Santa Clarita Valley Homes Sales Up 3% During 2009
Sales of existing single-family homes in the Santa Clarita Valley increased for the second consecutive year during 2009 with the 2,258 closed escrows up 2.9 percent from the tally reported in 2008, the Southland Regional Association of Realtors reported.
The increase in activity was not as pronounced as the 10.1 percent rise reported in 2008 primarily because tight financing and an extremely limited inventory of properties listed for sale restricted sales even as buyers returned to the market to capture favorable prices, low interest rates and a federal tax rebate.
Annual condominium sales also increased during 2009, posting a 0.5 percent gain over 2008. It was the first increase in condo annual sales after three consecutive years of declines. A total of 840 condos changed owners last year.
The 3,098 properties negotiated by Realtors during 2009 generated $1.16 billion for home buyers, sellers and the local economy. Typically, each sale yields many thousands of dollars more as buyers paint, landscape, remodel and purchase appliances to prepare a home for occupancy.
“Overall, what we’re seeing is very encouraging,” said Andrew Walter, the 2010 president of the Association’s Santa Clarita Valley Division. “The bottom has passed and in 2010 we’re likely to see more sales and a slow, steady increase in resale prices.”
The annual median price of single-family homes sold last year declined for the third consecutive year, although not as steeply as in 2008. The 2009 annual median of $407,208 was down 8.5 percent from the prior year, compared with a 22.0 percent drop posted in 2008.
However, Walter noted that the low point for resale prices of this real estate cycle came in December 2008 when the monthly median hit $385,000.
Ever since, prices have been trending higher as multiple bidders compete over a limited number of homes for sale. The year ended with a December median price of $417,500, the highest monthly median of the year.
“It’s very important for consumers to understand that while prices are still the most favorable in many years, the demand for entry-level homes is so strong that we’re seeing multiple offers on the limited number of properties listed under $500,000,” Walter said.
“We’re blessed that Santa Clarita is such a desirable place to live,” Walter said, “yet that translates into added competition on every listing and the need to present offers over list price if a buyer wants a real chance of success.”
With most buyers hoping to take advantage of a unique opportunity to buy a single- family home, condominium resale prices have been slow to recover, although there, too, the low point appears to have passed with the lowest monthly median of this cycle appearing in March.
The condo annual median price of $226,567 was 15.5 percent lower last year, which was an improvement from the 24.1 percent drop in the annual price seen in 2008. It was the third consecutive the condo annual median fell.
“Prices are still down from the prior year, which is what attracts buyers,” said Jim Link, the Association’s chief executive officer, “but the upward trend in prices has narrowed the gap.
“The market certainly is not healthy or even balanced, with the scale still favoring buyers,” Link said, “but it certainly has improved and is much better off than this time last year.”
December ended on a relatively positive note, even with a limited inventory. December single-family sales of 178 homes were off 7.3 percent from the prior year, but up 9.9 percent from November as buyers sought to lock in the federal tax credit, which had been set to expire at the end of November but has since been extended through April 30. December condo sales of 94 units were up 5.6 percent from the prior year and rose 30.6 percent from the November tally.
There were 738 properties listed for sale at the end of December throughout the Santa Clarita Valley. That was down 44.7 percent from the prior year. At the current pace of sales, the inventory represents a mere 2.7-month supply, down from the 4.7-month supply of December 2008. A supply of 5- to 6-months is believed to represent a “balanced” market. Pending escrows, a measure of future resale activity, increased 16.7 percent during December, which suggests the market will remain busy well into the Spring.
8 Important Tips for Protecting Yourself When Buying a Home
If you're getting ready to buy a house during what is typically the busiest buying and selling time of the year, then offers may be flying, loans may seem confusing, and everything may be moving way too fast. That's why it's important to do everything you can to protect yourself throughout the entire homebuying process.
Freddie Mac offers a number of tips:
Get pre-approved for a loan. With competition fierce, you'll want to be ready to make an offer. With a pre-approved loan, you'll have more clout as the seller considers your offer.
Make sure it's in writing. Don't settle for verbal agreements. If the seller says he'll replace the carpet or leave his washer and dryer, get it in writing.
