Renting vs. Buying

Deciding whether to rent or buy is quite the major decision. This choice truly does affect your lifestyle and savings as time goes on, so it is very important to do your homework and be prepared when deciding. This post will talk about the pros and cons of each to make the decision a little easier for you.

Home ownership gives you a sense of stability, so if you are a person who gets restless easily or moves quite often, then this is most likely not a good choice for you. If you need to move frequently, and the housing market happens to be down, then it would be much harder to sell your home and you may actually loose money in the process. Now, if one were to rent in this same situation, you would be able to move without penalty every time your lease ends.

A very popular myth is that by renting, you are “throwing away” money each month. This is not true. Living somewhere will always cost money. The cost of a home sometimes can even be higher than the cost to rent. There are some expenses you can avoid if you rent that you cannot if you are buying such as property tax, water and sewer service, trash pickup and many more.

Renting is alot more predictable financially wise because you always know exactly how much you are going to spend per month. When you own, you may just pay your mortgage and bills, but then next month you may have to replace your roof unexpectedly. Renters would not have this unpredictably. Although, renters could have their rent increase without notice every time your lease is up for renewal.

Owning a home can be unpredictable at times over things you cannot control. The neighborhood you live in could decline, a major employer could move out of the area and the population could significantly decline. Tax deductions are not a reason to buy a home because in the end, the tax break decreases as your proportion of your mortgage payment decreases. Deciding which option is best for you goes beyond the money. It is also about comfort and your lifestyle.

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Things to consider

Sometimes you may wonder to yourself if it is better to buy a house or just build one yourself. When considering this, there are a few things to keep in mind.

The most important thing to consider, is if you can afford it! Consider the construction costs of building a house. Take into consideration the lumber cost, if the land plot needs additional surveying and ensure you have wiggle room if need be. You can never predict everything that could happen.

Do you have time to wait for the house to be built? This process is a very lengthy one. This can take around 6 to even 18 months to build, depending on how complicated your house is. If this is too long, buying an already built house may be your best bet.

Can your relationship take the stress? Sometimes there are many decisions you must make with your partner in order to finish building the house. If you two don’t agree, this process will become even more stressful and long.

Is this a longtime place you will live? If you don’t plan on staying in the house for very long, it may not be worth it. After waiting so long for a house to be built, only to move shortly after may backfire. You may become emotionally attached to the house or just so exhausted you do not want to move anywhere else.

One more thing to take into consideration, what do you need for this house and what do you want? These are two very different things, and is something you must be able to make sacrifices for. Building a house can be expensive, so make sure you build what you can afford and need.

Reverse Mortgage

If you are considering taking out a reverse mortgage, make sure to keep certain things in mind before doing so. You will want to ensure you are making the right decision for you.

If you learned about a reverse mortgage via the TV, keep an open mind. TV commercials tend to keep certain things out. There are alot of extra fees involved such as closing costs. This include the appraisal fee as well as the origination fee. Other extra expenses include mortgage insurance and taxes as well. Make sure you add up all these other expenses and insure that this is something you are able to do and are comfortable paying.

You will also want to find out if your spouse owns the house. You may have just forgotten to put the house in both of your names, however this step is crucial. You will want to make sure this is done. This is because if the person who owns the house passes away, then you now must pay back the loan on the house. If this cannot be done, then you lose the house. Double check this, this is a crucial step!

If choosing a reverse mortgage, then this should be as a last resort, not as a first resort. If you are able to find your retirement in other various ways, then a reverse mortgage is not for you. If you do not have alot of money, but do have equity on your house, then this may be the best option for you. Consider maybe selling the home, moving to a cheaper home and paying off your debts. You also would no be able to pass on your house to your children should you do a reverse mortgage. With all this mind, be sure to make the best decision for you.

Top 3 Home Buying Mistakes

When buying a home, there are alot of different things to remember. If you keep these three things in mind, the home buying process should be a breeze!
One important thing to remember is to not buy a house if you plan on moving again soon. This can end up busting your budget. As frustrating as renting can be, it is better to rent than to buy if you are going to be moving often. Some people assume that they can just sell a house immediately or rent it out, but it does not always work out this way. Better to rent and buy when you are ready, then to go bankrupt.

Another important thing to keep in mind is to not bust your budget. It may be tempting to buy the house of your dreams, that has everything you can imagine. However, everything that you want in a house can add up quickly. Stretching your budget an extra $10,000 or $15,000 may seem worth it for something you want, but it’s not something you want to do. Remember how much you can afford monthly, and keep in mind that jobs can change, life expenses can increase anything could happen!

