Uncategorized

Financially, theres more to buying a home than the purchase price”sometimes much more.

After the down payment, and once your closing costs and monthly mortgage payments are added up, it can be easy to forget some of the costly and hidden costs of owning a home. Take these added charges into consideration:

Property Taxes
Property taxes are set and collected by the state, county and local agencies. Sometimes multiple agencies collect funds through a property tax for services such as water, sewer, schools and fire and police departments.

The taxes can go up annually in some areas, depending on a citys services, so the following year’s cost may be difficult to predict. You’ll still want to find out what the current property taxes are on a home before buying. A real estate agent should be able to help you calculate estimated taxes for the following year.

Home Insurance
Since home insurance is required by mortgage lenders, this is one cost that youll be reminded of quickly. It can protect your home from natural disasters, accidents and thefts. Extra insurance for natural disasters, such as floods and earthquakes, can cost more but may be worthwhile.

Maintenance and Remodeling
A leaky roof, cracked foundation or other home problem can be found during the inspection or long after youve moved in. Home repairs can be expensive and something you dont want to put off. Experts recommend putting aside 1 percent of your homes value for maintenance each year.

Along with repairs, take into account any remodeling you want to take on. Kitchens, bathrooms and bedrooms are the most common areas for remodeling, which can cost thousands of dollars. Put some money aside each month in a savings account dedicated to maintenance and remodeling to make your life easier.

The same goes for home insurance, property taxes and other costs you may not think of when buying a home. Contribute regularly to a bank account to pay for the costs of owning a home, and youll be ahead of the game when the bills come due.

Published with permission from RISMedia.

Many renters, especially young couples planning to settle down and start a family, debate whether to keep renting an apartment or buy a home. Depending on your financial situation and long-term goals, though, one option may be better than the other. To determine if its the right time for you to start searching for a house, consider the following:

Money
Some renters think theyre throwing away money on rent. Its true that you might be able to find a monthly mortgage payment that is similar to, or even lower than, your current rent; however, be careful not to overlook the additional costs of homeownership.

As a homebuyer, youll need to save up thousands of dollars for a down payment and closing costs. After the purchase, youll also need to budget for the mortgage, insurance, property taxes and maintenance, among other expenses. As a renter, you might need to pay for renters insurance, but all taxes, maintenance and repair costs are on the landlord.

That said, if you can afford the extra costs of homeownership, there are financial benefits to buying a house. Chief among them, of course, is a homes ability to appreciate over time. Homeowners can also take advantage of tax deductions that might help with overall costs.

Time
One major impact on whether it makes sense to rent or buy is how long you plan on staying in the property. Rentals make the most sense for short-term stays. Unless you intend to live in a home you buy for at least a few years, the house likely wouldnt appreciate, and youd be selling it either at a loss or with little return on investment.

Conversely, a long-term stay in a home could allow you to not only cover the initial costs of purchasing, but also build up valuable equity. That profit isnt guaranteed, though. Various factors, including market fluctuations, can affect a homes worth.

Location
Lets say youre in love with a certain town or city, or you want to live close to family. If the homes in that area are too expensive for your budget, renting might be best. If youre still determined to own, consider looking for a house in a nearby area with lower sale prices. A real estate agent can help you weigh your options.

Freedom
Renting and owning both offer their own distinct freedoms.

As mentioned, renting is great for short-term stays, as it allows you to pack up and move almost whenever you want with little to no financial repercussions. (You could be penalized for breaking your lease early.) You also dont have to worry about handling maintenance as a renter, but the landlord controls whats allowed on the property.

As a homeowner, you have much less flexibility to move around, but you can renovate or decorate your house however you like without having to ask a landlord for permission. Unlike with many rentals, you can also have pets. Some buyers find such newfound independence and authority, alone, worth the price of homeownership.

The Answer
When deciding between renting or buying, consider what you can afford and how youd like to live. If renting is the best option, you can stay in your current apartment or start looking for a new one. If homeownership sounds best, it might be time to ready your down payment and scope out the market.

Published with permission from RISMedia.

For generations, most home purchases were made by married couples. With many people postponing marriage to pursue an education and a career, more and more single adults are overcoming challenges to become homeowners.

Meet Income Requirements
If you want to buy a house by yourself, the lender will make its decision based solely on your income. If the earnings from your full-time job aren’t enough to buy the house you want, or if the monthly mortgage payments would be a stretch, consider looking for a part-time job. You could find a retail position, freelance work, odd jobs, or anything that would allow you to earn money by using skills you’ve learned in school, at a previous job, or by pursuing a hobby. A relatively small amount of money, earned on a consistent basis over a period of time, could make a big difference when it comes to qualifying for and paying a mortgage.

Check Your Credit
You should check your credit reports several months before applying for a mortgage. Your reports might contain errors that could derail your chance of qualifying for a loan. If you find any inaccurate information, contact the credit bureau right away to have it corrected.