Get a good-faith estimate.. Your mortgage lender is required to provide you with a good-faith estimate of closing costs within three days of receiving your application. They need to provide it in writing. If you don't have to pay loan application fees, you may want to compare lenders and compare closing costs.
Don't settle for the first lender you come across. Contact at least three lenders and compare rates.
Lock-in your rate. One of the most stressful parts of the loan process is watching rates inch up and down each day and trying to figure out when to lock in your rate. Once you do lock in, be sure to get a written statement that outlines your interest rate and length of the lock.
Get a home inspection. A professional home inspector will examine the house's major systems and let you know if there are any problems or defects. You can then use the information in your negotiations. Look for an inspector who is a member of the American Society of Home Inspectors. Members are required to have completed at least 250 paid professional home inspections and passed two written exams that test the inspector's knowledge. Also, ask for references.
Shop for homeowners' insurance as soon as your offer is accepted. The National Association of Realtors recently cautioned homebuyers to not take homeowners insurance for granted. You and your spouse may have a clean claims history and a stellar credit history - something insurance companies use to determine whether they will insure you - but it's not just you they're looking at . If the house you're eyeing has had claims, there's a chance they won't insure you, especially if it's a water-related claim.
Read everything. When you have the closing meeting to sign the mountain of papers, make sure you read through everything carefully and don't hesitate to ask questions if there are something you don't understand.
Finally, give yourself enough time between your closing and your move date, just in case there are delays in the closing process.
FHA Sets Tighter Lending Requirements
The Federal Housing Administration is implementing more-stringent lending requirements and higher borrower fees to cushion against rising defaults and stave off the need for a taxpayer bailout of the agency.
The FHA said Wednesday it will raise insurance fees that borrowers must pay, and it will cap the amount of cash that sellers can contribute for closing costs. It will also require higher down payments for the borrowers with poor credit scores, below 580.
"These changes are overdue," said David Stevens, the FHA commissioner, speaking to reporters. "FHA has a responsibility to be fiscally sound" and to provide homeowners with "financing that's going to give them the ability to live in their home long term."
The FHA, which backs as many as half of all new loans in certain housing markets, has come under fire for insuring home buyers who have put little or no money down as prices have plunged over the past three years. With its reserves falling sharply, the agency has been forced to walk a tightrope between protecting taxpayer dollars and helping to facilitate the housing recovery.
Josh Levin, a research analyst at Citigroup Inc., said the changes were less restrictive than expected and illustrated the "broader point that the federal government will likely find itself unable to extricate itself from support for the housing market."
Mr. Stevens characterized the changes as "significant but not overwhelming," and predicted that there would be "on the margin some curtailment of potential homeownership."
Starting this summer, borrowers with credit scores below 580 will be required to make a minimum 10% down. While the FHA doesn't have a credit-score cutoff, most lenders require a minimum 620 score. Fewer than 1% of FHA borrowers last year had credit scores below 580, according to LPS Applied Analytics.
The FHA opted not to raise minimum down payments for most borrowers, which are set at 3.5%. Some analysts had pushed for higher down payments and one bill in Congress would raise down payments to 5%.
Industry trade groups are strenuously opposed to such increases, and government officials, sensitive to concerns that tightening credit standards could hurt fragile housing markets, opted for less restrictive measures. "The FHA tightening arguably has no bite and is clearly a non-event," said Ivy Zelman, chief executive of Zelman & Associates, a housing-research firm, who called the changes a "major coup" for the housing industry.
The FHA, which currently insures more than one-third of all new home loans, doesn't lend money to home buyers; instead, it insures lenders against default on loans that meet FHA criteria.
In exchange for FHA backing, borrowers who take out FHA-backed loans must pay an upfront insurance premium, currently set at 1.75% of the total loan amount. The premium can be rolled into the loan. The FHA said Wednesday it will raise that fee to 2.25%, the second increase in the past two years. The change will go into effect this spring.
Also to boost its reserves, the FHA will ask Congress to increase a separate insurance fee that borrowers pay annually. If approved, that would allow the FHA to boost the annual fee while easing the upfront fee.
