro</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house damages decorating dishonesty house hunting maintenance neighborhoods red flags repairs warning signs Wed, 14 Sep 2016 09:30:27 +0000 Paul Michael 1792245 at http://www.wisebread.com 4 Reasons Millenials Should Invest in a Home http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-millenials-should-invest-in-a-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_moving_boxes_43085150.jpg" alt="Millennial couple deciding to invest in a home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you believe popular culture, most Millennials don't want to buy homes and would rather rent. But the numbers suggest otherwise. The National Association of Realtors found that in 2015, Millennials made up 35% of all homebuyers, up from 32% in 2014. No other age group represented a bigger percentage of buyers last year.</p> <p>If you're a Millennial who wants to make the jump from renting to owning, congratulations: There are several reasons why owning a home is a smart financial move for younger buyers.</p> <h2>Owning a Home Is an Investment</h2> <p>No one can guarantee that the home you buy will have increased in value by the time you're ready to sell. But the odds are high that it will.</p> <p>Just look at the most recent sales statistics released by the National Association of Realtors: The median existing-home price across the nation stood at $247,700 in June. That was up 4.8% from June of 2015, when that number stood at $236,300. This June marked the 52nd consecutive month that the median price rose.</p> <p>Just remember that price increases, though possible, aren't guaranteed. Plenty of people who bought homes in 2005 and 2006, before the housing market began its crash in 2007, still owe more on their mortgage loans than what their homes are worth. Many of these homes still are worth less today than what they sold for back then.</p> <h2>Interest Rates Are Still Low</h2> <p>If you're like the vast majority of buyers, you'll need a mortgage loan to finance the purchase of a home. Borrowing mortgage money today, though, is affordable thanks to historically low mortgage interest rates.</p> <p>According to the Freddie Mac Primary Mortgage Market Survey, the average interest rate on a 30-year, fixed-rate mortgage loan stood at 3.45% for the week ending July 21. For a 15-year, fixed-rate loan, that rate stood at 2.75%. These low rates mean that your monthly mortgage payment will be lower than if rates were closer to the 5% range.</p> <h2>You Can Build Equity</h2> <p>Every time you make a monthly mortgage payment, and pay down your home loan's principal balance, you build equity in your home. Say your home is worth $200,000 and you owe $180,000 on your mortgage loan: You have $20,000 worth of equity.</p> <p>You can borrow against this equity, in the form of <a href="http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you">home equity loans</a> or home equity lines of credit, to fund major home improvements, <a href="http://www.wisebread.com/oops-i-maxed-out-my-credit-cards-now-what?ref=internal">pay down credit card debt</a>, or even to help fund a child's college education. When you are renting, your monthly rent check disappears in your landlord's bank account.</p> <p>Do exercise caution, though, when borrowing against your home's equity. You will have to pay back whatever you borrow, in monthly installments. Don't add too much monthly debt to your expenses or you will feel the financial squeeze. And if you can't afford to make your monthly equity loan payments, you could lose your home to your lender.</p> <p>You can boost your credit score: Your FICO credit score is a key number. Lenders rely on it to determine if you're a good lending risk. The higher your score, the more likely you are to qualify for loans and credit, and the lower the interest rate attached to these loans.</p> <p>By paying your monthly mortgage payment on time each month, you'll steadily boost your credit score. Payment history makes up 35% of your FICO score.</p> <h2>Tax Breaks</h2> <p>Owning a home also comes with tax breaks each year. The interest you pay each year on your home is tax-deductible. This break pays off more in the earlier years of owning a home, because the majority of your mortgage payment at this time is interest.</p> <p><em>Are you ready to move from renting to buying? What's holding you back? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway">What Is Private Mortgage Insurance, Anyway?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip">4 Tax Deductions New Homeowners Shouldn&#039;t Skip</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you">Thinking of Skipping the Home Inspection? Here&#039;s What It Will Cost You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move">3 Times a Refinance Is the Wrong Move</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing building credit buying a house equity interest rates millennials new homeowners tax breaks young adults Fri, 05 Aug 2016 09:00:08 +0000 Dan Rafter 1766255 at http://www.wisebread.com You're Ready to Make an Offer on a House: Now What? http://www.wisebread.com/youre-ready-to-make-an-offer-on-a-house-now-what <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/youre-ready-to-make-an-offer-on-a-house-now-what" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_new_house_94290869.jpg" alt="Couple learning what they need to know about making an offer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've found the home of your dreams. Now the hard work starts: It's time to make an offer, and hopefully, close the deal that will make the home yours.</p> <p>If you've never made an offer on a home before, the process can be intimidating. Fortunately, there is a formula here. Knowing that formula should at least remove some of the uncertainty from making an offer.</p> <h2>The Purchase Offer</h2> <p>Once you've found the home that you want to buy, you'll work with your real estate agent &mdash; or on your own if you're buying without an agent &mdash; to fill out a <em>purchase offe</em>r form. Most agents use a standard form. You'll fill in your name and the address of the home you want to buy.</p> <p>You and your real estate agent will also fill in the price you want to pay and provide an expiration date for the offer. Usually, you'll give the sellers and their real estate agent two to three days to respond, though you can set any expiration date you'd like.</p> <p>The purchase offer will also include information on how you will pay for the home, indicating that the offer hinges on you qualifying for a mortgage loan or that you are going to pay for the property in cash. The offer will also state a date by which the sale must close if the sellers accept the offer.</p> <p>How much you offer for the home is up to you. Your real estate agent will recommend a price for your first offer. If you really want the home, and you're worried that another buyer will make an offer, too, you might offer to pay the home's full list price. In some particularly hot markets, buyers even offer more than list price to make sure they don't lose the home.</p> <h2>The Seller's Move</h2> <p>After your real estate agent submits the offer to the agent representing the seller, it's your turn to wait. Sellers can accept your offer as is, make a counteroffer or reject your offer without making a counteroffer, effectively ending any future negotiations.</p> <p>You and your agent will review any counteroffers together. Usually, sellers will make a counteroffer based on the price you submitted. The sellers might have listed their home for $300,000 and you might have offered to pay $280,000. The sellers' counter offer might request that you pay $290,000 instead.</p> <p>Don't panic when you receive a counter offer. There is no limit to how many times you and the sellers can go back and forth. You and your agent can keep submitting offers until the sellers either accept one, or you or the sellers finally decide that the sale isn't going to happen.</p> <h2>The Sellers Accept &mdash; Now What?</h2> <p>When the seller accepts your offer, you'll sign a contract. The contract states that you intend to buy the home, as long as the property meets certain contingencies. The sellers can't entertain other offers for the home now unless your deal falls through.</p> <h3>Earnest Money</h3> <p>You'll supply earnest money with the contract. This money, which can range from a couple hundred dollars to thousands of dollars, tells the sellers that you are serious about buying their home. The money is held in an escrow account maintained by the title company handling the real estate closing. If you back out of the home sale for a reason not allowed in your sales contract, the sellers get to keep the earnest money deposit.</p> <p>If you go ahead with the sale, the earnest money that you already supplied is usually applied to the closing costs of the mortgage loan or the down payment on the house. If you supplied an earnest money deposit of $1,000, say, and you are providing a down payment of $10,000, you could use the earnest money so that you'd only need to provide $9,000 for that down payment.</p> <h3>Appraisal</h3> <p>After you and the sellers sign the contract, your mortgage lender will require that you pay for an appraisal to make sure that the home you are buying is worth at least what you are paying. If the appraisal comes in too low &mdash; say the appraiser says that the home you are buying for $250,000 is only worth $200,000 &mdash; the lender might rescind its offer to loan you mortgage dollars. This could scuttle the deal, though in most instances you will have your earnest money deposit refunded.</p> <h3>Inspection</h3> <p>You also have the opportunity to schedule a <a href="http://www.wisebread.com/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you">home inspection</a> after signing the contract, and you really should. An inspector will tour the home and point out any problems with the property. You then can ask the seller to fix the problems, reduce the sales price of the home, or provide you with the money you need to fix the problems yourself. Your contract will also state how serious these problems have to be before you can cancel the sale. For instance, your contract might state that you can walk away from the home sale if the inspector turns up needed repairs that are equal to $10,000 or more.