Last of all, do not forget about the added costs! When buying a home, it is not just about replacing a rental payment for a mortgage payment. You need to keep in mind maintenance costs, utilities and property taxes. Most people tend to forget these extra payments and end up buying a house that they cannot possibly afford. Keep these things in mind when picking out a house, and you will be fine!

Home Equity Scams

In the world of real estate, you will find some very dishonest lenders that are willing to take advantage of your desire for cash and in the end scam you out of your equity. Here are some scans to look out for.

Equity stripping is when a lender can get you a home equity loan, even though your monthly income is not enough for the payments. These lenders encourage you to apply anyway, and should you default on payments, they get to foreclose and take your home and strip you of your equity.

Another one is loan scamming. This is when a lender encourages you to refinance your loan. When doing this, the lender charges high fees. The more you flip a loan, the more your debt increases and soon your can become in over your head and most likely loose your house.

Credit insurance packing is another scam. Once a home equity loan has been agreed on, a lender can give you papers to sign that include “charges” for credit insurance that you never asked for. The lender essentially hopes you will no notice and sign anyway. If you do notice, a lender could use scare tactics and tell you that should you not agree to these terms, the loan will have to be re-written and a delay in your application.

Deceptive loan servicing is a scam in which the loan service fails to provide you with an accurate or complete account statements and payoff figures. This makes is pretty much impossible to figure out how much you have paid off or still owe. The service may even tack on late fees or legal fees you don’t understand. This way you are confused, and have more to pay than you should.

Signing over the deed is one more scam. If you are having trouble paying your mortgage, the lender can threaten to foreclose the house. The lender can offer you a new way to finance, and in the meantime really be asking for the deed to your property. Once the lender has the deed, he can treat it as his on property.

When to refinance your home

There are many reasons why homeowners decide to refinance. This is a new opportunity to obtain a lower interest rate, shorten their mortgage term or convert to a fixed rate mortgage. One of the best reasons to refinance is to lower your interest rate. This can help you save money and increases the rate at which you build equity in your home. This can also, and importantly, decrease the size of your monthly payment.

It is also a good idea to determine whether it is better to have an adjustable rate or fixed rate mortgage and convert between the two. Sometimes adjustments in fixed rate mortgages can occur and this results in rate increases that are higher than the rate available through a fixed mortgage. When this happens, it may be better to concert to a fixed mortgage so the interest rate will be lower. On the other hand, converting from a fixed rate loan to an adjustable rate can also be a food strategy especially in the falling interest rate environment. This is especially a good idea for homeowners who don’t plan on staying in their home for more than a few years.

It is important to do your homework and research when considering refinancing your home. If you are not careful, you can end up with never ending debt. Some people do this in order to cover bigger expenses such as home remodeling or a child’s college education. Another reason is that the interest on mortgages is tax deductible. Just keep in mind that increasing the number of years that you own on your mortgage s rarely a smart financial decision and neither is spending a dollar on interest to save 30 cents.

Many homeowners also refinance in order to consolidate their debt. Doing this does not automatically bring great savings. Many people who had high interest debt on credit cars or other purchases more than likely will just end up doing it again and be in the same situation as before.

Refinancing can be a great financial move as it can reduce your mortgage payments and shortens your loan term. However, it can quickly backfire if your are unprepared or not ready. Make sure you are serious and are ready to do your financial homework.

How to be approved for a loan

Buying a house is obviously a stressful process, so learning the best way to qualify for a mortgage loan now will help you later down the road!

The best way to start is to know you credit score. It only takes a few minutes to do so and is quite an easy process. Some homeowners never end up doing this and then only realize their score is too low when they are already rejected for a loan. If your score is below 680, lenders are allowed to deny your request, so make sure you know what your score is before applying!

Make sure to save up your cash. Many Mortgage lenders require a down payment, so if you are unable to fork up any cash, be prepared to be rejected! Each down payment differs depending on the type of loan and lender you are working with. Keep in mind that this is not the only expensive you will need to be able to cover. There are also closing costs, home inspections, appraisals, title searched, and application fees to cover as well!

Also make sure to not quite your job during this process! This is a crucial step, because any changes to your employment or income can delay or even stop your mortgage approval process!