The FHA also will reduce the amount of money that sellers can kick in for closing costs to 3% of the sale price, down from the current level of 6%. The higher cap led to abuses where sellers "heavily marked up the purchase price" to compensate for their contribution, says Lou Barnes, a mortgage banker in Boulder, Colo.
The value of the FHA's reserves to cover losses has fallen to $3.6 billion, about 0.5% of the $685 billion in loans outstanding and down from 3% a year earlier. Congress requires the agency to maintain a 2% capital-reserve ratio and if the agency were to run short of cash to cover projected losses, it likely would have to ask Congress for money for the first time ever. If the larger insurance fee had been in place last year, the FHA would have boosted its reserves by more than $1 billion.
Mr. Stevens said he expected that the agency's performance could see some "bumps and bruises in the months ahead" but said it was generally "headed in a positive direction."
The FHA also announced a series of measures to boost its ability to police lenders that originate loans with FHA backing, and the agency will ask Congress for greater authority to take action against lenders who originate loans with high rates of default.
"Mortgage lenders will find the new rules painful but necessary," said Howard Glaser, an industry consultant. He says the rules were past due given that "an 'anything goes' environment" had prevailed in recent years as former subprime brokers migrated into FHA-backed loans.
By NICK TIMIRAOS
FHA Waives 90 Day No Flip Rule for 1 Year
As almost everybody has been saying all along … short sale and REO flipping are becoming more and more accepted by the government and major lending institutions. This is evidenced, among other things, by Freddie Mac’s recent bulletins, updated credit policies by Wells Fargo to allow for C buyer financing, and revised title bulletins stating that the C purchase price does not need to be revealed to the A lender as long as certain disclosures are made.
Today, the FHA has rescinded its 90 anti-flipping rule and will, for a period of 1 year, allow FHA buyers to obtain loans on properties that have been recently purchased by investors.
There are a few details that you need to understand (e.g. if the resale is 20% higher than the investor’s purchase certain safeguards must be met.)
If you enjoy reading legalese, the waiver of 24 CFR 203.37a(b)(2) may be found here:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
Fixer Uppers, Wise Investments or a Money Pit?
Fixer Uppers, Wise Investments or a Money Pit?
Learn how to spot a fixer-upper with good potential and figure out what makes a good investment or what makes a bad one.
Would you spend $650,000 for a beachfront home with sagging shutters, no landscaping, peeling paint, old appliances, outdated wallpaper and a generally drab exterior?
On paper, the house sounds less-than-desirable -- okay, it sounds hideous. But before you answer, consider that this potential fixer-upper is located in California jus t steps from the Pacific. Drab as it may be, could this home sparkle one day? With a coat of paint, some "sweat" equity, and thorough revamping inside and out could this property be an investment gem?
All homes are different, but there are certain criteria which can help you spot a fixer-upper with good potential. Here are a few basic questions to ask:
What needs to be changed?
There are some homes which are structurally sound that require only cosmetic changes -- say that worn carpet from the 1960's, the historic appliances, or that inefficient heating system which consumes more fuel than a high school.
It makes sense to inventory a home to see what can remain and what must go. A good home inspection can help you spot mechanical, structural, and system upgrades that should be made, and also provide some cost estimates.
Does the area support a new and higher price?
If you buy a home for $300,000 and add improvements worth $100,000 are you ahead if area homes only sell for $350,000? What about $400,000? You need to recover the value of your investment, your time, and the cost of improvements. Many who specialize in fix-up work won't touch a project unless they can get a 100 percent mark-up -- two dollars in new value for each dollar invested.
What about the land?
In some close-in areas a home may simply not be worth an up-grade, instead it's the land and location which have value. In this case, the question is not whether to improve, it's whether to tear down. Essentially, the property's purchase price is equal to the combination of what you pay to buy it plus the expense of removing the old house. The addition of a new house is extra.
Who will do the work?
The economics of fixing-up vary enormously depending whether you're considering a do-it-yourself project or reconstruction contracted out to professionals. For the lowest cost and highest quality, it often makes sense to do both -- do much of the work yourself and then call in professionals for specialized work such as wiring, gas, and roofing.
Do You Need Repairs Or Remodeling?