</p> <p>If the appraisal and the inspection go well? It's time to move to the closing table, where you'll sign a stack of papers that will officially transfer ownership of the home to you.</p> <p><em>If you've ever bought a home, how did your offer and negotiation go?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/youre-ready-to-make-an-offer-on-a-house-now-what">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-buy-a-house-without-a-mortgage">4 Ways to Buy a House Without a Mortgage</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-house-hunting-red-flags-you-cant-ignore">12 House-Hunting Red Flags You Can&#039;t Ignore</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/score-your-dream-home-with-the-perfect-offer-letter">Score Your Dream Home With the Perfect Offer Letter</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment">4 Smart Ways to Lower Your Monthly Mortgage Payment</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buyers buying a house counteroffers escrow house hunting inspection purchase offers Fri, 29 Jul 2016 10:30:10 +0000 Dan Rafter 1757852 at http://www.wisebread.com Thinking of Skipping the Home Inspection? Here's What It Will Cost You http://www.wisebread.com/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/70578731.jpg" alt="Learning what a skipped home inspection will cost you" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a home is a lengthy process, and most likely the biggest financial decision you'll ever make. Even if you score a great deal on the cost of your home, there are several other fees that sneak in, like closing costs, private mortgage insurance, broker fees, and more.</p> <p>It can be tempting to want to forego the home inspection, especially since it's one more cost to handle. But even if your prospective home looks immaculate, you should still get an inspection. Doing so can potentially save you thousands of dollars.</p> <h2>Don't Take the Seller's Word</h2> <p>A few months ago, we bought a new home. Our home buying situation was a little unique, considering we were buying from a relocation company. The relocation company had gotten a home inspection before listing the house, and they were slightly put off by the fact that we wanted our own home inspection.</p> <p>The home inspection ended up finding about $2,500 worth of repairs that were invisible to the naked eye. Shingles need to be replaced on the patio cover, the plumbing wasn't covered correctly in the attic, and the patio lighting wasn't done properly and posed a fire hazard. These were all things we would have never noticed without an inspection &mdash; but could have caused serious issues if left unfixed.</p> <p>The company made the costly repairs right away, which saved us quite a bit of money. If we had foregone the inspection, then a number of things could have happened with the shoddy electrical wiring or uncovered plumbing lines. It was easily worth the $450 we paid for the inspection.</p> <h2>Prepare for Future Costs</h2> <p>With a home we bought in 2012, the inspector pointed out that we should keep an eye on the water heater, but he didn't write it in his report. Because of that comment, we opted for home warranty insurance, which cost about $400, and called in an inspection of the water heater within a few months of moving in. The home warranty covered the costs, saving us $400&ndash;$500, overall.</p> <p>See also: <a href="http://www.wisebread.com/9-things-you-need-to-know-about-a-home-appraisal?ref=seealso">9 Things You Need to Know About a Home Appraisal</a></p> <h2>Forgo Bribes to Skip the Inspection</h2> <p>If a seller offers a discounted price or cash back for skipping the home inspection, walk away from the deal. This could be a huge red flag. A home inspection takes only a few hours and the cost is footed by the buyer. Therefore, the seller is not really inconvenienced when it comes to the home inspection, and there is no reason to persuade buyers against it, unless there are critical issues with the home.</p> <p>Chicago homeowner, Lisa Keefe, experienced this when she and her husband put an offer in on a rehabbed cottage. &quot;The sellers offered us a $5,000 break on the price if we would forgo the inspection,&quot; she said. They chose an inspection, instead.</p> <p>Their inspection turned up a wide variety of issues, because the home was redone by the owner's inexperienced brother-in-law. A load-bearing wall was removed in the kitchen, the support beam was rotting, there were zoning issues with the basement, the roof was unstable, and the foundation was sinking. All of these issues were very serious and would have cost the Keefe's a lot of money, but thankfully they walked away from the cottage purchase.</p> <h2>What to Look for in a Home Inspector</h2> <p>You want to hire a home inspector that has many years of experience and the proper certifications and licenses. You also want an inspector that is thorough and will go into the attic, through the basement, and on the roof.</p> <p>We had the same inspector for both of our home purchases, and he noted the big stuff, as well as the minor issues. Not only did he tell us about the faulty electrical on the patio, but he also mentioned minor things, like the fact that the shower grate needed to be screwed down and the hot and cold water for the kitchen sink were switched. When it comes to your new home purchase, it is better to have too much information than not enough.</p> <h2>Should You Be There for the Inspection?</h2> <p>Home inspections are not mandatory, but it is a good idea to be there. Some inspectors are happy with you following them around asking questions, while others want to do a thorough search first, and <em>then</em> a walk through with you. Make it a point to meet with the inspector and walk through all of his findings. Be sure to look thoroughly through his report afterward too. You are paying for his time, so don't hesitate to ask several questions.</p> <p>Even if your home inspection turns up clean, it is nice to have that peace of mind. It can seem like an unnecessary expense, especially when your new home purchase is already squeezing your budget. However, the cost of a home inspection is worth it. It is better to pay $400&ndash;$500 for a report you don't need, than to skip it and pay $3,000 for a new roof within a year of buying your new home.</p> <p><em>Ever have a home inspection? Do you think it was worth the extra cost?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/thinking-of-skipping-the-home-inspection-heres-what-it-will-cost-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-house-hunting-red-flags-you-cant-ignore">12 House-Hunting Red Flags You Can&#039;t Ignore</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway">What Is Private Mortgage Insurance, Anyway?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home">4 Reasons Millenials Should Invest in a Home</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/first-time-home-buyer-consider-these-5-cities">First-Time Home Buyer? Consider These 5 Cities</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bribes buying a house costs home inspections new homeowners repairs Wed, 13 Jul 2016 09:30:33 +0000 Ashley Eneriz 1748330 at http://www.wisebread.com The 7 Most Important Financial Moments of Your Life http://www.wisebread.com/the-7-most-important-financial-moments-of-your-life <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-7-most-important-financial-moments-of-your-life" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/parents_new_baby_000061550566.jpg" alt="Parents learning the most important financial moments of their life" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all have turning points in our life. They are moments when it seems like our future rests on what happens next. Perhaps it's when we met our spouse, or decided on what college to attend.</p> <p>There are a number of moments like these that could have major impacts on our finances, depending on how we react and whether we are prepared. Consider these seven key moments or decisions and how they affect your financial future.</p> <h2>1. You Get Your First Credit Card</h2> <p>Right around the time you graduated high school, you probably got solicitations for credit cards in the mail. If you went to college, credit card companies may have stopped by your dorm or had a booth set up on campus. Credit card companies wanted you when you were young, and once they got you, they wouldn't let go. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">Best Credit Cards for College Students</a>)</p> <p>For those who haven't gotten a credit card yet, there's a lot you <a href="http://www.wisebread.com/ask-these-7-questions-to-help-choose-the-perfect-credit-card?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">need to know before signing up</a>. Yes, you will want to get a credit card or two in order to <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">build a credit history</a>. But learn to use them with caution. Do your own research and find the credit card that is best for you. (Look for the <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">lowest interest rates</a> and the <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">best rewards</a>.) When you use a credit card, pay your balance in full each time. Get an understanding of how high interest on credit card debt can pile up. If you start off with bad credit card habits, you may enter a debt spiral that will be hard to escape from, and it may have a ripple effect on every aspect of your financial life.</p> <h2>2. You Move Out</h2> <p>Everyone reaches a point in their life when they can no longer mooch off Mom and Dad. If you're lucky, your folks have been letting you shack up in their basement and raid their fridge even after you've long been able to support yourself. But at a certain point, it's time to leave the nest. This is when budgeting and watching your expenses becomes key. It's also a time when you may find that your ambitions are bigger than your finances can allow. Can you really afford that apartment in the city? Are you really planning to go clubbing and eating out with your friends every weekend?</p> <p>It's tempting when you go out on your own to want to live it up, but this is a time when young people often find themselves in financial pickles. Learn to budget, spend sensibly, and understand that it's possible to live the fun, single life without going into debt.