Common Expenses New Homeowners Need To Plan For After Buying A Home
Many first time homebuyers in the excitement of getting their first home may not be aware of some common expenses they can expect with the purchase of a home and could neglect to budget for that. Some of those expenses like closing costs are an absolute requirement that must be paid otherwise the homebuyer will not be able to close on their home and move into it. Other expenses may vary but do need to be considered by the homebuyer so that they have the money ready to do certain things when the time comes.
One major expense of purchasing a home, and that is usually due right up front upon the final transfer of a home, are closing costs. Closing costs represent the fees associated with getting a mortgage and registering the new house in the buyer’s name. If the buyer is using a low down payment or zero down payment mortgage they may be in for a surprise if they don’t have enough money to pay for closing costs. Even with a zero down payment mortgage (VA, USDA) the homebuyer may be required to bring a check to the closing table in order to pay for the closing costs. If the buyer cannot pay for the closing costs they cannot complete the sale for the home.
The money used to pay for closing costs also generally must come from income sources of the homebuyer and cannot come from credit cards or other forms of loans. Gifts of money from parents or other relatives can be used to pay closing costs but the lender...
What Does It Mean That A Home Is Available For Short Sale And Should You Buy Such A Home?
Ever run across a home listed for sale and the words in the marketing remarks mention short sale? Often times there is no room to explain what a short sale is or what it involves so homebuyers may be left confused by the term and unsure if they should consider buying a short sale home or not. This article explores what a short sale home exactly is and discusses whether homebuyers should consider purchasing a home that is being sold as a short sale.
What Does Short Sale Mean With Regards To Selling A Home?
A short sale is the process whereby the mortgage lender agrees to allow the homeowner to sell their home for less than the amount that is owed on the mortgage. A mortgage lender does not have to agree to any sale of home unless they are getting paid in full everything owed to them. Mortgage lenders generally have a first position lien (generally the highest priority in rank unless taxes are involved) meaning they must be paid off first with the proceeds from any sale.
A homes value may be less than the amount of the mortgage due to factors such as a decline in the overall value in a neighborhood, the homeowner owing more than the home is worth (this is not as common as it was in the past when lenders allowed 125% mortgages but can happen with multiple loans like a regular mortgage and home equity loan), a condition issue with the home or the land, lack of upkeep or something else. Where the homeowner plans up making up the difference between a ...
Why Do Homes Return Back To The Market After Having Accepted An Offer
Once a homeowner has accepted an offer on their home there is still a process to undergo before the actual transfer of ownership takes place. There are a number of contingencies that must be met prior to closing where the actual ownership of the home is transferred to the buyers. Once an offer is accepted the status of the home in the Multiple Listing Service is usually changed to “Pending” to reflect that an offer has been accepted and closing is waiting on certain things to happen before it finally can close. This article explores some of the common reasons a home may fall out of pending status and come back to the market for sale.
One of the more common reason a home falls out of contract is due to inspection issues. A majority of homebuyers opt to have a home inspection performed after an offer is accepted. A home inspector will inspect a home to check for any major issues and provides a report to the buyers detailing the overall condition of the home. Some of the common major home inspection issues uncovered can cause a buyer to walk away from their purchase if they feel the cost of dealing with the issues are too high and/or they could not come to agreement with the seller to either have the seller make repairs or reduce the price.
In some situations like foundation or structural issues, roof in need of replacement, mold issues...
5 Important Home Buying Pitfalls To Be Aware Of
When buying a home there are a number of problem areas homebuyers can spot off right at the get go and know that the home may end up to be more trouble (or cost) than it is worth. By understanding these problem areas and either avoiding the home or making an offer according to the current condition homebuyers can save themselves some extra expense from having to fix certain issues. This article explores five common pitfall areas homebuyers may encounter and what the downsides of those problems can be.
Every home is built on some sort of foundation. Whether there is a basement underneath the home or a slab, the foundation is what holds a home up and holds it in place. The foundation in combination with the land around it dictates how the foundation will standup throughout time. Homes built into hillsides or areas with a lot of surface or sub-surface water flow are more prone to foundation issues.