According to Addie Mae, a mortgage lender, those contemplating the purchase of a fixer-upper should consider first whether the home "is in need of repair, remodeling, or both. Many homes need both types, but both don't provide equal returns on your investment."
Repair work, according to Addie Mae, usually falls under the "out of sight, out of mind" category and includes such major projects as plumbing, electrical systems and foundation repair. Remodeling, though labor-intensive, involves aesthetic projects such as kitchen updates, installing tile or wood floors, painting bathroom cabinets, etc.
"The important thing to remember is repair work usually costs money, while remodeling makes money," Addie Mae advis es. "You may find a home needing $25,000 in repair costs may only be priced $15,000 below current market value. On the flip side of that, a home in need of a little cosmetic painting may be $10,000 below market value.
"One way to turn that equation around is to make your repairs into a remodel," the lender advises. "For example, if you need to replace a large amount of dry rot in a wall, try adding a picture or bay window. If you need to replace the roof anyway add skylights. If you have sheetrock damage as well you might consider vaulting the ceiling or adding recessed lighting. These simple things can turn what would normally be a money drain into a money maker."
How Much Time Do You Have?
The general rule for fixing up is that everything takes longer than planned. If you need to re-sell quickly, then fixing-up becomes increasingly risky. If you have more time available, getting the job done becomes more plausible.
How Will You Pay For Your Fixer-Upper?
A fixer-upper requires two forms of financing: acquisition money to buy the home and additional dollars to do the actual repairs and improvements. In the best case, you want one loan to provide both forms of financing so that you do not have to pay for a second closing. Some mortgages to consider include the FHA 203(k) program, Fannie Mae's HomeStyle loans, Freddie Mac's HomeWorks financing, and similar programs. If you now live in a home and need money for improvements, consider HUD's Title 1 program for loans up to $25,000,
Be aware that for financing purposes it makes a big difference whether you are an owner-occupant or an investor not living on the property. For details, speak with brokers and lenders.
What is a CDPE?
What is a CDPE?
A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.
The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.
While enduring financial difficulties is challenging for any family, the process of finding a qualified real estate professional should not be. Selecting an agent with the CDPE Designation ensures you are dealing with a professional trained to address your specific needs.
As a A Certified Distressed Property Expert (CDPE), I don’t merely assist in selling your property, I help save my clients in need.
For more information, Contact me today to discuss your options.
Should You Invest in Foreclosures?
Periodically I hear from readers who want to make $1 million in real estate -- quickly and with no money down. Usually they want to know more about real estate foreclosures -- how to buy them and how to profit from such homes. I've participated in a couple of these deals, and I'm now working on my second million -- I gave up on the first.
Foreclosure properties can be a good place to invest for exponential growth (or loss). There are some deals out there for little or no money down, but potential investors should take precautions because foreclosed properties can involve significant risks.
There are various ways to invest in foreclosure properties. The first and probably most popular is to purchase a property, fix it up and then rent it out, hopefully creating a positive monthly cash flow. The investor then becomes a landlord, with all the responsibility of an investment property owner.
The second way to invest is to seek out foreclosures or "handyman" specials, buy them, invest more money to fix them up and then sell them, taking -- hopefully -- a profit once the house is sold.
A third approach is to purchase a foreclosure that is underpriced and selling it immediately at a higher value.
One way to sell homes for a higher value is to take back a mortgage. For example, let's say a house worth $100,000 is sold at a foreclosure to an investor for $50,000. The investor may put down 10 percent and ass ume or create a new mortgage for $45,000. The investor then advertises the property at a discount, say $80,000, offering 100-percent seller financing (remember, we're figuring that like houses are worth $100,000).
The owner hopes to create a sense of urgency by underpricing the house and pulling in buyers.
If successful, the investor takes a promissory note from the new purchaser for $80,000. He has now created a $35,000 note for himself (the difference between the $80,000 sale price and the original $45,000 mortgage). The new buyer makes payments to the investor for an $80,000 loan and the investor makes payments on the original loan for $45,000. In real numbers, here's what it would look like.