</p> <h2>3. You Get Your First Salaried Job</h2> <p>It was a great feeling to get that first paycheck as a teenager, but an even bigger moment was when you landed your first job that you consider part of your &quot;career.&quot; This is the type of job that pays a salary rather than a living wage, and may even offer benefits like a 401K plan.</p> <p>These first big jobs are when you start to actually think hard about where your money is going. You'll want to pay attention to your tax withholding to avoid paying too little or too much tax. You'll want to set a certain amount aside to pay down debt. Once that's taken care of, you'll want to invest. And don't forget about health and life insurance. A big job often means some big financial decisions. Are you ready?</p> <h2>4. You Have Your First Big Emergency</h2> <p>Maybe it's a serious illness. Maybe you totaled your car. Or maybe your heat furnace blew out unexpectedly. Whatever it is, it's going to cost you some money. Did you plan for this? Do you have an emergency fund of three to six months' worth of expenses? It's moments like these that test your financial discipline. Those that come through relatively unscathed are much better off in the long run. And even if you're not prepared this time, you learned enough to be prepared for the next emergency, which may be coming sooner than you think.</p> <h2>5. Your Child Is Born</h2> <p>So you have a new bundle of joy in the house. Wonderful news, and congrats! Are you financially prepared for this? Because kids aren't free. It costs <em>at least</em> $11,000 annually to raise a child in the United States, according to the USDA, and that total could be much higher depending on where you live and any child care costs. Having a child also may impact your investment choices. The good news is that there are tax credits for having children &mdash; but the bad news is that they hardly offset the added expenses.</p> <p>Having a child is an amazing, life-altering event. Just be prepared for how those kids impact your finances.</p> <h2>6. You Decide to Buy a Home</h2> <p>Buying a home is one of the most exciting, but stressful decisions you will ever make. Before taking this plunge, there are a number of big financial questions you'll want to answer. How much money do you have saved for a down payment? How much money will you need to borrow? What's the interest rate and terms of the loan? These are key pieces of information that will impact how much you end up spending in housing each month. You'll get some nice tax breaks when you buy a home, but ideally, you want to spend no more than about one-third of your household income on housing. Otherwise, you may find yourself without enough cash to build an emergency fund, invest, or spend on other necessities.</p> <h2>7. It's Time to Retire</h2> <p>It's the moment of truth. All of the hard work, the saving, the investing. Do you have enough money to last another 20, 30, or even 40 years? Are your investments protected in case of a big market downturn? Do you have a plan for when you might not be able to care for yourself any longer?</p> <p>This is a critical moment in your financial life, but it should be one that is free of drama if you made the right financial choices along the way.</p> <p><em>Any key financial life moments we've overlooked? Tell us about them in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-7-most-important-financial-moments-of-your-life">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/use-the-8020-rule-to-maximize-your-financial-opportunities">Use the 80/20 Rule to Maximize Your Financial Opportunities</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/rich-people-spend-350k-to-park-their-cars-heres-how-wed-spend-it-instead">Rich People Spend $350K+ to Park Their Cars — Here&#039;s How We&#039;d Spend it Instead</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-secrets-you-need-to-tell-your-financial-adviser">11 Secrets You Need to Tell Your Financial Adviser</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance adulthood buying a house emergency funds family financial planning mortgages retirement Thu, 23 Jun 2016 10:30:04 +0000 Tim Lemke 1736532 at http://www.wisebread.com What Is Private Mortgage Insurance, Anyway? http://www.wisebread.com/what-is-private-mortgage-insurance-anyway <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-is-private-mortgage-insurance-anyway" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_fence_house_000024946015.jpg" alt="Woman learning what private mortgage insurance is" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Private Mortgage Insurance is one cost that mortgage borrowers hate to pay. And that's not surprising given than this form of insurance &mdash; Private Mortgage Insurance &mdash; doesn't actually protect homeowners. Instead, it protects mortgage lenders from borrowers who don't make their mortgage payments on time.</p> <p>PMI isn't cheap, either: Freddie Mac says that you can expect to pay from $30 to $70 a month in PMI costs for every $100,000 you have borrowed. According to this formula, you'd pay from $60 to $140 a month in PMI for a $200,000 mortgage.</p> <p>There is good news, though: Conventional mortgage borrowers won't need PMI if they have a large enough down payment. And even if you don't, your lender must drop PMI when you build up enough equity.</p> <h2>The PMI Hit</h2> <p>You'll need PMI if you have a conventional mortgage loan &mdash; one not guaranteed by the government &mdash; whenever you borrow with less than a 20% down payment.</p> <p>Fortunately, PMI isn't permanent on a conventional loan. You can ask your lender to drop PMI when the equity in your home reaches 20%. For instance, if your home originally appraised at $200,000 and you owe $160,000 on your mortgage loan, you now have 20% equity in your residence. If you owe $180,000 on your mortgage and your home is worth $200,000, you only have 10% equity in your home and must keep paying your PMI.</p> <p>If the balance of your mortgage drops to 78% of your home's original appraised value, your lender will automatically drop your PMI.</p> <p>If you want to calculate whether you can eliminate PMI, simply divide the balance of <a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan" target="_blank">your mortgage loan</a> into the original appraised value of your home. Most often, this appraised value will be the same as your home's original selling price.</p> <h2>Dropping PMI</h2> <p>If you want to drop PMI when your loan value reaches 80% of your home's original purchase price &mdash; which is the same as reaching 20% equity &mdash; you must request the cancellation in writing, sending a letter to your lender. You'll need to be current on your mortgage payments, and you might have to pay for a new appraisal to prove that your home hasn't lost value since you purchased it.</p> <p>When you take out your loan, your lender should provide you with the date on which, if you made your monthly mortgage payments as scheduled, your equity would reach the 20% level. You might reach this equity level earlier, though, if you've made additional payments. You might also reach it sooner if your home appreciates in value. But you'll need a new appraisal to prove that your home's value has risen.</p> <h2>FHA Mortgage Insurance</h2> <p>If you take out a mortgage insured by the U.S. Department of Housing and Urban Development's Federal Housing Administration, you must take out a different form of mortgage insurance. And this insurance is required, no matter how much of a down payment you put down.</p> <p>First, you'll need to make an upfront payment of 1.75% of the amount of your loan. If you take out a mortgage for $100,000, you'll have to pay $1,750 for this upfront premium.</p> <p>You'll also have to pay an annual premium, which you'll pay out in monthly installments throughout the year. For a 15-year fixed-rate loan with a down payment or equity of less than 10%, your annual FHA insurance premium will be 0.7%. For a 15-year loan with a down payment or equity of 10% or more, your annual premium will be 0.45%.</p> <p>For a 30-year loan and with a down payment or equity of less than 5%, your annual insurance premium will be 0.85%. For a 30-year loan with a down payment or equity of 5% or more, your annual insurance premium will be 0.80%.</p> <p><em>Did you have to pay PMI? For how long?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home">4 Reasons Millenials Should Invest in a Home</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-qualify-for-a-mortgage-with-a-small-downpayment">5 Ways to Qualify for a Mortgage With a Small Downpayment</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-youre-paying-too-much-for-your-mortgage">8 Signs You&#039;re Paying Too Much for Your Mortgage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip">4 Tax Deductions New Homeowners Shouldn&#039;t Skip</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house down payments equity new homeowners pmi private mortgage insurance Tue, 03 May 2016 09:00:05 +0000 Dan Rafter 1702378 at http://www.wisebread.com Is Buying a Foreclosed Home Ever a Good Idea? http://www.wisebread.com/is-a-buying-a-foreclosed-home-ever-a-good-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-a-buying-a-foreclosed-home-ever-a-good-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/home_sold_sign_000007866517.jpg" alt="Learning if buying a foreclosed home is ever a good idea" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Foreclosures are falling across the country. Real estate site RealtyTrac reports that the number of homes in foreclosure dropped 3% in 2015 compared to the previous year. But while foreclosure activity is dropping in most major cities, there are some metropolises where foreclosed properties still account for too large of a percentage of homes on the market.</p> <p>Here's the question for home buyers: Do high-foreclosure markets actually represent an opportunity? Do these cities give buyers a chance to get into city neighborhoods that they otherwise might not be able to afford?</p> <p>Yes, they do. But buyers have to be careful: Purchasing a home that is in foreclosure can lead to big problems.</p> <h2>Foreclosure Numbers</h2> <p>RealtyTrac said that at the end of 2015, 1.08 million U.S. properties had foreclosure filings on them. These filings include default notices, scheduled auctions, and bank repossessions. This figure is down 3% from the end of 2014.