Another good tip is to start paying down your debt and avoid stacking up any additional debt. Before being approved for a mortgage, lenders evaluate your debt to income ration, so if you have alot of debt, you can be denied for a lower mortgage or denied all together! Don’t let your guard down once you are approved, lenders will re-check your credit before closing as well.

Getting pre-approved for a mortgage loan is a very responsible choice. This way you know what you can and cannot afford before you start looking. All you need to do is contact a mortgage lender and submit your financial and personal information and wait for a response. This way, you know what your budget will be. By following these simple steps, you can make the house buying process slightly less stressful!

Earthquake tips

If you are living in the United States, then chances are you may have to face a few natural disasters in your life time. This type of disaster can differ depending on where in the U.S. you live. The East coast faces many hurricanes, but what if your live on the West coast? Here are a few tips to help earthquake proof your home!

The first main thing to do is ensure your water heater is strapped, meaning it cannot fall down. If this falls then this can create water damage to your home as well as possibly mixing with electronics in your house that could cause disastrous effects. Also, make sure to install an earthquake gas shut off valve for your gas meter. This can ensure that there are no gas leaks should a pipeline rupture.

You will want to also install something called positive connectors at the joints where posts meet beams and footings in your home. Connect the wood frame of your house to the foundation. These precautions can help your house to still be standing when you come back after an earthquake, which of course is the ideal situation. If your home happens to have a post and pier, masonry block, stone or brick foundation, then it is best to consult with a contractor about options. You will want to make sure you do everything you can to help strengthen your home. A good option is install a redundant post and beam system that is adjacent to the humble foundation. This can be a back up support in case the old foundation should fail.

All this may not completely prevent damages to your home, but it will help to protect it and make the damage less catastrophic. At least this way, you can relax knowing you did all you could to prepare for an earthquake and that you will have the least amount of damage to your home possible.

For Sale by Owner

Usually buying a house entails buying it through a listing agent, but sometimes the homeowners themselves will list their house. So why would people do this? The main reason is to save money. To prepare yourself to sell your own home, there are a few things you need to do. The first thing is to make sure the outside of your house looks well taken care of and pruned!
The next thing to do is to price your home. You can do this by hiring an appraisal professional, but if you want to save this money, you can do it yourself. This can be done by seeing what other homes that have similarities to your house have been listed for.
Next, you need to ensure you take good photos of your house. Most people shop for houses online, so you will want to make sure you have very eye-catching photos listed. This means they need to be taken with a high-definition camera as well as natural lighting. Time it to where you have the best natural light coming into your house. This will make your house look more appealing to others.
A detailed listing is also a must. The listing needs to stand alone, and draw people in. You can brainstorm ideas by looking at other house listing and see what attract you. If this attracts you, it will most likely attract others.
Once the listing is up, being available is vital. Potential buyers need to see your house, and if you are the one selling it, you are the one everyone will have to go through. A potential buyer should always be able to reach you, whether this is through e-mail, phone or in person. You need to engage these potential buyers and try to convince the to come see your house. Be prepared to work with a potential arrangements for showing the home. If this buyer is coming with their own agent, you’ll most likely have to leave the house during this time.
After all this, you’re not done yet! You’ll still need to know what to do during a closing too. This can be a pretty complex process that entails lots of paperwork. You have to stay on top of this, and to also make sure the buyer is doing the same thing. Selling your home yourself is pretty hard, however it is possible if you put in the time and effort!

HOAs

When moving into a neighborhood, you may be wondering about the dreaded HOA fees in the back of your head. Well fear not, because this post will tell you all you need to know about HOA fees!

The first and most important thing to do when it comes to HOAs is to research and do your homework! Home owner associations manages the common area and amenities of the neighborhood There are certain documents that have all the HOA information that you should be sure to read before making a decision of moving in. One of the documents is the covenants, conditions and restrictions. This is what all the homeowners in the neighborhood must abide by. These rules can limit you on many things such as maintenance or number of pets.

The HOA budget and financial statements are also very important as well. The budget should include operating expenses, salaries and utilities. Thus, if the budget is small, then you may have to spend extra money or have your dues increase. When you join an HOA, you gain access to their amenities, and this is sometimes what makes it worth it to some people. This is because you are able to enjoy things you would not be able to otherwise such as pools, gyms or tennis courts.

So in short, you need to ensure you do your homework so you won’t be surprised come move in day. Many feel that HOAs and the rules that come with it can be very limiting. Research what these rules are and see if this is something you can or cannot live with.