If the original loan is for $45,000 at 8 percent over 30 years, the principal and interest is $366.88. When the second buyer takes a note for $80,000, the investor may charge a bit higher interest since he's offering 100 percent financing (which is normal in the mortgage world).
Let's say he offers an $80,000 loan, 9.5 percent over 30 years. The monthly payment is $672.68, creating a positive cash flow of about $306 per month.
If the borrower stays in the house for 30 years, the investor will make $88,295 in interest and $30,000 in capital gains after he's paid his own interest on the first note for a total return of $118,295. Not a bad return on a $5,000 downpayment.
Keep in mind that not all mortgages allow an owner to "wrap" a second mortgage onto original loan. Most loans today contain a "due-on-sale" clause, meaning if the property is sold, the first trust must be paid off immediately. Wraparound financing is popular when investors purchase foreclosed Veterans Affairs (VA) properties as the VA allows wrap-around loans in such cases.
Before you go out, checkbook in hand and ready to bid away, take some advice first.
If you're deciding to invest in foreclosure properties with a spouse or with other investors, be sure that everyone understands this form of investing. You are about to enter a world of hi gh finance, property management, calls in the night from tenants and other risks that regular homeowners never experience.
Second, get educated. Reading this column does not constitute preparing the first-time investor to start bidding on properties. There are plenty of real estate agents and auctioneers who do this on a daily basis and would be happy to educate you in the world of foreclosure properties. Also, visit the bookstore for guides by reputable authors who know investment intricacies.
Third, be realistic.
- Not all foreclosures are good deals.
- Not all foreclosed properties are available at discount.
- If you take back a loan your buyer could default.
- Most loans today prohibit wraparound financing.
- Repairs might be far more than you expect.
- Not all tenants pay their rent on time -- or at all.
- Some renters damage property.
- Changing interest rates could impact your bottom line.
- It may not be possible to re-sell the property without extensive -- and costly -- repairs.
- Not every deal yields a profit.
- If you have a profit you may face taxes.
- If you only look at foreclosures you may miss other investment opportunities.
The list of potential downers goes on...and on and on.... Think of it this way: If making money with foreclosures was both easy and a sure bet every time, no one would bother with IPOs -- or jobs.
Fourth, get professional help from brokers, lenders, attorneys, accountants, home inspectors, and others.
And don't worry, foreclosure properties are not about to disappear. The mortgage industry is already reporting that delinquencies on mortgage payments are up these days in the latest economic slowdown, meaning, if anything, we'll be seeing more foreclosures on the auction block.
Avoid the Top Six Down Payment Mistakes
Top Six Down Payment Mistakes
About to make a down payment on a home? Here's how to avoid the six most common down payment errors. Deciding how much of a down payment to make on a home is one of the most crucial steps in the mortgage process. The amount you pay up-front is a major factor in determining how much your monthly payments will be, which makes it a decision that could affect you for years to come. Here are six of the most common down payment mistakes home buyers make and advice on how to avoid making them yourself.
Mistake #1: Making too small a down payment
While lenders do offer mortgages with down payments of less than 20 percent of a home's sale price, these loans require you t o pay private mortgage insurance (PMI) -- an additional fee tacked on to your monthly payment to help protect the lender in case you should default on your loan.
In addition, low- and no-down-payment loans frequently carry higher interest rates and so can end up costing you considerably more over the life of your loan. Conversely, a down payment greater than 20 percent may earn you a more favorable interest rate if you have a less-than-stellar credit rating.
Mistake #2: Making too large a down payment
While common sense dictates that the more you pay up front, the better off you'll be, that's not always the case. One mistake first-time homebuyers sometimes make is using such a large portion of their savings for their down payment that they end up not having enough left over to cover closing costs and other expenditures for their new home.
Mistake #3: Not making a down payment at all
Some lenders offer mortgages that require no down payment but these loans can be risky. Paying no money down puts you in the position of having no equity in the home (i.e. you don't own any part of it). Should the value of your home fall, there is the risk that you could end up owing more to the lender than your house is worth. This situation could also make it difficult to refinance your mortgage in the future.
A no-down-payment mortgage may be an effective strategy in certain situations. However, you need to be economically responsible and financially sound to be able to handle the inherent risks involved.