</p> <p>Even more impressive, it's down nearly 62% from 2010. That year saw 2.87 million U.S. properties with foreclosure filings on them &mdash; an all-time high.</p> <p>But five U.S. cities in particular are still struggling with too many foreclosures. RealtyTrac reported that as of the end of 2015, 3.43% of the housing units in the Atlantic City, NJ housing market had foreclosure filings. That's the highest percent of any the major U.S. markets that RealtyTrac charts.</p> <p>Other cities in the top five, according to RealtyTrac, are Trenton, NJ, with 2.14% of its housing stock having foreclosure filings; the Tampa Bay-St. Petersburg-Clearwater metropolitan area of Florida with a foreclosure rate of 2.03%; Jacksonville, FL, at 2.02%; and Miami, FL, at 1.98%.</p> <h2>Opportunities for Investors</h2> <p><a href="http://www.wisebread.com/3-terrible-things-foreclosure-does-to-your-credit">Foreclosures are bad news</a> for neighborhoods. That's because they tend to bring down the sales prices of the homes surrounding them, even those residences not in foreclosure.</p> <p>Say a neighborhood has several foreclosure homes that are selling for less than market value. This makes life difficult for other sellers. Sellers listing their homes at $200,000 will struggle to get that listing price if their neighborhood also features eight similar homes that are in foreclosure and all selling near $150,000.</p> <p>The buyers, looking for bargains, will make offers on those homes first. Other sellers can either lower their asking prices to compete more effectively with the foreclosures, or wait out the wave of local foreclosures in the hopes of nabbing a sales price closer to their actual list price.</p> <p>But while foreclosures might be a burden for sellers, they do present opportunities for buyers. A lower-priced foreclosure could help buyers find homes in neighborhoods that they otherwise couldn't afford.</p> <p>But buying foreclosures can also come with big headaches, mostly because these homes are often in terrible condition.</p> <h2>Foreclosure Traps to Avoid</h2> <p>You'll find the lowest prices for foreclosed homes by buying them at auction. But the auction process is also the riskiest way to buy foreclosures. That's because you won't have the chance to inspect a foreclosed home beforehand.</p> <p>Once you get your &quot;bargain&quot; home, you might find that it needs costly repairs that can quickly eat up the savings you thought you'd enjoy. A foreclosed home purchased through auction might also have liens filed against it, such as liens for outstanding tax payments. You might be on the hook for those unpaid taxes, and need to reach a settlement with the IRS.</p> <p>A safer choice is to buy homes that are owned by a bank. These properties, often referred to as REO or real-estate owned homes, have already been through the foreclosure process, with banks having taken them over. Banks will often sell these homes at prices below market value to get rid of them.</p> <p>The best news for buyers is that banks are required to pay off any liens filed against these properties. Buyers can also hire home inspectors to tour the homes before they buy them. These inspectors can help buyers determine how much they'll need to spend in repairs. Buyers can then calculate whether a particular foreclosure is a bargain or a potential money pit.</p> <p>A foreclosed home can present a savvy investment opportunity under the right circumstances. Do your homework, and you might just come away with a diamond in the rough.</p> <p><em>Have you ever purchased a home out of foreclosure?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-a-buying-a-foreclosed-home-ever-a-good-idea">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-at-a-foreclosure-auction">What Happens at a Foreclosure Auction?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-housing-market-is-finally-rebounding">The Housing Market Is Finally Rebounding</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-are-the-7-features-home-buyers-want-most">These Are the 7 Features Home Buyers Want Most</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-into-a-good-school-district-for-less">How to Get Into a Good School District for Less</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bank owned buying a house foreclosure housing market money pits Fri, 18 Mar 2016 11:30:08 +0000 Dan Rafter 1673870 at http://www.wisebread.com 23 Hidden Costs of Buying an Old House http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/23-hidden-costs-of-buying-an-old-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_money_000021065464.jpg" alt="Learning the hidden costs of buying an old house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying an old house may seem like a great way to save some money. The purchase price is typically much lower than a newer house, especially considering the cost per square foot. Older homes tend to be located closer to downtown areas, which can be convenient and reduce transportation expenses. Plus, you may see potential to fix up an old house yourself and sell it for a profit.</p> <p>However, it's easy to overlook hidden costs that can hit you soon after you buy that old house, all of which trump any potential financial gains. Here are some of the hidden costs I learned about the hard way after I bought a 120-year-old farmhouse.</p> <h2>1. Big Energy Bills</h2> <p>The heating bill for our old farmhouse was over $300 per month before we added insulation. Check the utility bill history before buying an older house to see what kind of energy costs you are signing up for!</p> <h2>2. Air Conditioning</h2> <p>Older houses may not have air conditioning at all, or may only have a window unit in one room. Installing central air costs a few thousand dollars.</p> <h2>3. Furnace</h2> <p>Older houses may have older furnaces. Although a furnace can last 50 years or more, at some point the furnace will become unsafe or ineffective and will need to be replaced at a cost of thousands of dollars.</p> <h2>4. Roof</h2> <p>The roof of a house wears out over time and eventually needs to be replaced. Depending on how many layers of shingles have been installed, you may be able to add another layer, or you may need to tear off all of the roofing material and start over. Be prepared to spend a few thousand dollars if you need a new roof.</p> <h2>5. Exterior Painting</h2> <p>Wood siding requires periodic repainting. You can repaint a house yourself, but this is time consuming. It took me five months to repaint my house, working mostly on weekends and evenings. Hiring someone to repaint a house can cost thousands of dollars depending on the size of the house and the condition of the siding.</p> <h2>6. Siding Replacement</h2> <p>If you don't want to paint wood siding, you can upgrade to vinyl. The biggest problem with this is that new siding can cost $30,000 or more.</p> <h2>7. Window Replacement</h2> <p>Older houses often have single pane glass windows. With respect to energy efficiency, single pane glass windows are almost as bad as leaving the window open. Upgrading windows costs around $300 per window. Older houses tend to have a lot of windows, so this can add up quickly.</p> <h2>8. Lack of Storage</h2> <p>Older houses usually have much less closet space than newer homes. This means you may need to buy wardrobes and other furniture for storage, or install cabinets, or build closets yourself.</p> <h2>9. Electrical Services</h2> <p>Older houses may have an undersized electrical panel. Modern houses need at least 100 amp service to handle appliances and lighting. Upgrading the service panel can cost a few hundred dollars.</p> <h2>10. Electrical Outlets</h2> <p>New houses have abundant electrical outlets in every room, but older houses may only have one or two in each room. If you don't want to use extension cords, you may need to have some outlets installed at a cost of over $100 each.</p> <h2>11. Old Electrical Wiring</h2> <p>The insulation on old electrical wiring starts to crumble and can be a fire hazard. Old wiring is hard to deal with, since it can be difficult to remove and replace with new wiring. Rewiring an old house can be incredibly expensive.</p> <h2>12. Lead Paint</h2> <p>Before 1979, lead paint was used for both interior and exterior surfaces. Older houses may have lead paint, which is hazardous and expensive to remove. You may need to resolve any lead paint issues before you can sell an older house.</p> <h2>13. Asbestos</h2> <p>Another hazard in older houses is the potential to encounter asbestos. Asbestos was used for insulation and may be used in old floor tiles as well. Removing asbestos can be expensive and requires special equipment and expertise.</p> <h2>14. Wet Basement</h2> <p>Older houses may have settled over the years, resulting in cracks in the basement which leads to dampness and water issues. If you are planning to use the basement of an older house for storage or to remodel it into living space, make sure there are no water problems first.</p> <h2>15. Insulation</h2> <p>My old farmhouse had no insulation in the walls or under the floor! I added insulation and was able to recover the cost in a few years from lower energy bills &mdash; but initially, this cost thousands.</p> <h2>16. Well Expenses</h2> <p>If your older house has its own well to supply water, you are responsible for all costs of maintaining the well. I had to replace a well pump at a cost of about $2,000 and then had to add a chlorinator to resolve a bad water test result before I could sell the property.</p> <h2>17. Small Garage</h2> <p>You may be in for a surprise when you try to pull your SUV or minivan into the garage of an older house for the first time &mdash; it may not fit! Measure the garage or try to pull your car in when looking at an older house to make sure you will have a place to park.</p> <h2>18. Water Line for Refrigerator</h2> <p>Refrigerators that dispense water and ice are a relatively new invention. To put one in an older house, you may need to install a water line for your fridge.</p> <h2>19. Old DIY Projects</h2> <p>In an older house, you may encounter old do-it-yourself projects that are not up to code or are just plain ugly and need to be removed and redone. (See also: <a href="http://www.wisebread.com/15-cool-diy-home-improvements-for-50-or-less">15 Cool DIY Home Improvements for $50 or Less</a>)</p> <h2>20. Nothing Is Square</h2> <p>One thing that struck me when I moved from my old farmhouse to a brand new house was how square and level everything was in the new house. Improvements in an old house can be more challenging &mdash; and more expensive &mdash; because nothing is level due to settling over the years.