Common foundation issues include settling, cracking, shifting and more. Most home foundations do settle minor amounts over time mainly due to the total weight of the home. As long as the settling is minor and even there should not be much cause for concern. Where the home settling is more than normal during a short period of time or happens unevenly then without costly repairs the structure of the house will begin to suffer. Shifting foundations where the basement walls are collapsing inward or outward can also subject a home to major damage. Until secured in place with additional supports...
Tips For Saving Up For A Down Payment On A Home
Many may dream of owning a home but feel like they could never come up with enough money to make the down payment and pay for closing costs. Saving up for a down payment on a home can seem like a huge task especially with the day to day bills and living expenses getting in the way. As the saying goes where there is a will there is a way and if you want to buy a home there are plenty of low down payment options available. With the right plan you can save enough money for a down payment and start to enjoy the benefits of homeownership.
How Much Down Payment Is Needed To Buy A Home
In some cases homes can be purchased with no money down. If you are a veteran or qualify for a Veteran’s Administration (VA) loan due to being in the armed services you can purchase a home without any down payment at all. Even if you are not a veteran you can purchase homes in certain rural areas using the U.S. Department of Agriculture (USDA) mortgage loan that also provides for no money down loans. While the USDA mortgage does have certain income limits the VA loan does not. For the USDA mortgage the income limits are different based on the size of the household.
Other federally backed mortgages like the FHA loans allow for homes to be purchased with as little as 3.5% down. So on a $100,000 home 3.5% down means only having to come up with $3500 for the down payment. Even with the $3500 down requirement...
Guide To The Home Inspection Process When Buying A Home
An important part of buying any home is the home inspection process. During the home inspection home buyers get an in depth look at the home and the condition of various parts of the home. Homebuyers will learn if certain aspects of the home are in need of repair and which parts of the home are working fine. Through the home inspection process homebuyers ultimately learn if the purchase they are about to make is a sound purchase or one that should be reconsidered. This article explores the home inspection and how it can impact the purchase of a home.
How To Choose A Home Inspector?
Just as important as the home inspection is, it is also important to pick a qualified home inspection professional. In many states home inspectors are required to be licensed and in order to get licensed have to at least pass a test if not also have met some educational requirement and/or home inspection training requirement. Working with a licensed home inspector is a great way to make sure an inspector has met some minimum requirements.
In the situation where a state currently has no licensing requirements to be a home inspector (Ohio for example currently does not require licensing for home inspectors) then it is best to look at the training the home inspector has received and for any certifications they may also have. The International Association Of Certified Home Inspectors (InterNACHI for short) represents one of the largest home inspection certification organizations in the United States. InterNACHI is a voluntary organization that trains and certifies home...
What Is Earnest Money In A Real Estate Transaction?
Whether you are buying or selling a home chances are the question of earnest money will come up. Earnest money is not required as part of a real estate transaction. A contract to purchase a home requires and offer, acceptance (by both parties) and valuable consideration. The act of offering to buy a home with money (financed or cash) is the valuable consideration. Earnest money is part of the overall valuable consideration but on its own is not a requirement.
What Is Earnest Money?
The word earnest means “serious in intention, purpose, or effort;”. The earnest money part of an offer to purchase a home shows that the buyer is serious and willing to commit funds towards the home purchase. Generally there is no set amount that buyers should give as earnest money and customs may vary from state to state as to how much should be given. Some areas may suggest giving one percent of the total purchase price as earnest money whereas others may have a custom of giving a couple of thousand dollars or more based on the value of the home being purchased.
When an offer to purchase a home is written the homebuyer has the ability to specify the amount of earnest money to be provided as part of the offer. Generally the earnest money check will be collected and deposited right away upon acceptance of the offer. The earnest money can be deposited with either one of the real estate brokers who are party to the transaction and goes into their trust account. The earnest money can also be deposited with the closing/title...