No-down-payment loans often come with a higher interest rate than loans with a conventional down payment. As a result, your monthly payments will be higher, leaving you with less money available for bills and emergencies.
Since you'll be paying less than 20 percent of the home's purchase price, you will also have to pay PMI or be required to take out a second loan (known as a "piggyback loan"). Each of these options increases the monthly cost of owning the home.
Mistake #4: Paying with unseasoned funds
In most cases, a down payment is a pretty substantial chunk of money, and not everyone has the ready cash to cover it. A gift from a friend or family member can help, but don't think that just because you've come up with the full amount that you're necessarily in the clear.
All funds -- whether they're gifts from relatives, loans against an investment portfolio or your own savings -- that have been in your account for longer than two months are referred to as "seasoned," meaning that they're considered your money. If your bank statements indicate a large cash deposit that's less than two months old, your lender will need to know where those funds came from and whether they're gifts or loans. Gift-givers may be required to provide a letter to the lender indicating that they are in a financial position to offer the gift. Also, generally speaking, the larger your overall down payment amount, the less concerned the lender will be about where the money is coming from.
The lender wants assurances that the money you're putting towards your down payment is actually "yours," since it's assumed that if you're investing a significant portion of your own money into the down payment, you're less likely to default on your loan.
Mistake #5: Neglecting to bring a cashier's check to closing
Along with figuring out how much of a down payment you should make, you also need to ask your closing agent exactly how much you will be required to pay at closing. It 's not enough to simply bring your personal checkbook to closing. You will a cashier's check to pay the amount of your down payment and your closing costs. Find out ahead of time exactly what the final total will be and obtain a cashier's check for that amount.
Mistake #6: Incorrectly assessing your debt comfort level
No one knows better than you how much debt you can handle. Trust your instincts; if you'd rather pay as much as you can at the start and have the benefit of lower monthly payments, don't let anyone dissuade you from that. The worst thing you can do is lock yourself into a mortgage that ends up costing you more per month than you can comfortably afford to spend.
Don't Overlook a Homes Potential When Choosing a Home
Home shopping? For first-time homebuyers it's an exciting, albeit nerve-wracking, experience. If you're like others in the market for their first home, you probably have in mind exactly how your soon-to-be home will look.
But it's important not to fall into the bad decorating, dingy walls, and dirt-bare back yard equals bad-home trap. If you don't see past the hideous wallpaper, funky light fixtures, and avocado green carpeting, you may miss out on a home with great potential.
And, if you're looking for a home in a seller's market where homes are being snatched up as soon as they go on the market, you'll come to realize you can't be choosy if you want to make a competitive offer.
One of the first things to do is to get pre-qualified for a loan and determine the maximum you can afford to offer for a house. Don't look at homes that are asking for more than 5 percent above your maximum, otherwise you'll be setting yourself up for disappointment if you find the perfect - but outside your budget - home.
So what to do?
The floor plan of the home is extremely important. If a floor plan isn't quite to your liking, consider rearranging it or adding on. If you're looking at an existing home and will need to remodel or expand to suit your needs, the estimated cost of renovation should play a role in how much you offer.
Also, consider the features of a home:
· Walls. While walls are one of the easiest things to remedy, they also make a huge first impression. If the walls need to be painted, are covered in wallpaper, or are painted a color you find distasteful, picture them crisp and clean in the color of your choice - that's how they could look after you paint them.
· Floors. Like walls, carpet or floor surfaces that are old or outdated can be easily replaced. You could even ask for a carpet allowance in your bid, especially if you're in a buyer's market.
· View. Things like old, ugly -even dirty - windows and window treatments can make a view appear less desirable. Those things can be improved, so unless the only view you have is of your neighbor's clunker on the side of the house, don't get hung up on what is surely a fixable view.
· Landscaping. Your best bet is a moderately landscaped yard because you can always improve landscaping without spending too much. Worst case, even if you're looking at dirt, landscaping is one of the more feasible projects to tackle. Plus you get to design it however you'd like if you're starting from scratch.