</p> <h2>21. Uneven Steps or Sidewalks</h2> <p>Having uneven steps or sidewalks at an older house may seem like a minor problem, but this presents a trip hazard and it is expensive to correct.</p> <h2>22. Historic Restrictions</h2> <p>Some older houses may be classified as historic. This designation may result in restrictions on the type of remodeling and additions that can be done, and even what color you can paint it. This can force you to spend more than you planned on remodeling and can limit your potential to upgrade an older house and sell it.</p> <h2>23. Endless Projects</h2> <p>Constantly spending money for home improvement and remodeling expenses is a big drag on your budget. Those trips to buy more building materials and paint every weekend add up to significant money. It can easily end up being less expensive to buy a newer house that requires less work than taking on all of the challenges of fixing up an older house, even if the initial purchase price is lower.</p> <p>Before deciding to buy an older house, get a home inspection by an inspector experienced with older houses. Review the inspection report and make a list of all of the upgrades and repairs you think the house needs. Consider all of the hidden costs of buying an older house before taking the plunge.</p> <p><em>Do you live in an old house? How &quot;charming&quot; is it?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-hidden-housing-costs-new-homeowners-dont-expect">10 Hidden Housing Costs New Homeowners Don&#039;t Expect</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everybodys-wrong-about-how-much-house-you-can-afford">Everybody&#039;s Wrong About How Much House You Can Afford</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-myths-about-real-estate">6 Myths About Real Estate</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-college-expenses-you-arent-saving-for">9 College Expenses You Aren&#039;t Saving For</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house expenses hidden costs home ownership old houses Wed, 10 Feb 2016 18:00:02 +0000 Dr Penny Pincher 1651573 at http://www.wisebread.com Why You Should Be Saving Big With Bi-Weekly Mortgage Payments http://www.wisebread.com/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mortgage_pay_date_000008692460.jpg" alt="Learning how bi-weekly mortgage plans can save you thousands" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Sending a check to your mortgage lender every two weeks instead of once a month &mdash; through what is known as a bi-weekly mortgage program &mdash; could shorten the length of your mortgage and reduce the amount of interest you'd pay over the life of your loan. But is <a href="http://www.wisebread.com/the-surprising-reasons-your-fixed-rate-mortgage-payment-could-rise">making mortgage payments</a> every two weeks a smart move? Not always.</p> <p>Mortgage experts say that homeowners need to look at their entire financial picture before deciding whether a bi-weekly mortgage program makes sense for them.</p> <p>&quot;There is no one-size-fits-all approach here,&quot; said Chris Birk, education director with Veterans United Home Loans in Columbia, Missouri. &quot;You can't say that a bi-weekly payment schedule is always the smart decision. Often it is. But for other borrowers, it's not always the best choice.&quot;</p> <h2>How it Works</h2> <p>If you sign on to a bi-weekly payment plan through your lender, you'll make mortgage payments every two weeks. Because there are 52 weeks in a year, you'll make 26 payments in a calendar year. If you're good at math, you'll notice that this comes out to an extra month's payment.</p> <p>When you pay off a mortgage loan in the traditional way, you make 12 payments in a year, or one per month. That would come out to 24 bi-weekly payments. But under a bank's bi-weekly payment plan, remember, you are making 26 &mdash; not 24 &mdash; bi-weekly payments. Those extra two payments at the end of the year go directly toward reducing your mortgage loan's principal balance.</p> <p>Say you had a 30-year fixed-rate loan with a balance of $200,000 at an interest rate of 4.4%. If you paid that loan off with traditional once-a-month payments, your monthly payment, not including taxes and insurance, would be $1,001.52. If you took the full 30 years to pay that loan off, you'd pay more than $160,000 in total interest.</p> <p>If you went with a bi-weekly payment plan, you would pay $500.76 every two weeks &mdash; again, not counting taxes and insurance. If you took the full 30 years to pay off your loan, you'd pay just more than $132,000 in total interest. That's a savings in interest of nearly $30,000.</p> <p>You'd also pay off your mortgage loan in 26 years instead of 30.</p> <h2>It's Not Always the Right Choice</h2> <p>The math shows that bi-weekly mortgage plans work: They do reduce the amount of interest you pay each month while shortening the term of your mortgage.</p> <p>But that doesn't mean that a bi-weekly plan is always the right choice.</p> <p>If you plan on living in your home for a short period of time, a bi-weekly mortgage might not make sense. You won't save much in interest if you move out of your home in five years, say.</p> <p>Bi-weekly plans also mean that you'll be sending more money to your lender each year, too. In our example of a 30-year fixed-rate loan of $200,000 with an interest rate of 4.4%, you'd pay about $1,000 more each year under a bi-weekly plan than you would with a traditional repayment program. That might not seem like much money, but if you're attempting to save for a big purchase &mdash; say a child's college education &mdash; that $1,000 could come in handy.</p> <p>Then there's the fact that of all the debt to carry, mortgage debt is usually the most affordable, thanks to the low interest rates that come with it. Homeowners burdened with high interest rate debt, such as credit card debt, should pay more dollars each month toward reducing that debt rather than their mortgage balance.</p> <p>&quot;If you can financially do it, I am always an advocate of being debt-free,&quot; said Rick Roque, managing director of retail with Michigan Mutual in Port Huron, Michigan. &quot;But because mortgage rates are so low, it often doesn't make sense to work so hard to pay off your mortgage debt.&quot;</p> <p>On the flip side, Roque said, by paying off more of your principal balance at a quicker rate, which you would do with a bi-weekly plan, you do gain more access to equity. You can then take out home equity loans to help fund major home improvements or a child's college education.</p> <p>&quot;You do gain a tremendous amount of financial leverage when you have more equity,&quot; Roque said. &quot;You can leverage that equity in your home for emergencies or educational opportunities. That is a powerful tool.&quot;</p> <p>The bottom line? Bi-weekly mortgage plans work. Just consider whether they'll work for your financial needs.</p> <p><em>Are you on a bi-weekly payment schedule?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-ends-meet-when-youre-house-poor">How to Make Ends Meet When You&#039;re House Poor</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-private-mortgage-insurance-anyway">What Is Private Mortgage Insurance, Anyway?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home">4 Reasons Millenials Should Invest in a Home</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fallacy-of-homeownership-as-a-sound-investment">The Fallacy of Homeownership as a Sound Investment</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move">3 Times a Refinance Is the Wrong Move</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bi-weekly mortgage program buying a house equity homeownership lenders mortgage payment plans Thu, 01 Oct 2015 13:00:35 +0000 Dan Rafter 1570347 at http://www.wisebread.com How to Evaluate a Neighborhood Before You Buy http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-evaluate-a-neighborhood-before-you-buy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/fence-194025-small.jpg" alt="neighbor" title="neighbor" class="imagecache imagecache-250w" width="250" height="185" /></a> </div> </div> </div> <p>When it comes to buying a home, the old real estate saying holds true. It's all about &quot;location, location, location.&quot;</p> <p>The neighborhood you live in can make a big difference in whether or not you enjoy your home. You can have a great house, but if you don't like the neighborhood, living there can be unpleasant. (See also: <a href="http://www.wisebread.com/think-you-can-afford-more-house-in-the-exurbs-think-again">Think You Can Afford More House in the Exurbs? Think Again</a>)</p> <p>Our next door neighbors are finding this out for themselves. When they moved in three years ago, they liked the house and the large yard. However, they are an older couple, and our neighborhood is full of starter families and <a href="http://www.wisebread.com/how-big-of-a-house-do-you-really-need">starter homes</a>. They were annoyed with all of the young children running around and the frequent family events and get-togethers. They've moved out, and the house hasn't even sold yet.</p> <p>Before you move in, take the time to evaluate the neighborhood, getting an idea of whether or not you will feel comfortable there. Here are some things to consider as you choose a location.</p> <h2>Schools</h2> <p>This is one of the biggest concerns that many homebuyers have. And why not? Do you want your child to attend a good school? One of the things I like about my son's school is that the test scores are great, and there is a lot of funding for at-risk children. The result is that his class sizes are small for our area, and there is a great enrichment program for him.</p> <p>Even if you don't have children, or if you decide to homeschool your children, it can still be a plus to have good schools nearby if you are looking for resale value. Chances are that whoever buys the house from you will want to know about the schools.</p> <p>You can evaluate schools by checking <a href="http://www.greatschools.org/">GreatSchools.org</a>, and even by visiting the school. If you are really serious about it, attend a PTA meeting, or meet with the school's principal for a tour. Most of the time, this can be arranged, and you can see what resources are available, as well as what kind of parental support you see in the schools.