What Is The Purpose Of The Final Walkthrough When Buying A Home?
After an offer on a home has been made, appraisal completed, inspection done and repairs negotiated, one of the last activities done prior to the actual closing on the home is the final walkthrough. While a final walkthrough is not required it is highly recommended and serves a great purpose both for the home buyer as well as the home seller. In the final walkthrough a homebuyer makes one last tour of the home in order to see the condition the home will be in once the buyer takes possession. If there are major issues found during the final walkthrough then the buyer can refuse to close which means the transfer of ownership will not take place. Usually the closing is put on hold until the issue is taken care or although in the rare occasion a closing can be completely called off if something substantial is discovered during the final walkthrough.
After closing and taking possession of the home the buyer is generally responsible for everything associated with the home. Of course if the seller failed to properly disclose an issue that should have been disclosed then the buyer may have recourse against the seller, but that is a topic for another article. In this article the importance of the final walkthrough is explored along with suggestions for both the homebuyer and home seller as to what they should be doing prior to and during the final walkthrough.
How Should A Homebuyer Conduct The Final Walkthrough?
The final walkthrough is not a time to have another home inspection and look through the home with a fine tooth comb. A home inspector could be brought along...
What To Consider When Buying An Older Home
Depending on location, sometimes the only options available for a home to purchase are homes older than fifty years old. Homes older than fifty years old have their own unique architecture, design, and build condition and for many homebuyers the unique charm is what draws them in. Prior to buying an older home, homebuyers would be wise to read up on all the different issues they may encounter in an older built home so that they can better be prepared to identify if updates have been made or old conditions still exist that may need ongoing monitoring or updating.
The Home's Electrical System
Modern homes have electrical boxes with breakers rather than fuses and use copper wiring to run electricity to the various parts of the home. When older homes were built in the past often times the electrical wiring consisted of knob and tube wiring or aluminum wiring with a fuse box. Additionally prior to 1959 the use of a ground wire was not required in homes. A ground wire allows electricity to travel into the earth (ground) in the event of a short circuit as opposed to shocking the person flipping a switch or plugging in an electrical device.
A fuse box acts much as the circuit breaker boxes do today in that if too much power goes through the line a fuse would burn out stopping the flow of electricity. With a fuse box the fix was to replace the burned out fuse with a new fuse. Current circuit breaker boxes only need to be reset once and as long as the high power surge has stopped the power will start flowing again as normal. If an older home does still have a fuse box then homebuyers should have it inspected by a licensed electrician...
Buying A Home With A 203(K) Rehab Loan
Sometimes homebuyers may come across the fixer upper home and after repairs would appear have a good investment on their hands. Whether the homebuyer is handy or not at self-repairs they could get enough money to buy the home and make the repairs all with one mortgage loan. The Federal Housing Administration (FHA) 203(k) mortgage loan allows homebuyers or homeowners to finance the cost of repairs into their total mortgage amount. There are two programs for homebuyers and homeowners, the limited 203(k) mortgage program which allows up to $35,000 worth of repairs and/or upgrades to be added to the total loan amount. Under the full 203(k) mortgage the cost of repairs/upgrades must at least total $5,000 and the upper limit is the total limit allowed for any FHA mortgage based on the area the home is located in.
As mentioned above the money does not need to be used for only repairs to a house. The money can also be used to make updates to a home such as upgrading an outdated kitchen, replacing an old roof, making energy efficiency upgrades (solar, geothermal) and more. The FHA 203(k) mortgage helps homeowners and homebuyers boost the value of homes and as a result local neighborhoods by allowing the upgrading or updating of homes needing it.
Who Can Use A 203(k) Mortgage To Purchase A Home?
The answer to the question of who can use the 203(k) mortgage to buy a home is only a homebuyer who will be occupying the home as their primary residence can use the loan. Investors who will not be occupying the property need not apply. On the other hand if a homebuyer plans on buying...
