Advantages of owning a home
Buying a home is one of the most important decisions any individual or family can make. As you decide, consider these six advantages to owning a home.
- Feeling of Ownership: Homeowners have better jobs, give more to charity, have children who get better grades, have lower divorce rates, and report higher rates of happiness than renters. Owning a home ties you to a community and makes it easier for every member of your family to shine at work, school, and home.
- Live In a Home You Love: There are few things more important than the home you live in. It affects your mood on a daily basis, as well as the mood of your family members. When you own a home, you can alter it however you want. You can paint it your favorite color, put in the flooring you love, and make the yard into your paradise--all without asking your landlord for permission.
- Stable, Predictable Payments: In most areas, rent is raised every two to three years, and often in unpredictable intervals. This can be a huge source of anxiety for renters. By securing a fixed-rate mortgage, you will know exactly how much you need to allocate towards housing for years to come.
- Moving Up With The Market: Since real estate always appreciates over the long term, the longer you wait to enter the market, the harder it will be (i.e., you will need more money). On the other hand, as soon as you enter the market, you ensure that your home will move up with the market, enabling you to purchase better and better homes as your personal wealth increases.
- Lower Taxes: Mortgage interest is fully deductible from your federal tax return. Since interest makes up the most substantial portion of a monthly mortgage payment for the majority of the loan duration, a home is one of the most reliable tax shelters, and often the first step towards long-term financial security.
- Retirement Savings: A home is one of the safest and surest ways to build up wealth over the long term. As you pay down your loan and your home appreciates, you will have an ever-increasing source of capital for retirement, education, travel--whatever you desire.
Top 10 Buyer Mistakes (And How To Avoid Them)
Buying a home is fun, profitable, and relatively easy, if you do it correctly. However, if you make one of these following ten mistakes, you could unnecessarily complicate the process.
- Skipping pre-approval Many buyers are so anxious to start looking at homes that they skip the pre-approval process. Unfortunately, this means that when you find your dream home, you will be several steps away from making a viable offer. It is much more satisfying to get the paperwork out of the way early, and then be able to put an offer on a home as soon as you find one that you like. It will also give you a better sense of your price range and enable you to act quickly in a multiple-offer situation.
- Neglecting credit scores Credit scores are one of the main variables used to compute your mortgage rate. Inexperienced buyers can end up paying thousands of extra dollars because they didn't take the time to clear up a dispute on an old parking ticket, or pay down their Macy's card. Take the time to understand your credit score and clear up any blemishes.
- Over-buying You have a $50,000 down payment and a $200,000 loan, so you purchase a home at $250,000. This is what is known as over-buying, because you have not set aside any money for taxes, insurance, association dues, transaction fees, or even furniture. Make sure you take into account all of the ancillary costs of home ownership before you end up in a huge home with only a mattress and a lawn chair inside.
- Skimping on inspections Inspections are the best place to expose potential problems with the property, so it's essential to take the process seriously. Unfortunately, some buyers use this as an opportunity to save money by hiring a substandard inspector to execute the inspection. Make sure you put the inspection in the hands of a competent and experienced professional.
- Buying a car during the transaction When calculating your monthly mortgage payment, your lender will take into account your debt-to-income ratio. If you have recently taken out a loan on a car or even used a credit card to buy a new plasma TV, your mortgage rate will be adversely affected, potentially costing you thousands over the duration of your loan. Wait until after escrow has closed to go on your shopping spree.
- Lowballing When you place an offer on a home, it is going to have an emotional impact on the seller. If you place an insulting offer at the outset, you run the risk of enraging the seller and destroying your chances of buying the home. It is perfectly acceptable to place an offer below the listing price, but if you are way off, be prepared for some blowback.
- Being too open and honest Keep in mind that a housing transaction is a negotiation. Every piece of information you give to the seller or the seller's agent can be used against you in that negotiation. If you reveal that "this is the only home for us," your bargaining position is weakened, and you may end up paying more for the home. Be honest with your family, your agent, and anyone who has your best interest at heart. When talking to the seller or the seller's agent, be friendly, but not effusive.
- Adhering to unrealistic criteria Many buyers develop criteria for their home that turn out to be unrealistic. For instance, a buyer may want a home with a three-car garage in a neighborhood that only has two-car garages. If you fixate on adhering to unrealistic criteria, you will blind yourself to the better options that may be available, such as the beautiful home with a three-car garage in the neighborhood across the street.
- Ignoring resale value Certain home deficiencies can make a home difficult or even impossible to resell. You may love your home now, but if you can't sell it when you land that big cross-country promotion, your dream home will quickly become a nightmare. When purchasing your home, take into account how long it has been on the market and how easily other comparable homes in the area are being sold.
- Including too many people in the process It can be tempting to include your friends, extended family, and trusted advisors into the home-buying process; but the more people you include, the harder it is to come to a decision that makes everyone happy. Try to reduce your home-buying team to as few people as possible.
Understanding your agent's role
Real estate agents perform several roles throughout the course of a transaction. Here are the four main ways I will assist you throughout the transaction process.
As you begin the transaction process, my first job will be to initiate and facilitate several important relationships. First, we will meet with a lender who can get you pre-qualified and give you a better idea of just how much home you can afford. As we move throughout the process, I will introduce you to expert inspectors, appraisers, and
insurance providers, who can help you secure and insure your home against all eventualities. Towards the end of the process, I will begin introducing you to qualified movers and contractors who can help you move into your home and make basic renovations.
After you have secured funding, all of my attention will be on finding your dream home. With complete access to the MLS (Multiple Listing Service), I can find homes as soon as they come to market. And, through my various professional networks, I often find out about new homes before they even come to market. Together, we will develop a criteria for your dream home, then I will search the MLS for homes that fit your criteria. Finally, I will set up showing appointments at each property and show the homes to you, using the properties' lockbox keys to gain access to the homes. I can also show you around the community, visiting local schools, parks, shopping centers, and attractions.
Once you find your dream home, we will work together closely to propose offers and respond to counteroffers quickly and fluidly. Throughout this process, you will communicate your priorities to me and I will negotiate on your behalf. I will represent your best interests to the seller and seller's agent, while updating you whenever I receive new information from them. As contracts and disclosures need to be completed, I will prepare them for you and deliver them to the necessary parties.
In the course of a typical transaction, there are bound to be a lot of small, but important decisions. Should we go with Lender A or Lender B? What areas have the best school districts? Should we accept this counteroffer or try to negotiate the price down a bit? As an experienced agent, I can help you make these important decisions, by fully explaining the pros and cons of each side, based on past transactions and general market trends. I can also access exclusive market data so we can make these decisions with the aid of important facts like regional tax rates, appreciation expectations, and area demographics.