</p> <p>If you are unsatisfied with the more traditional school, you can find out about nearby charter schools and private schools.</p> <h2>Strike Up a Conversation</h2> <p>Nothing gives you the feel of a neighborhood like talking to your potential neighbors. If you see someone outside while you are looking at the house, don't be afraid to ask questions. You don't even need to get into an in-depth conversation. Wave and say, &quot;hi,&quot; and see if the neighbors wave back.</p> <p>Spend a few minutes observing the people and talking to a few of the residents. Are there children for your kids to play with? Does it look like the neighbors get along with each other?</p> <p>You'll get a good idea of what to expect and a feel for whether or not you &quot;belong.&quot; While I don't always feel like I belong in my neighborhood, everyone is nice, and my son has friends to play with &mdash; one of them is exactly his age and right across the street.</p> <h2>Watch for Negative Signs, Too</h2> <p>Pay attention to signs that the neighborhood could be headed for trouble. While there are one or two houses in my neighborhood that have unkempt yards, most of the homes are <a href="http://www.wisebread.com/home-improvements-that-pay-off">neat and well-cared for</a>. The grass is trimmed, flower beds are attractive, and most of the neighbors clear their sidewalks during the winter. These are signs that your potential neighbors take pride in their area and that they care for their things.</p> <p>Also, watch for an abundance of &quot;For Sale&quot; signs. A <a href="http://www.wisebread.com/quick-tip-how-to-sell-your-home-when-your-neighbors-are-too">lot of For Sale signs</a> can be an indication that the neighborhood is struggling. However, it's not the end of the world if there are a lot of homes for sale. Since I live in a starter neighborhood, there are several homes on the market as families, after five or six years, have decided to upgrade. You can look for indications that the home is well-cared for, even though it is for sale. A foreclosure/real estate owned property is likely to look a little shabby. If there are a lot of foreclosure properties in the neighborhood, that's a real red flag.</p> <h2>What's Nearby?</h2> <p>Don't forget to consider nearby amenities. Consider what you value in your lifestyle. Do you like to walk? If so, look for a neighborhood near shopping and restaurants. My husband likes privacy, so we looked for a neighborhood a little outside of the main part of the town with reasonably large yards and a quieter feel.</p> <p>Others, though, prefer to be right in the middle of it all, close to dining, shopping, and entertainment. We like to go out enough that we didn't want to go full-on rural. Instead, we are in a semi-rural neighborhood that is about 15 minutes from the things we like to do. It makes sense for us, and, even though I wish there was better public transportation near our house, we're reasonably happy with the location.</p> <p>You can use tools like <a href="http://www.walkscore.com/">WalkScore</a> to get an idea of what is close to your potential neighborhood. WalkScore helps you figure out what's close in terms of schools, activities, dining, shopping, and entertainment. You can see whether it makes sense to bike or walk, and whether there is public transportation nearby.</p> <p>I am painfully aware that the WalkScore for my neighborhood is 8. That's the one thing I'd change about my neighborhood; I'd like a little better access to amenities.</p> <h2>Bottom Line</h2> <p>Currently, I'm faced with the possibility of moving in the next 12 months or so. I've been thinking about what I want in a neighborhood and how to evaluate what I find. Before you buy, think about the things that would make a neighborhood a pleasant place for you to live. Then, do a little research on communities in your target location.</p> <p>Finally, take the time to visit neighborhoods in the area. All the data in the world can't replace the actual gut feeling you get when you drive through a neighborhood and receive a first impression about how you might function as part of the community.</p> <p><em>Did you research your neighborhood before you bought or rented there? What tools or resources did you use?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> of <a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-house-hunting-red-flags-you-cant-ignore">12 House-Hunting Red Flags You Can&#039;t Ignore</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick">Buy a Home You Can Afford With the Mortgage Suitcase Trick</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Quiz: Am I Really Ready to Buy a Home?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-boost-your-neighborhood-and-your-homes-value">8 Ways to Boost Your Neighborhood and Your Home&#039;s Value</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house first time home buyer neighborhoods neighbors Wed, 29 May 2013 10:24:31 +0000 Miranda Marquit 976251 at http://www.wisebread.com What to Look for in a Fixer-Upper http://www.wisebread.com/what-to-look-for-in-a-fixer-upper <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-look-for-in-a-fixer-upper" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/3139490667_aafe34aa01_z.jpg" alt="fixer upper" title="fixer upper" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>The housing market is definitely improving, and many of my friends are looking to purchase a new house. The problem is that in many areas inventory is quite low, and it is getting difficult to snatch a perfect house at a great price. However, if buyers are willing to put in some time and work, they are still able to find fixer-uppers that are worthwhile. Here are some tips on what to look for in a fixer-upper. (See also: <a href="http://www.wisebread.com/9-costly-things-new-homeowners-dont-prepare-for">9 Costly Things New Homeowners Don't Prepare For</a>)</p> <h2>Location</h2> <p>Location is extremely important in choosing a house. It is better to buy a fixer-upper in a nice neighborhood rather than a pristine and perfect house in a war zone area riddled with crime. Generally, houses in nicer neighborhoods have greater value to begin with, and whatever improvements you make will give you more return on your money. You should also look at the neighbors' houses on the same street and see how much you need to improve the house to make it fit in.</p> <h2>Age of House</h2> <p>Generally, newer homes have certain features that are more updated. For example, plumbing and electrical systems are usually better, and newer homes are up-to-date with modern building codes. From what I've seen, newer homes also have better insulation and are more <a href="http://www.wisebread.com/what-americans-can-learn-from-how-the-rest-of-the-world-saves-energy">energy efficient</a>. These features may not be so visible, but they can be very expensive for you to fix. If you do buy an older home, you should check if these major systems have been updated. If you need to upgrade a house's infrastructure to comply with current laws or insurance requirements, then it can be quite expensive.</p> <h2>Costs and Savings</h2> <p>One reason to buy a fixer-upper is to save a little bit of money. To do that you need to assess how much the repairs will cost and have a reserve fund of cash to pay for those fixes. You should definitely get a professional home inspection and also estimate how much cosmetic repairs would cost. If there are major structural issues that cost tens of thousands of dollars to fix, it may not be worthwhile to purchase the house.</p> <p>The <a href="http://www.wisebread.com/home-improvements-that-pay-off">fixes that get you the most bang for the buck</a> are really the cosmetic ones, and that is why the best fixer-uppers are the ones that have great &quot;guts and bones&quot; but need a fresh coat of paint and some new flooring. The cost of paint and flooring is usually pretty easy to figure out, but major structural changes to the foundation and walls may become a real money pit.</p> <h2>Your Time</h2> <p>If you want to deal with a fixer-upper, then you really need to figure out how much time you have to devote to it. If you don't do the work yourself, then you will need to research which contractors to use, and for cosmetic changes you will need to pick out all the colors and styles. Depending on how much work there is to be done, it may take weeks to months before you can actually move into the house.</p> <p>Some people love customizing their homes, but some really just want a move-in-ready house. If you do not have a lot of time to deal with a project, then it might be better to just pay a little more for a pristine house.</p> <p>While the <a href="http://www.wisebread.com/the-housing-market-is-finally-rebounding">market is tightening</a>, I think that it is still possible to get a deal on fixer uppers if you are willing to do the research and follow up work. However, it may not be a great idea for those who do not have a decent cash reserve and the time to do the legwork. I've only purchased houses that needed cosmetic fixes, and that is because I don't have a lot of time and money to devote to major fixer uppers.</p> <p>One last consideration &mdash; it is better to get a house at a lower price because your tax basis will be lower, and that may save you money for many years to come.</p> <p><em>Have you purchased a fixer upper?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/what-to-look-for-in-a-fixer-upper">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-into-a-good-school-district-for-less">How to Get Into a Good School District for Less</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-buying-a-foreclosed-home-ever-a-good-idea">Is Buying a Foreclosed Home Ever a Good Idea?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-process-for-purchasing-a-house-with-cash">The Process for Purchasing a House With Cash</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house fixer upper home improvement Tue, 01 Jan 2013 10:30:20 +0000 Xin Lu 961639 at http://www.wisebread.com Buy a Home You Can Afford With the Mortgage Suitcase Trick http://www.wisebread.com/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2921978502_7a0f8414c8_z.jpg" alt="house" title="house" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Raise your hand if you&rsquo;ve ever tried to stuff more than you really need into a suitcase. You begin with good intentions, wanting to make sure you have everything you need for your trip. You don&rsquo;t really know if you&rsquo;re going to need that extra sweatshirt, but you throw it in just in case. Before you know it you&rsquo;re sitting on the lid of your overflowing suitcase just to get it closed. Although you&rsquo;re finally able to zip it up, the real bummer is that you have to drag around that heavy suitcase your whole trip.