7 Smarts Things To Do Prior To Buying A Home
Owning a home is a long term commitment that takes proper planning and preparation in order to make sure homeownership is successful over the long term. The preparation period prior to purchasing a home is not short. Instead the preparation time can be many months or more in order to ensure that homebuyers are in the best situation possible to apply for a mortgage to buy a home. The tips in this article will help homebuyers navigate through the preparation phase so that they can get the best possible mortgage now and not worry about having to seek better terms or better interest rates later on down the line.
1. Pay Down Debt
Paying down debt is something everyone should be doing regardless of whether or not they want to buy a home. More importantly though future homebuyers can greatly benefit by paying down debt by being able to get better interest rates as well as better terms for mortgages. If a homebuyer has too high of a debt to income ratio then the amount the homebuyer will be pre-approved for will be lower than if they had fewer or no debts. At a certain point of debt to income ratio the homebuyer may not be able to qualify for a mortgage at all.
Best strategies to pay down debt is to either pick the account with the smallest balance and pay that down first and then move onto the next account or to pay down the debt with the highest interest rate. Some psychologists suggest there may be a psychological benefit to paying off the smallest account first since that is one less bill to look at and...
Buying A Home With A Septic System
Depending on the area where you are looking for a home you may find a home that has a septic system rather than a sewer line connection. Homes in some neighborhoods where the sewer lines have not been run instead have a septic tank which holds the waste water from the home. The holding tank has a number of different components but what it does is allow the waste from a home to decompose over time and work its way back into the ground in a harmless state. Some may say that a septic system is greener than a traditional sewer system since the homes waste goes into the immediate environment where it can be utilized immediately by the vegetation in your yard. With a sewer system the treatment of the waste happens at one central location which means many miles of piping to send the sewage to the right place. On the other hand improperly maintained septic systems can lead to backups and contaminated local land that can be costly to cleanup and damaging to the environment.
Inspecting A Septic System
Most home inspectors do not have the expertise to inspect septic systems. As a result depending on the age of the septic system and the condition of the land around the septic system it may be wise to have a separate inspection scheduled of the septic system. Septic systems that are not functioning properly can cause waste water to leak into the surround yard causing flooding issues as well as making the area not pleasant to be around due to bad odors. Poorly operating septic systems can also result in waste water backing up into the house causing further problems. Due to the expense associated with septic system repairs it is always advisable...
Where Can I Find Homes For Sale In My Market?
With all the homes available for sale in different markets homebuyers may not be sure where to find the most up to date information on homes available in their market. Unfortunately there is no one website where homebuyers can find a list of all homes currently available for sale. Homes listed for sale that have Realtors helping sell the home can be found on local real estate websites (through the local Multiple Listing Service or MLS) as well as on some of the national websites like Realtor.com, Zillow, Trulia and more. Additionally homes will also be found on national real estate brokerage websites like United Real Estate, Coldwell Banker, RE/MAX, and more. Often times the national brokerage websites will redirect homebuyers to local area websites to make sure homebuyers connect with local agents when shopping for their home.
Homes that are listed For Sale By Owner (FSBO) may be found (though not always) on sites like Realtor.com, Zillow, Craigslist, Ebay, Facebook market place groups, local classifieds, local bulletin boards, Realtor.com, local real estate websites and more. Some FSBO home sellers may be listed on the local MLS by paying for flat fee service some real estate brokerages provide whereby they will list the home on the MLS but provide no other services to the home seller. Services like photography, videos, online and offline marketing, lockboxes, screened showings and more are instead done by the FSBO...
Tips For Buying A Home Sight Unseen
Whether you are an investor looking to buy investment property in another state or a homebuyer who needs to buy a home in an area where you are moving to but won’t be able to see the home until you move in there are ways for it to be done. Especially in this digital age where homes can be viewed online and signatures can be done digitally from the comfort of one’s home or office a home can just as easily be purchased without visiting it in person. There are some initial steps homebuyers need to take prior to buying a home without seeing it in person and this article will explore those steps in detail.
