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Real Estate |
Are you interested in:
Buying
Selling |
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Buying a home is one of the most important
decisions you will ever make. Here are five
important questions to consider before making your
decision.
Are you looking for a large spacious house to
raise a family? Are you looking for a vibrant
condo to set up your bachelor pad? Are you
interested in a place with a pool, gym, and
fully-equipped kitchen? Maybe you are most
interested in price and location. First, write
down a list of all the things you are looking for
in your future home. It can be anything. Next,
rank the items on this list by importance. Using
this list will help you create a smooth home
buying experience.
You should only buy if you are planning on living
there for at least 3-5 years before moving again.
Staying that long will at least enable you to
break close to even on the mortgage. However, if
you know that your job will require you to
transfer to a new area or you plan on moving to
larger home (maybe to raise a family) then you
should strongly consider renting instead of
buying.
Finding out how much you can afford is a very
important stage in the home buying process. When
lenders calculate how much you can afford, they
consider your debt-to-income ratio, which is a
comparison of your gross income (pre-tax) to
housing and non-housing expenses. The housing
expense is your potential mortgage payment and you
non-housing expenses are long-term debts such as
student loans, car loans, and even alimony
payments. What is the magic number that lenders
come up with? On average, a lender wants your
monthly mortgage payment to be no more than 30% of
your gross income. This is without non-housing
expenses. With non-housing expenses, the average
lender says your mortgage payment plus non-housing
expenses, should be no more than about 42% of
income. In addition, a lender will also consider
the cash you have available for a down payment,
closing costs, and your credit history. All of
these elements will factor into determining your
maximum loan amount.
There are several different types of mortgages
available. Among the most popular are fixed-rate
mortgages and adjustable-rate mortgages (ARMs). To
find out more about mortgages, check out our
mortgage section. To sum up the two most common
mortgages, if you are planning on living in your
home for more than 5 years and are more on the
conservative side, you should go with a fixed-rate
mortgage. If you are planning on living in your
home for a short period of time (maybe 3-4) years,
and you feel that interest rates will fall in the
future, then an ARM would be more advantageous.
Please learn more in our mortgage section before
making a decision.
Owning a piece of real estate is a large
responsibility and it should be taken very
seriously. Whether the real estate you are looking
to buy is for your primary residence or an
investment, you should spend a significant amount
of time analyzing applicable internal and external
factors. Some important internal factors are your
personal finances, your job stability, your credit
rating, and the burden of making several timely
payments each month. Externally, you must analyze
the mortgage market (what’s a good interest rate),
the real estate market (average market price),
Make sure you consider all of these factors to
determine whether you are ready for home
ownership. Educate yourself, be honest with
yourself, and you will have a successful buying
experience. |
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Here are important questions to consider when
selling.
Will you choose a realtor or try to sell it
yourself? Most realtors charge 6% of the sales
price (If your selling price is $200,000 they
receive a $12,000 commission). However, if you let
a realtor sell your property, there are a lot of
advantages. They will help you advertise, show the
property for you, handle the paperwork, and hold
your hand through the whole process. I suggest
using a realtor unless you have time to show your
property, you have real estate experience (or know
someone close to you who will help), and you have
an understanding of real estate contracts.
How soon are you looking to move out of your
house? Do you have another house that you are in
the process of buying or renting once your place
is sold? Timing can be a difficult element to
control when selling a house, but it is something
you should plan for with options. Have options for
where you will move once your place is sold. If
you are looking into buying a new house, try to
schedule a closing date for your new house that is
close to the closing date of your home you are
trying to sell. That way, once your home is sold,
you can move into your new home a few days later.
How will you determine your asking price? If you
hire a realtor, they will usually run a CMA
(Comparative Market Analysis). A CMA shows recent
home sales in your area that are comparable to
your home. This is not an appraisal, but will help
you determine the fair market value of your house.
Run your own CMA and get an idea of how much your
place is worth before choosing an asking price.
Click this link to get started:
Homegain.com link
Minor touch ups around the house can make a big
difference for potential buyers. When the buyer
walks into your home, you have to provide an
atmosphere that makes them feel like this should
be their next home.
Make sure you have a bottom price that you are
comfortable with selling your property for.
However, do not make this the asking price! Make
sure your asking price is higher than the price
you are willing to settle for because a potential
buyer will usually offer less than your asking
price; but don’t make your asking price too high
or potential buyers will be under the impression
that you are not serious about selling. The
general rule of thumb is to be reasonable when
negotiating. If you are serious about selling your
property at a fair price and the potential buyer
is serious about purchasing your property at a
fair price, both parties will reach an accord. |
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