Archive for December 2011
Buying a home is a difficult balance in so many ways. On the one hand, you don’t want to miss out on a great home deal, and may feel pressured to make a quick decision or snap offer to get the home you think you want. On the other hand, though, you may not want to bid on the first home you see for fear you’re missing out on a great home down the road. The pressure can be exacerbated by overzealous realtors or brokers. Take a stand for your rights, and don’t be forced into making a home-buying decision before you’re ready.
You May Need Time to Find the Right Home
Many first time home buyers look for at least a month before they seriously consider making an offer; mostly to familiarize themselves with the market and get a sense for what’s available, what they really want and need and what they like and don’t like in a home. If you’re working with a real estate agent who is trying to rush you through the purchase process, put your foot down. You shouldn’t buy until you’re ready to buy. Buying a home is a long-term decision, and you don’t want to be forced into making a bad decision you’ll have to live with for the next 5, 10 or 15 years.
On the other hand, don’t err too far on the side of caution and avoid getting the right home. Some buyers see the perfect home right away, and are afraid to buy because they haven’t looked at many properties.
The bottom line is that you should buy the right home for you, when you’re ready to buy. Don’t get forced into making a decision under pressure by your real estate agent, an overzealous seller or even your mortgage lender. It’s your home and your decision!
Posted December 31, 2011on:
When you’re buying a home, you want to work collaboratively with everyone who is involved in the process. You expect to trust your real estate agent, your mortgage lender, your lawyer – everyone involved in your “team.” However, contrary to the attitude you may start with, it’s a good idea to play your financial cards close to your chest. In most cases, you can trust everyone on your team, but you may find in some circumstances that your trust is misplaced. If you start by keeping your financial information to yourself, you won’t have to worry about how to handle a breach of trust – and it won’t cost you any money.
What to Say When You’re Buying a Home
When you’re buying a home, it’s important to let your real estate agent and your mortgage agent know that you have the financial ability to buy your home. You’ll have to reveal some information about your income, savings or other relevant finances to prove that you’re a real purchase candidate. However, you don’t want to reveal too much information to your agent or broker. In some cases, unscrupulous professionals may talk you into buying a bigger house or a bigger loan if they think you can afford it. A bigger purchase price or loan may increase their commission.
In other cases, an agent may not work as hard for you if he or she believes you have money to spare; he might not be aggressive enough in negotiation, or might innocently let slip to the other agent or seller how much you can afford to pay.
Whether the slip is innocent or intentional is irrelevant. If you play your financial cards close to your chest, your agent can’t slip, your mortgage lender or finance professional won’t suggest a bigger loan and you may end up saving money when you buy your home. Even the most well-meaning professional can make a mistake, while unscrupulous individuals may be tempted to take advantage of you outright. Remove the temptation by keeping your financial information to yourself.
We all hope and wish that our home-buying process would go smoothly. We want to find the perfect house, make an offer, negotiate the cost, get a great deal, close on the loan and move into our new homes with no problems. That sort of dream home purchase isn’t a realistic expectation, though. In a real home-buying situation, obstacles can and do arise during the purchase process. Your job as an aspiring homeowner is to remove obstacles that come up during the home buying process.
Ask Advice, but You’re the Responsible Party
One trap that many homeowners fall into is the idea that buying a home is something other people can help you do, or even do for you. As buyers, we expect real estate agents to help us find the perfect home, agents or lawyers to negotiate the purchase and sale agreement and smooth out the process, mortgage lenders to get the financing in order; essentially we rely on everyone else to do their part. But when an obstacle comes up, you can’t rely on others to fix the problem or smooth out the situation.
Your real estate agent may give you good advice on how to deal with a negotiation problem or something that comes up during the inspection, but it’s ultimately up to you to decide how you’re going to handle it and get over the hurdle it poses to your home purchase. You’re the one who is invested in the purchase process, and the buck stops with you; you can’t rely on other people to clear obstacles for you.
Be prepared to overcome obstacles when you buy a home. You’ll encounter trouble shopping, negotiating a deal, during the inspection, while arranging financing or during the closing – or even all of the above! Problems can and do happen during the purchase process. Have the flexibility to go with the flow when these problems come up, and the willingness to work through the problem and move forward with your home purchase.
There’s a reason we hire professionals to help us through the home-buying process: the professionals have useful information that can help us get the best deal or make the right financial call when buying a home. However, if you’re not careful, the professionals could end up making all of the decisions and talking you into a home you don’t want, or preventing you from finding your dream home. When you’re buying a home, it’s in your best interest to take an active role in the home-buying process, or even take control of it. When you’re a back-seat passenger, you might miss out on a great home or you might not get the best deal you could get.