Your credit report will also show your current credit scores. If they’re lower than lenders requirements, you can raise them by paying down debt and consistently making payments on time. Dont apply for any new credit cards or loans in the months before you apply for a mortgage because that could make you appear like a risky applicant. At the same time, dont cancel any credit cards you dont use, because that could increase the percentage of available credit you’re using and lower your credit score.

Make a Down Payment
For a single homebuyer, coming up with a 20-percent down payment can be difficult”or impossible. If a large down payment isn’t realistic in your case, explore other mortgage options that have lower down payment requirements, such as a loan from the Federal Housing Administration (FHA).

Consider a Co-Signer
If you cant qualify for a mortgage, or you need to act quickly to get the house you want, you might be able to get someone to co-sign the loan. Before you ask a family member or friend, think it over carefully. Doing so could help you get the mortgage, but what if you couldnt afford the monthly payments? The person who co-signed the loan would be financially responsible. Think about whether that person would be able to cover your mortgage in addition to his or her own bills, or whether your co-signers entire family might suffer financially by bailing you out. Consider how that could affect your relationship, and whether it’s worth the risk.

Make Your Dream a Reality
Buying a house by yourself is an achievable goal, as long as you meet the lenders guidelines. Take a realistic look at your current financial picture and do everything you can to make yourself a qualified applicant.

Published with permission from RISMedia.

After a buyer has agreed to purchase a home from a seller, the escrow process begins. This is designed to make sure that all the necessary conditions and obligations are met so the transaction can proceed smoothly.

Purpose of Escrow
Escrow is designed to protect all the parties involved in a real estate transaction from risk and to ensure that everyone is acting in good faith. The seller will need to prove that he or she owns the house and that its not subject to any liens from third parties that could prevent or complicate the sale. The buyer will need to prove that he or she has the funds necessary to buy the house or the financial means to obtain a mortgage.

What Happens During the Escrow Process
Escrow is generally a mandatory part of a real estate transaction that starts after the seller accepts the buyers offer to purchase the house. The law related to the escrow process varies by state, but in general an escrow agent, who is a neutral third party with no vested interest in the transaction, is assigned to handle the process and to protect each involved party from risk. The escrow agent is paid a fee that represents a small percentage of the sale price. This fee can be paid by the buyer, the seller or both.

Earnest money is a small percentage of the sale price that the buyer provides to demonstrate that he or she is serious about buying the house. In exchange, the seller takes the house off the market. After the sale is completed, the earnest money is applied to the buyers down payment. Until the sale is finalized, the earnest money and the house are both considered to be in escrow.

The escrow agent collects the sales contract, earnest money and contingencies related to insurance, inspections, repairs and any other requirements that must be met to finalize the sale. These items are placed in an account and stay there until the buyer and seller have fulfilled all their duties required by the terms of the contract.

Once all parties have met their obligations and all the necessary documents have been signed, the mortgage lender pays the money due to the seller. Then the deed is recorded in the name of the new owner, escrow closes and the buyer can move into the house.

Understand How Escrow Works
The escrow process is designed to protect both the buyer and the seller in a real estate transaction. It allows each party to be confident that the other is acting in good faith and meeting the requirements set forth in the contract. Escrow also allows each party that is due payment to receive the appropriate amount in a timely manner. If you have any questions about the escrow process as it relates to your specific situation, talk to your real estate agent.

Published with permission from RISMedia.

Cracks in ceilings can be a sign of a larger problem, or they may be nothing but a cosmetic issue. But when selling a home, all flaws in the ceiling require attention.

Most ceilings will develop a few cracks over the years that are harmless and not indicative of some bigger issue. Repairing these is a fairly simple process.

Start by removing loose paint and drywall with a utility knife. Next, cover the crack with mesh tape, centering the crack within the tape. Spread drywall joint compound over the tape, using the putty knife to make the compound flat. Dont be afraid to use too much compound, because the next step is to sand down any ridges after the compound has dried. Be sure not to sand the tape away.

The final steps are to prime and paint. Painting the entire ceiling is best so that it looks uniform.

Larger cracks are more serious and require professional attention. So-called spider web cracks can stretch from a ceiling to walls and floors. These large cracks can be a sign of structural damage and should be repaired quickly. When a crack runs across the ceiling and continues down a wall, it is commonly a sign of structural damage caused by a weak wall stud.

Cracks combined with a so-called bow, or dip in the ceiling can be a serious challenge. If the support provided by joists weakens, a ceiling will sag”a professional should be contacted right away if this is happening.

Another thing to look at is the coloring of a crack. If yellow or brown stains are around the crack, its a sign of a water leak. Be sure you find the cause of the leak and have it repaired before you fix the crack in the ceiling.

Even if your ceiling is free of cracks, its well worth your time to take a close look when selling the home. Simply dusting or vacuuming your ceiling, particularly in the corners, can make a difference to buyers. Also, be sure to clean away any scuffs. If your ceiling needs a new paint job, consider painting it white, which can make the ceiling appear higher. And while youre up on that ladder, dust ceiling fans and vacuum vents that are high on walls.

Published with permission from RISMedia.