Updated: Nov 22, 2019
If you understand how and why to buy a house or the basics of selling a house you have, you can save yourself a lot of trouble. We want to give you our free advice now.
"The problem with real estate is that it's local. You have to understand the local market."- Robert Kiyosaki
When buying or investing many owners do not consider that there are fees upfront when purchasing such as closing costs.
Let's start with wanting to own a house at all and the time you took to research it. You may want it for investing purposes or to buy your first family home. There are a few factors to be aware of and even more that we may not have mentioned.
Do you really know the neighborhood?
It's important to consider where you are buying and the area the house is located. Just because a house looks great doesn't mean it has much value. If the houses on the same block are only worth 90K and someone gets you to pay 100K then you unfortunately are in the hole 10k already. You will only get up to the value the house is worth. Many home owners and investors make the mistake of thinking if they jazz up the house with a ton of new appliances they can sell the house for more than its market value. DO NOT DO THIS. Another problem is not vetting the area. If it's a home you will live in for awhile then it's probably best to see how activity is going to be in your surroundings during the day and night. Take time to drive around at different hours. What may seem like a peaceful quiet neighborhood could have a very different story when everyone's back from work. These potential issues could effect selling a home as well depending on who your buyer is and their reason for purchasing.
Are you prepared for fees and taxes?
When buying or investing many owners do not consider that there are fees upfront when purchasing such as closing costs. Closing costs are seen when purchasing and selling a home. This could be paid to the realtor and attorney who file the title for your home or the inspector when appraising the house. There is also the cost of the title search or title insurance that may be do to find out if there are any leans on the home that may need taking care of. Let's not forget homeowners insurance or the interest rates paid to lenders on a mortgage on top of the payments for the mortgage itself. According to an article written by David Rae on Forbes.com, "Rates and fees can vary greatly from lender to lender. Even small changes in the Annual Percentage Rate (APR), or interest rate, can mean tens of thousands of dollars in extra interest over the life of a loan." It doesn't stop there either. There are property taxes that come along after the house is purchased. All in all? Make sure you have the funds to be able to take care of all the necessary requirements. You don't want them creeping up on you as a surprise. A lot of home owners end up having to sell because the load becomes too much to catch up with after a few years. Although negative, this situation can benefit those who do have a healthy budget and can purchase these homes at a favorable price. Always double check your numbers before committing. You can never be too sure.
Do you have a budget for the unforeseen?
Buyers get caught up in debt often before they even have a livable home. They do not prepare for unseen circumstances like having to pay rent on top of a mortgage because they assumed ahead of time when their move in date would be. That leads to extended leases or being relocated which could involve double the moving expenses and storage expense. Most homes sold at a good deal are often in need of repair right away, a cost that can't be predicted until the damage is seen. That comes with taking the time to get proper quotes as you don't want to get caught underestimating your repair costs. Repair and labor combined can add up to a lot more than you think. Thats not including the repairs you will need down the road for possible natural disasters or wear and tear over time. According to HGTV.com "Set aside 1 percent to 3 percent of your home's purchase price each year in a separate savings account specifically for home maintenance and repairs. For example, if your home cost $300,000, set aside at least $3,000 each year. Make one large deposit or spread the amount out in monthly deposits." Owning a home isn't the fantasy you thought it would be huh? Preparing for the unexpected can save you from added years of stress.
You can do it!
Overall you shouldn't let location, fees and taxes, or unforeseen circumstances scare you from making a purchase on a house. Just make sure it is a smart purchase. Does that mean you will have to let go of certain expectations or put in some elbow work? Yes! But in the end you will be all the more grateful you did your research. Our non profit Good Things Happen Foundation Inc. originally came about to help those who are facing #preforeclosure, #foreclosure, #taxliens, or those who may have #inherited a property they do not want to deal with. Every situation has a different solution its just finding out what needs to be done and making the best decision based on your #finances.
Written by LaToya Desprez of GTHFINC.org