Educated Homeowners Get the Best Deals
Tons of resources exist today to help new and aspiring homeowners learn about the home-buying process. You can find thousands of articles online; you can find mortgage calculators to help you decide how much home you can afford; you can view listings in your area at a realtor’s website. In short, there are many resources available to you on the Internet to help you educate yourself about the home-buying process.
Take advantage of these resources. If you’re not educated about the process, you won’t know the right questions to ask, and you’ll be blundering through the process at the mercy of your real estate agent or lender. Well-educated homeowners get the best deals, because they know what questions to ask and can make sure they’ve exhausted all their options and done the necessary research. If you’re an educated homeowner, you can feel confident that you’re getting the right home for you, and getting the best possible deal on your home.
Don’t let your hired professionals dictate the home purchase process for you. Educate yourself so you can take an active role when you’re ready to buy a home, and drive the process when you can; it’ll help you get your dream home at a great price.
Posted December 31, 2011on:
Legally, every resident of the United States has a right to buy a home. There are no laws permitting discrimination when minority homeowners want to purchase a home. However, many minorities do face discrimination during the home-buying process. African Americans face the highest rate of discrimination, although minorities of all ethnicities deal with this problem when buying a home. Know your rights when you decide to start shopping for a home. If a lender, landlord, real estate agent or other person violates your rights, you may want to pursue legal action.
Discriminating Against Minorities is Illegal
Discriminating against minorities during the home-buying process is illegal. However, African Americans face a rate of loan rejection almost twice as high as Caucasians when applying for a home loan. This comes down to a lot of potential reasons. In some cases, lenders may black-list a neighborhood, refusing to grant any more loans in the area because the rate of default is too high. In other cases, the loan may be denied because of income or work history. As much as this puts minority homeowners at a disadvantage, they’re legitimate reasons to deny a home loan. However, if you find that a loan is denied purely based on the race of the applicant, you may have an illegal discrimination case on your hands.
What to Do in Discrimination Cases
The Department of Housing and Urban Development, or HUD, protects minority homeowners during the purchase process. If you believe that you’re facing a case of discrimination, contact your local HUD office to talk with someone and explain your circumstances. You may be eligible to file legal proceedings if the HUD finds that you’ve faced illegal discrimination. A list of state-by-state information is available at the main HUD website: http://www.hud.gov.
Women who are shopping for their own home by themselves, or even as a part of a couple, may find themselves facing discrimination during the home-buying process. While it’s true that women are legally equal and just as capable of buying a home as a man or couple, many people still retain old-fashioned beliefs about women’s role in the family or the home-buying process. Women may also find that their income counts for less, because women still earn less than men in most professions. However, women should know that true discrimination isn’t legal, and should be prepared to face down anyone who challenges their role in the home-buying process.
Real Discrimination vs. Negative Attitudes
One challenge that women may face during the home-buying process is determining real discrimination from negative attitudes. Real discrimination is illegal, while dismissive or negative attitudes are unfortunate but there’s nothing to prevent them.
In a case where a lender dismisses a woman’s income, for example, or refuses to qualify a woman for a home loan based on income – women have to find out why. In some cases, a woman’s income may simply not meet legitimate income guidelines for issuing a home loan. In other cases, the income may be perfectly sufficient, but a woman may encounter someone who feels that a woman alone can’t handle the financial burden. In the latter case, women may be facing discrimination and may be entitled to take legal steps.
Challenges of Discrimination in Home-Buying
In some cases, discrimination against women is outright illegal. But many times women find themselves facing some level of discrimination during the home-buying process and have no recourse. One woman, for example, took over the buying process when her husband left town on a business trip. But the agent refused to work with her because he didn’t feel she had the authority on her own to make decisions about the purchase.
In other cases, sellers may not want to sell to single women, real estate agents may be dismissive of women buying a home – there’s a lot of subtle discrimination that women face. It’s important to understand what’s legal and what’s not, and be prepared to fight against these perceptions during the purchase process.
Today’s family and average household bears very little resemblance to life 50 years ago. Today’s world includes more and more single mothers, single fathers, divorced people, gay and lesbian couples and single men and women. However, the picture of home ownership hasn’t changed much over the years, even though the family has changed. Many women feel that they can’t buy real estate without a man, or without being in a relationship, and this is a myth perpetuated by some agents and mortgage lenders. But women need to wake up and realize that this is a false belief. Women can and should buy real estate, regardless of relationship status or other considerations.
Real Estate is an Investment
Everyone knows that real estate is an investment. People who buy real estate earlier in life typically end up wealthier than people who buy later in life. Real estate provides financial security, investment opportunities, wealth-building opportunities in the form of equity and can be a hedge against inflation. Appreciation can help your home investment increase drastically. And if you move into another house later, you could always keep an existing property for rental income. Women have just as much right to benefit from this investment as men and couples, and more women should take advantage of these opportunities.