</p> <p>Unfortunately, this scenario of trying to stuff in more than you really need isn&rsquo;t just limited to packing your bags. When buying a home, it&rsquo;s easy to convince ourselves to buy more than we need even though it stretches our budget. As a result we end up dragging around tens of thousands of extra mortgage debt for the life of our 15-30 year loan.</p> <p>The mortgage suitcase trick is simple and can help you avoid buying too much home. Picture your housing budget as a suitcase. Every time you think about adding another feature or upgrade during your home buying decision, ask yourself if you really want to lug around the cost of that feature for the next 15-30 years.</p> <p>While the mental image of a heavy suitcase busting at the seams can be an overspending deterrent, I know sometimes it helps to have more concrete guidelines. So here are four tips that can help you avoid overloading your mortgage suitcase. (See also: <a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Quiz: Am I Really Ready to Buy a Home?</a>)</p> <h2>1. Know Your Limits</h2> <p>Before you even start looking at homes figure out <a href="http://moneysmartlife.com/how-much-house-can-you-afford/" target="_blank">how much house you can afford</a>. Just because you&rsquo;re pre-approved for a certain amount doesn&rsquo;t mean you have to spend that much or that you can really afford it.&nbsp;</p> <p>It helps to run through some &ldquo;what-if&rdquo; scenarios to future-test the limit you decide on. What if one person decides they want to stay at home with the kids? What if you lose your job for six months? Whether you&rsquo;re looking at a <a href="http://moneysmartlife.com/30-year-mortgage-vs-15-year-mortgage/" target="_blank">15 or 30 year loan</a>, a lot can change in your life during that time, so try to take that into account.</p> <h2>2. Define Your Priorities</h2> <p>There are many different factors that come into play when you&rsquo;re trying to find the right place to live. Chances are you&rsquo;re not going to be able to get everything you want in a home, so it helps to prioritize what is most important to you.</p> <p>This list will come in really handy when you&rsquo;re comparing multiple properties and having a tough time choosing which you want and how much money to offer the owner.</p> <h2>3. Don&rsquo;t Shop Up</h2> <p>My wife likes to watch these house-hunter shows that start with the potential buyer listing off everything they&rsquo;re looking for and what they want to spend. Many times the real estate agent will tell them they can&rsquo;t get everything they want at the price they&rsquo;ve set and will proceed to show them <a href="http://www.wisebread.com/how-big-of-a-house-do-you-really-need">more expensive homes</a>.</p> <p>Once you see the home that meets all your criteria, you&rsquo;re going to want it. However, if you can&rsquo;t afford it then, you&rsquo;re just making yourself unhappy by looking at it. Two unfortunate scenarios often result from shopping up:</p> <ol type="1" start="1"> <li>Your emotions overcome logic, and you&rsquo;ll break your budget to buy the home.</li> <li>You don&rsquo;t buy it but &ldquo;settle&rdquo; for less and are unhappy with the home you buy.</li> </ol> <h2>4. Beware Payment Justification</h2> <p>When you&rsquo;re going through the process of buying a home, most everyone involved will be happy to tell you that a more expensive property &ldquo;only raises your monthly payment by a little.&rdquo; Your realtor wants you to buy. Your bank is probably happy to lend you more. Sometimes your spouse/partner/friend will even jump on board and argue the case that another $20-30K doesn&rsquo;t raise your payments that much.</p> <p>If you&rsquo;ve done steps #1 and #2, then you&rsquo;ll know what you can afford and what&rsquo;s important to you. Don&rsquo;t <a href="http://www.wisebread.com/friends-and-goals-dont-let-a-blue-falcon-bring-you-down">let other people talk you into spending more</a> than you&rsquo;re comfortable with. You&rsquo;re the one who has to get out of bed and go into work every day for the next 20 years to pay off the mortgage.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ben-edwards">Ben Edwards</a> of <a href="http://www.wisebread.com/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy">How to Evaluate a Neighborhood Before You Buy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Quiz: Am I Really Ready to Buy a Home?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-shouldn-t-buy-a-home-if">You Shouldn’t Buy a Home If…</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/mcmansion-to-mccottage-why-smaller-houses-are-smarter">McMansion to McCottage: Why Smaller Houses Are Smarter</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house first time home buyer home mortgage small houses Mon, 26 Nov 2012 10:36:38 +0000 Ben Edwards 955494 at http://www.wisebread.com Quiz: Am I Really Ready to Buy a Home? http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/quiz-am-i-really-ready-to-buy-a-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6037999486_531d422d5d_z.jpg" alt="couple on a car" title="couple on a car" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Home prices are on the uptick for the first time in several years, which means that you may have a limited window of opportunity to become a homeowner before prices shoot through the proverbial roof again.</p> <p>I don&rsquo;t have to tell you that buying a home is serious business, a major milestone, a huge responsibility, and probably the largest purchase you&rsquo;ll ever make, but are you asking yourself the right questions to make sure that you&rsquo;re prepared for all the amazing and not-so-amazing aspects of home ownership? (See also: <a href="http://www.wisebread.com/9-costly-things-new-homeowners-dont-prepare-for">9 Costly Things New Homeowners Don't Prepare For</a>)</p> <p>To help you decide whether you&rsquo;re ready or not, I&rsquo;ve designed this quick quiz. Answers are below. No cheating!</p> <p><strong>1. When contemplating the decision to buy a home, what&rsquo;s the first thing you should do?</strong></p> <ol type="A"> <li>Contact a loan officer</li> <li>Take a good look at your finances</li> <li>Call a real estate agent</li> <li>Attend a few open houses</li> </ol> <p><strong>2. When you start looking for the perfect home, what should you have?</strong></p> <ol type="A"> <li>Cash for a down payment</li> <li>A good credit score</li> <li>A steady source of income</li> <li>All of the above</li> </ol> <p><strong>3. What&rsquo;s the best way to calculate the price range in which you should be shopping for a home?</strong></p> <ol type="A"> <li>Your anticipated monthly payment is 30% of your income, to include your mortgage, taxes, and insurance fees</li> <li>Add up all your assets, and work with 50% of the sum</li> <li>Multiply your current rent by three</li> <li>Multiply your annual salary by 30, then divide it by two</li> </ol> <p><strong>4. How much cash should you save for a down payment?</strong></p> <ol type="A"> <li>7% of the purchase price</li> <li>10% of the purchase price</li> <li>17% of the purchase price</li> <li>20% of the purchase price</li> </ol> <p><strong>5. To secure the best mortgage rate, what&rsquo;s the minimum FICO credit score you must have?</strong></p> <ol type="A"> <li>560</li> <li>660</li> <li>760</li> <li>860</li> </ol> <p><strong>6. How much money should you set aside for closing costs?</strong></p> <ol type="A"> <li>1% to 2% of the purchase price</li> <li>3% to 6% of the purchase price</li> <li>7% to 9% of the purchase price</li> <li>10% to 12% of the purchase price</li> </ol> <p><strong>7. If you don&rsquo;t have the cash for closing costs, you should put your dream of owning a home on hold.</strong></p> <ol type="A"> <li>True</li> <li>False</li> </ol> <p><strong>8. The bank has approved you for a loan that exceeds the budget you set for yourself by $50,000. You should:</strong></p> <ol type="A"> <li>Accept it. Now you can get a house with a pool.</li> <li>Politely decline and tell the loan officer where to stick it.</li> <li>Use the extra $50,000 to buy a new car.</li> <li>Reexamine your budget to see if you can afford it.</li> </ol> <p><strong>&nbsp;9. How long should you plan to live in your new home for it to make good financial sense to buy?</strong></p> <ol type="A"> <li>3 years</li> <li>5 years</li> <li>7 years</li> <li>10 years</li> </ol> <h2>ANSWERS</h2> <h3>1. B</h3> <p>Before you can start the home-buying process, you need to examine your budget so you know where you&rsquo;re at with your finances and to find out how much you can afford to spend on a home. Using your existing budget, it&rsquo;s not a bad idea to create an anticipatory budget too, which should include your monthly mortgage payment, insurance, property taxes, and other <a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">associated costs of home ownership</a>. This will help you determine if your budget can handle these expenses.</p> <h3>2. D</h3> <p>In this economy, cash for a down payment is important to a lender &mdash; it lets them know you&rsquo;re a serious buyer and that you&rsquo;re responsible &mdash; and a good credit score will help you lock in a low interest rate. Of course, to save for a down payment and establish a good credit score, you&rsquo;ll need a reliable, steady source of income in the form of a full-time job.</p> <h3>3. A</h3> <p>Financial experts suggest that the percentage of your monthly income that you should use to establish a budget for home buying should be from 25% to 33%, which makes 30% a safe compromise.</p> <h3>4. D</h3> <p>If you don&rsquo;t want to pay for private mortgage insurance, 20% of the purchase price is the sweet spot that you should aim for when saving for your down payment. Anything less will require you to purchase private mortgage insurance so the lender is protected from default on the loan. However, it doesn&rsquo;t hurt to save even more than 20% to put toward the down payment so you can ensure that you get the lowest interest rate possible.