· Closets and garages. You can never have too much storage space, which is why so many newer homes have three-car garages. But if you encounter a converted garage that is now a bedroom or storage room, don't give up. Converted garages can almost always go back to their original purpose without much cost or labor.
· Kitchen. The most popular room in the house, many homeowners want their kitchen to be large and have modern appliances. Don't let color schemes from the '70s detract you, because there's nothing like a fresh coat (or two) of paint to make a kitchen your own. Plus, if you like the rest of the house enough to make an offer, you can give the kitchen a minor spruce-up with some new appliances, or a major overhaul complete with new countertops, cabinets, and flooring.
· The exterior. If the home you're looking at doesn't have good curb appeal, try to picture i t with a fresh coat of paint and spruced-up landscaping.
· Pools. If you want a pool, buy a home with a pool already built in. The cost of adding a pool starts around $25,000, and paying to add one later will never yield a dollar-for-dollar return on investment. The cost of repairing a pool is less than putting one in, so if you're looking at a home with an old pool that looks like it's in bad shape, it's still a better bet than putting one in later.
When making an offer, bear in mind the things that you can't live without, as well as your budget. Also, be sure you hire a professional home inspector to inspect the house. If the home's systems are in good working order and the house has everything you want except a minor item or two, make an offer accordingly.
Most importantly, keep in mind that unless you're building your dream home from scratch, you'll probably never find the perfect home. But seeing past a previous owner's bad decorating choices to the core of the home and its potential for livability will yield you the home you've always wanted. It may take some work, but hey - it's yours!
10 things buyers need to consider when purchasing a home and what is involved during the home buying process.
Every year over 40% percent of all homes purchased, are by first-time home buyers according to the National Association of Realtors. Many have done it, many are doing it, and you can buy a home too.
But like most things, there are ways to make the process easier and you'll want to know everything you can before making one of the biggest purchases in your life.
Here in capsule form are 10 baseline strategies to make that first purchase a good experience.
1. Think credit. Poor credit will make you a much larger risk in lender eyes and a larger risk means higher interest rates and higher monthly mortgage costs. Make a point of paying your credit card payments, auto loans, rent, and other payments on time, all the time, and in full. In addition keep your credit card balances low below 30% of your available credit, otherwise banks may see high balances as a sign in weakness in managing your money.
2. Consider taxes. Keep in mind that in addition to your mortgage payment you will have to pay taxes and insurance. Sometimes this is not included in your mortgage payment, so when you get your loan make sure it includes a escrow account for taxes and insurance.
When you buy a home mortgage interest and property taxes are generally deductible from income taxes. This means while monthly housing costs may be larger when you own than when you rent, what you save in taxes can make up some or all of the difference. For details and to find out if you qualify, speak with a tax professional.
3. Know the real estate agents role. Real estate agents are at the center of most property transactions. It's important for you to know what an agent does, who is represented, and how the system works. Typically a buyer does not pay anything to the agent and the seller pays all the buyers agent fees.
4. Consider what location will work best for you. Look at your needs, the needs of household members, and your preferences in terms of commuting, shopping, recreation, and other factors that are important to you.
5. Plan on getting a home inspection as part of any offer you make. A professional inspection can help you understand the condition of the property and the repair bills you are likely to face in the next few years.
6. Look into the financing process as soon as possible. Get pre-approved by a lender so that you generally know how much you can borrow, what you can afford, and so owners will see you as a serious buyer.
7. Save Money. You'll need money for a down payment, closing costs, moving, and other expenses. Put off trips, buying on credit, obtaining new debt and luxuries until after you're in your new home.
8. Examine the different financial options which are open to you -- consider FHA, VA, and state-backed loan programs which require little down and have liberal qualification standards.
9. Look for gifts and grants. According to NAR, 22% of all first time buyers receive gifts from relatives and friends. Some companies offer grants and other incentives to employees who are buying a first home. Community groups may also have programs and financing in place for first-time buyers, while the federal government has established special prog rams for teachers and police officers.
10. Start now, don't wait! Start taking steps now to get into a home. In most markets the longer you wait the higher the home prices will be and harder it may be to get financed.
Take your time, and ask as many questions as you like. Being a first-time home buyer is challenging, but millions of people do it each year and you can too.