Work With A Knowledgeable Realtor
If you are buying a luxury home sight unseen then make sure you work with a Realtor who is experienced with buying and selling luxury homes, if you are buying investment property make sure the Realtor you are working with is experienced with investment property. Whatever the property type the Realtor you are working with should have experience with buying and selling those properties. Ask questions of the Realtor about their experience with buying and selling the property type you are interested in to make sure you find the best local expert.
Especially for a Realtor who claims experience in investment property a great question to ask them is if they own any investment property and what types if they do. While a Realtor does not have to currently own investment property to understand how to help a client buy or sell the property the fact that they do will give...
How Do I Appeal A Real Estate Appraisal For A Home I Want To buy?
When buying a home with a mortgage or refinancing an existing mortgage on a home an appraisal is usually required in order to determine the value of the home. The home value is used as part of financing a home under a mortgage whereby the mortgage lender wants to ensure that the value of the home will cover the mortgage in the event of default. If the value of the home cannot cover the amount of the loan most mortgage lenders will deny the loan.
Different types of mortgage loans will have different value requirements for a home. For instance the traditional mortgage where 80% of the value of the home is lent to the homebuyer the home must appraise for the full purchase price where borrowers need to put down 20% of their own cash in addition to the 80% from the lender. For example a homebuyer is wanting to buy a home and makes an offer at $500,000.00 dollars where they will borrow $400,000.00 (80% of the value of the home) and put down $100,000.00 (20% of the value of the home) cash from their own savings. If the home appraises at $500,000.00 or more the loan will be made to the homebuyer. If the loan appraises at less than $500,000.00 then the lender will deny the loan absent changes to the offer price of the home.
Where the home value is appraised lower than the offer price there are a few options available to both the homebuyer and home seller. The homebuyer can ask the home seller to accept a lower amount so that mortgage lender meets the 80/20% requirement. If the home seller does not want to accept a ...
Alternative Ways To Buy A Home Without A Mortgage
For some seeking to buy a home the traditional way of purchasing through the use of a mortgage may not be available. Mortgages are not available to some homebuyers due to credit issues, income issues, work history issues or other reasons. The lack of a mortgage does not necessarily prevent a person from buying a home as there are other alternatives. Those alternatives can be somewhat more expensive and more risky to the person wanting to use them.
One of the easiest alternatives to use to buy a home is to pay all cash for the purchase. Now obviously not everyone has access to enough cash to pay for a home outright but for those few who do a cash purchase of a home represents a good way to buy the home and not have to jump through all the hoops of getting a mortgage. Setting aside a large amount of cash to buy a home means there is less cash available for other investments or debt payments. Sometimes there are other investments with better rates of return than homeownership which sometimes can also give negative returns(LINK to behance article) so tying up cash to buy a home may not always be the best move.
As noted above when a buyer currently does not have sufficient credit history to qualify for a loan a home seller may be willing to allow a buyer to purchase their home through the use of a land contract. Under a land contract the seller is agreeing to finance the buyer’s purchase of their home. Land contracts are kind of like lease agreements except with a land contract all of the monthly payments are being applied towards the purchase of the home minus any interest payments. Similar...
3 Smart Tips For Improving Your Credit Score Prior To Applying For A Home Mortgage
Not everyone buys a home very often and in fact many might only own one to three homes over their life time. As a result when buying a home, buyers should make sure they get the best pre-approval amount they can so that when they do buy they are getting the best home that meets their budget at the time. By striving for the best home you can afford now and will suit your needs for some time to come there will be less need to upgrade to another home because your current home was only a “starter home”.
There is a caveat with that in just because a mortgage lender approves a mortgage for the highest amount of money that can be had that does not necessarily mean homebuyers should buy at the top of that range. Homebuyers need to analyze their current and future financial situation to make sure they can afford the home they buy today. If in the future the homeowner plans on having a larger family, wishes to change careers, or something else that effects their lifestyle then that should be part of the consideration when buying a home today. Homebuyers should not end up in a house poor situation where they cannot afford to pay for the home as well as the upkeep resulting in a loss of home value over time. Always consider how much home you can afford today as well as in the future as part of your home shopping process.