</p> <h3>5. C</h3> <p>A FICO score of 760 or higher will help you lock in the best mortgage rates. If your <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">score is lower than 760</a>, you&rsquo;ll still be able to purchase a home, but you&rsquo;ll pay for it in the long run with a higher mortgage rate.</p> <h3>6. B</h3> <p>Between 3% and 6% of the purchase price of the home is the ideal margin of savings you should have for closing costs. These costs usually consist of loan origination fees, title insurance, attorneys&rsquo; fees, property taxes, transfer taxes, and other fees.</p> <h3>7. B</h3> <p>You don&rsquo;t necessarily have to give up your dream of owning a home if you&rsquo;re short on the closing costs. While it&rsquo;s ideal to have that cash on hand to avoid a high monthly payment because you had to finance the closing costs, you can also ask the seller to cover closing costs, especially if the place is a fixer-upper.</p> <h3>8. D</h3> <p>Remember when the government bailed out the banks a few years ago? That was largely due to large loans given to homeowners who couldn't afford them, resulting in the inability of the homeowners to pay them. To avoid the trap if the bank approves you for a loan more than you think you can afford, re-crunch your numbers to see what makes sense. Just because more money is available doesn&rsquo;t mean you have to take it &mdash; because eventually you will have to pay it back.</p> <h3>9. B</h3> <p>It takes about five years to build up equity in a home, the amount of which increases as you make payments toward the mortgage loan. If you don&rsquo;t plan to stay in your new home for at least half a decade, <a href="http://www.wisebread.com/when-you-should-and-shouldnt-rent">it may not be a good decision to buy</a>.</p> <p>Buying a home is a big decision and one that will change your life &mdash; most of the time for the better &mdash; but it&rsquo;s important to ensure that you&rsquo;re financially secure before embarking on this milestone. While home ownership comes with plenty of perks, it also comes with lots of problems &mdash; problems that you have to fix, and fixing them will usually cost money. Use this quiz as a guideline to help you make the initial decision on whether or not to start the home-buying process, but ultimately it&rsquo;s your own common sense that will dictate if you&rsquo;re ready to take the plunge yet.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy">How to Evaluate a Neighborhood Before You Buy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick">Buy a Home You Can Afford With the Mortgage Suitcase Trick</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buying-your-first-home-what-to-do-and-when-to-do-it">Buying Your First Home: What to Do and When to Do It</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-shouldn-t-buy-a-home-if">You Shouldn’t Buy a Home If…</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">What It Really Costs to Own a Home</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Real Estate and Housing buying a house down payment first home first time home buyer Tue, 20 Nov 2012 10:24:32 +0000 Mikey Rox 955350 at http://www.wisebread.com The Housing Market Is Finally Rebounding http://www.wisebread.com/the-housing-market-is-finally-rebounding <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-housing-market-is-finally-rebounding" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/4629169207_05751fefb6_z.jpg" alt="sale sign" title="sale sign" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>The housing market is rebounding. Really.</p> <p>After many premature predictions and optimistic announcements, the housing market has indeed turned a corner. Home prices and sales are up. Foreclosures and mortgage delinquencies are down.</p> <p>Average home prices in the top 20 metro areas were up 1.6% in July from a year ago, according to the S&amp;P/Case Shiller Home Price Indices. All 20 cities in the index reported rising home prices for the third month in a row.</p> <p>&quot;All in all, we are more optimistic about housing. Upbeat trends continue,&quot; said David M. Blitzer at S&amp;P Dow Jones Indices.</p> <p>The median existing-home price, including all housing types, was $183,900 in September, up 11.3% from a year ago, according to the National Association of Realtors. The year-over-year monthly home prices have increased for seven months in a row. The last time that happened was from November 2005 to May 2006.</p> <p>&quot;Despite occasional month-to-month setbacks, we're experiencing a genuine recovery,&quot; said Lawrence Yun, NAR chief economist. &quot;More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest.&quot; (See also: <a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">What It Really&nbsp;Costs to&nbsp;Own a Home</a>)</p> <h2>The Buyer's Market Is Over</h2> <p>What's more, the buyer's market may be coming to an end as sentiment begins to favor sellers. A survey by RedFin, a technology-based real estate brokerage firm, showed that homebuyers believe the market may be shifting against them. Out of 982 homebuyers polled this summer, 46% said they believe that now is a good time to buy. That was down from 56% in the first quarter and 48% in the second quarter. Thirty-two percent think now is a good time to sell, up from 13% in the first quarter and 28% in the second quarter.</p> <p>Importantly, many homebuyers, 61%, believe home prices will increase, up from 32% in the first quarter. More buyers are coming across competition or even bidding wars for a limited number of homes being sold &mdash; 71% of respondents reported encountering competition on at least one offer.</p> <p>Homes are also selling faster. The median time on the market in September dropped 30.7% from 101 days in September 2011, another indication that housing has strengthened.</p> <h2>Too Many Buyers for Homes</h2> <p>The problem for home buyers is the shortage of homes being sold. In parts of the West, the shortage is especially acute, Yun said. The number of existing homes listed for sale fell 3.3% to 2.32 million at the end of September. That's down 20% from a year ago.</p> <p>Fewer homes being sold means rising prices, a trend that will accelerate unless home builders ramp up construction fast, Yun said.</p> <p>Why the shortage? Homeowners who bought their homes before the housing bubble bust are unwilling to sell now and take a loss. Homebuilders all but stopped home construction during the recession, and a wave of foreclosures hitting the market has failed to materialize.</p> <h2>Home Buying Is for the Fast and Ready</h2> <p>Real estate agents advise home buyers &mdash; don't fret about home price trends. If you love a house and are comfortable with the mortgage payments, make an offer.</p> <p>If you want to buy a home, don't keep waiting in an attempt to &quot;<a href="http://www.wisebread.com/once-again-safe-as-houses">wait for the bottom</a>.&quot; By the time you've concluded home prices have hit bottom, they'll probably already be rising. And even if prices do fall in your area, interest rates may rise. That will make mortgages more expensive, defeating the purpose of seeking affordable housing.</p> <p>Don't be too picky. You might not find your dream house, especially with fewer homes on the market than potential home buyers. Don't worry about appliances, colors of the walls, or weeds in the yard. You can always replace a refrigerator and paint walls latter.</p> <p>Be ready and fast. Obtain <a href="http://www.wisebread.com/buying-first-home/home-loans">mortgage preapproval</a>. Submit your financial documentation to a lender to get preapproval for a maximum home loan amount. Get to know the neighborhood where you're house hunting. Learn about multiple-offer situations and plan out what you'll do.&nbsp;</p> <h2>Should You Buy a House Now?</h2> <p>So should you should you rush to by a home before home prices increase even more? It depends.</p> <p>Because real estate is local, prices in your area might not follow national trends or the trend in a nearby metro area. Examine local home values when you're home shopping, not national or regional price indexes.</p> <p>Regardless of the home price outlook, before you jump into home buying, your personal and career situation should be settled enough for you to stay put for at least a few years. Buying a home is not like speculating in gold or stocks. You can sell a commodity like a stock fairly easily, but when you buy real estate, you pay an assortment of mortgage closing costs and fees. When you sell, you pay the real estate agent a commission. For that reason, you should plan to keep the property for at least several years to make the investment worthwhile.</p> <p>Your financial house, so to speak, should be in order, your credit good enough to obtain a favorable home loan rate, and a savings large enough for a down payment &mdash; ideally at least 10% but ideally 20% to avoid private mortgage insurance, which insures the lender and brings no benefit to you.</p> <p>You should be ready to pay for maintenance and repairs or to <a href="http://www.wisebread.com/5-household-fixes-you-should-stop-paying-others-for">fix things yourself</a>. Unlike a renter who calls the landlord when a faucet leaks, you'll be responsible for mowing the lawn and fixing anything that breaks.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> of <a href="http://www.wisebread.com/the-housing-market-is-finally-rebounding">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-buying-a-foreclosed-home-ever-a-good-idea">Is Buying a Foreclosed Home Ever a Good Idea?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/renting-is-cheaper">Renting is cheaper</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-are-the-7-features-home-buyers-want-most">These Are the 7 Features Home Buyers Want Most</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-into-a-good-school-district-for-less">How to Get Into a Good School District for Less</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-process-for-purchasing-a-house-with-cash">The Process for Purchasing a House With Cash</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Real Estate and Housing buying a house foreclosures housing market Fri, 16 Nov 2012 10:36:50 +0000 Michael Kling 955599 at http://www.wisebread.com