Dealing with Life Changes
Many women neglect to buy real estate because they’re waiting for a relationship with the right man, where they expect to buy a home with the spouse and maybe prepare to raise a family. Don’t let this stop you, ladies! You can always sell your home if you find yourself in a relationship down the road and want to buy a bigger home with your spouse. Or you may decide to keep the property for rental income. Don’t wait to buy your home; life changes can and do happen to people in any walk of life. Prepare for your future now, and you can be ready to deal with life changes as they happen – with a tidy little nest egg that comes from investing in your first home!
When you buy a new home, you’re not just buying the house itself; you’re buying into the community. This goes beyond the tangible “Do I like this neighborhood or not?” question. When you buy a home, you must be prepared to invest in the community to ensure it continues to go in the direction you want. You can’t just sit back and wait to see what happens; as a homeowner, you must take a more active role. What do you need to know about buying into your community?
Choose a Community that Meets Your Needs
First is the easy question: what do you want in a community? Do you want convenience stores that are open 24 hours and a lot of shopping and nightlife, or do you want a residential community where it’s safe for your kids to roam the streets? If you have children or plan on having children, how are the schools? You should also consider how long you intend to live in the home, and select a community that meets not only your needs today, but your needs in 5 or 10 years if you still intend to be living there. Getting stuck in a community that doesn’t meet your needs can be a long-term nightmare.
Be Prepared to Invest in Your Community
Once you’ve found a community you’re happy with, be prepared to invest in your community. You owe it to yourself to be aware of things happening with your community, and to be prepared to take action. If you find that someone wants to build a landfill next to your home, you’d better be arguing against it from the beginning to protect your property value. Be prepared to advocate for the things that will add value to your community and your property, and fight against things that can decrease your property value and change your community in negative ways.
Home ownership offers some great rewards, but it also comes with some costs. If you’re not prepared for these costs, they can blindside you throughout the ownership of your home. When you’re thinking about buying a home for the first time, make sure you’re prepared for the additional costs of home ownership. Don’t deplete your savings in coming up with a down payment, closing cash or other purchase-related funds, as you may find you need more of your own money sooner than you think.
You are Your Own Landlord
One of the biggest adjustments for renters to make to becoming a home owner is becoming the “landlord” of the property, so to speak. When you own your own home, there isn’t anyone else to call to come make repairs and replace broken appliances. You’ll be paying out-of-pocket for most of your own repairs, although homeowners insurance may cover some unexpected repairs that fall within your policy guidelines.
You’ll be the person responsible for calling the plumber when your pipes back up, repairing the roof when it starts to leak and dealing with rodents and other pests. Prepare for this mental shift before you buy a home.
Fees and Costs Associated with Home Ownership
In addition to the straight repair and maintenance costs, you’ll also be responsible for any fees and costs associated with your home ownership above and beyond your mortgage payment. You’ll be the one paying real estate taxes, monthly condo assessments or homeowner’s association fees. Most of the additional fees of home ownership are non-negotiable, and you may find someone taking legal action against you if you fail to pay.
Don’t forget about the cost of dealing with these additional fees, and make sure you consider ongoing fees in your budget. If you buy into an area where property values are increasingly rapidly, be prepared for rising property taxes and other increasing costs of ownership that go along with increasing property value.
Becoming a homeowner is a huge turning point in many people’s lives. It marks the point when you turn from temporary, short-term goals to making long-term decisions about your life. Buying a home is a long-term investment, and it signals a certain degree of commitment. Many people buy a first home with the understanding that they’ll only be there for a year, or five years. A lot of people who buy have a plan to upgrade or move out into the country when they have kids or their family situation changes.
These are all wonderful goals, but make sure you understand that when you buy a home, you become subject to the whims of the marketplace. Your plan may not work out exactly as you hoped, so be prepared to have a Plan B.
Resale Values and the Market Change
The past few years have been an object lesson in changes in the real estate market. Many people who bought a home at a high point in the market have found themselves underwater in their home purchase, with property values that are worth less than their mortgage cost. These people can’t sell their homes even if they want to, because the value of the home isn’t enough to pay off the mortgage. Other people have mortgages that are in good shape, but there simply isn’t enough activity in the housing market to help them sell at a reasonable price.
Keep this housing slump in mind when you’re making your long-term plans of buying a home. If you intend to sell or relocate in a few years, you might need to get creative or have a good Plan B in mind. Can you add on to your existing home, instead of selling and buying a bigger home? Can you rent the home out instead of waiting until you can sell it? Or are you willing to offer owner financing to sell your home to someone with less-than-optimal credit? Willingness to be flexible makes life much easier when it’s time to sell, and can help you rest easier when you become a homeowner.