Credit Score and Mortgage Amount
There are a number of factors that influence the amount of a mortgage pre-approval...
Buying A Home With Pets In Mind
Pets are an everyday part of life for their human companions. Pets like humans also have individual needs that every house may or may not meet. When buying a home with pets in mind knowing what one should be looking for and what considerations should be made for our furry friends is on the top of many home buyers list. This article takes a look at the different considerations pet owners should take into mind when buying a home.
Type Of Pet
The type of pet a homebuyer has will dictate some of the needs for a home. Bird and reptile owners who keep their pets indoors a majority of the time may not have as many requirements for a home as those would dog or cat owners who may let their pets outdoors unsupervised or who have free roam of the house. The health and age of a pet also play into home needs as an older pet who cannot walk around as much as they could may need fewer stairs and a flat yard in order to best accommodate their needs.
The size of your pet plays into this as well particularly in the case of dogs. Larger athletic dogs need more room to run around and burn off their energy and a larger yard might be important to owners of large dogs. For smaller dogs, cats and rabbits that may be allowed to roam free in the yard, having a yard that is open and in an area that does not attract predators like coyotes, bears, raptors and more is important to consider.
As noted above the way a yard is setup and situated should be considered when buying a home with pets in mind. A steep hilly yard may not be good for smaller dogs or dogs who have joint or back problems. Homes with yards that run right up to unfinished...
Why Home Buyers Need Their Own Representation
Buying a home is a complicated process that commits a homebuyer to living in the same place for a number of years and paying a mortgage over a long term while living in that house. If there are mistakes in purchasing a home then the buyer is not able to simply return the home and get all their money back as if it were a pair of pants that did not fit correctly and can be returned to the store no questions asked. In the event of some major concealment by a home seller a home buyer may be able to sue the seller and demand that they take the home back. The buyer may be able to recover money from the home seller assuming they have money to give back to the buyer. Lawsuits are expensive and time consuming so the desire to sue to undo a home deal is not something that a home buyer will be able to quickly settle and move on.
With the home buying process being as complex as it is working alone without your own real estate agent means dealing with the complicated paperwork and negotiations without the help of a trained experienced professional. A YouTube video or blog article while providing some answers is not the same thing as having a local real estate expert with the experience to be able to guide a home buyer through the different situations that can come up. This article explores some areas where home buyers can benefit from a real estate agent who represents their interests exclusively.
A Buyer's Agent will Represents Your Best Interests
The real estate agent who is the listing agent is the agent who is representing the home...
Why Every Home Buyer Needs A Mortgage Pre-approval
Just as you would not go shopping for groceries without cash in your purse/wallet or without knowing you have available credit on your credit card you should also not got shopping for a home without knowing if you have been pre-approved or not for a mortgage. Just as no one wants to go to the store and find out their credit card has been declined or that they are short on cash to purchase their items, viewing homes to purchase without knowing if you can afford it can also lead to great disappointment. Thinking that you can get a preapproval at any time with enough time to make an offer and you could end up losing out on a house you really like and/or realizing you may have never been able to get pre-approved for an amount to buy a particular house in the first place. Cash buyers keep note, while you may not need a pre-approval since you have sufficient cash to purchase a home you still may be required to show that the cash is readily available.
What A Mortgage Pre-Approval Can Tell You
Even if you have a great credit score that does not mean you should wait until the last minute to get a mortgage pre-approval. The mortgage pre-approval is the first thing you should get before you even look at the first home. A big issue you can run into when viewing homes without a mortgage pre-approval is that you find a home that you really like, but once the pre-approval is run you find out the pre-approval is not enough for the home you like. A mortgage pre-approval will let you know how much home you can afford and save you some stress down the line.
Also a pre-approval is not just about your credit score but also factors in aspects...