Need Mortgage Help?
Fast Mortgage Rate Quotes

Why Are New Homes So Big?

Comments Off on Why Are New Homes So Big?
Bookmark and Share

Before You Purchase Your HomeA Tale Of Two Markets

If you have your heart set on purchasing a home that is spacious and newly built you are sure to be in luck. The real estate market abounds with large houses of recent vintage. On the other hand, those of us who would prefer to live in something that is compact and modest, yet we yearn for a home that is newly constructed at the same time, might not have such a large selection to choose from in the marketplace. So, that begs the classic question: What’s up with that?

In A Word It Is Economics

Builders and developers live in a reality that is brutally wracked by the oscillations of the market. One year they cannot build homes fast enough to satisfy buyers and the next they have no buyers to be found. So they tend to drive hard for the profits when they can get them. The developers who supply the market have it burned into their experience that they must maximize profits at all times.

That is the force that is behind the supply of the market. How it shapes the market is interesting to see and good to understand if you are house hunting. It helps to know why the market is being fed with a supply that might not match with what the average consumer wants or can afford.

New Build Pricing Is Different From Resale

The majority of home sales in the United States are the resale of properties that have been previously occupied either by owners or tenants. The value of properties is calculated by simple measures such as square footage and a comparison to similar properties that have recently sold in the local market.

Developers face an entirely different set of economics when they are building new homes to add to the market. Quite simply they earn higher profits when they put fewer and larger homes on a given piece of land.

What builders have to pay to build a home gets a little bit complicated. There is the cost per square foot and then there is the fixed cost per unit. It turns out that fixed costs are significant enough to make a difference in the calculations that developers make.

The Breakdown Behind The Method

Those fixed costs include such things as adding utility services and amenities such as heating, ventilation and air conditioning. Most homes have one kitchen that includes a standard range of features and appliances. All of these things are examples of the elements of a home that remains relatively fixed price regardless of the size of the home.

So when you are building homes, it pays you to have less fixed costs. That is why you put twelve 4,000 square foot homes on a plot of land rather than twenty at 2,400 sq. ft. each. This is the practical impact of profit maximization on the modern suburban landscape.

The Meaning For Homebuyers

This appears to have nothing to do what so ever with the accommodation that the median income family can afford in most parts of the United States. It is great if you have the need for a large home. Those larger homes are going to be expensive and more suitable for families than singles or more mature buyers. If you have an empty nest you may find that it is more difficult to find smaller detached homes and those that are available will likely be older and command a premium.


How to Get Help Purchasing Your First Home

Comments Off on How to Get Help Purchasing Your First Home
Bookmark and Share

Home Purchase BasicsMore Help Than The Average Mom And Dad Can Give

If you are not familiar with the ins-and-outs of real estate in its central role to the American Dream you could be forgiven for thinking that homeownership is out of reach of the average person.

Conventional practice without any help is to have a deposit of twenty percent, a host of professional services and agents as well as records and printouts of every detail of your life to date. It sounds exhausting and overwhelming. Fortunately there is a reason that homeownership is part of the American Dream. You will find it is actually still surprisingly accessible, once you start to dig into the details.

Homeownership Gets A Helping Hand

If you have never owned a home before but you have a job history, been renting your home and not too much debt, you can get into home ownership with the help of one of several government programs that are designed with the first time buyer in mind. You can call upon programs such as FHA form the Federal Housing Administration. If you have served honorably in the military the Veterans Administration has an excellent home loan program for veterans.

These programs are designed to get you into a home, even if you don’t have a huge pile of cash for the deposit. You can make a small down payment and just cover the costs of closing. This will save you thousands on what you might otherwise be expected to pay to get your hands on the door keys.

Low down payments on FHA loans are possible because of private mortgage insurance; VA loans have no such requirement (making them a great deal if you can qualify). PMI is an added cost. However, even including it, you may find that it is less expensive than renting an equivalent property.

Easy To Use Lending Practices

Your lender will also help to keep it organized by handling the PMI payments and property taxes as part of your monthly payment. PMI is due monthly but property taxes are normally due twice a year. Your lender sets aside the amount so that you don’t have to worry about calculating and saving the monthly share of a semi-annual payment.

When you start to look into the issues you will find that you need to get in good enough financial shape to make payments and clear off any excessive credit balances before you begin house hunting. You will need to get pre approved for finance and then find a realtor or broker that you want to work with to find your first home.

Once you are at that point the professionals will help to get you through the biggest purchase of your life to date. You don’t need to feel overwhelmed by the process because your agent and lender, as well as the government program that you join, will do all of the heavy lifting for you.

Dream The American Dream And Start Saving Up Today

Given and reasonable income stream and not too much personal debt it is still very possible to get your own piece of the American Dream. Government backed loan programs, private mortgage insurance and tax payments through your lender will take the burden off you as you become a new homeowner. Speak with your local real estate professional today and get ready to get enthusiastic about joining in the adventure of homeownership in America.


The Front To Back Fix Up Strategy

Comments Off on The Front To Back Fix Up Strategy
Bookmark and Share

Home Selling TipsThe Good Karma of Instant Curb Appeal

When you buy a home with the intention of fixing it up to realize the full value you have to make choices about how much work you should do yourself. You need to proceed based on a plan and there are a few things that you can do to make the most impact as rapidly as possible.

After all, if you intend to stay you need to make it look homey and presentable when the in-laws arrive to inspect (always sooner than you would like). If you are hoping to flip it for a quick profit then you want it to be presentable pronto for possible buyers.

There is one principle in DIY rehabilitation that will help you get there and keep the stress manageable too. You should work from the front to the back of the property to first get the curb appeal pumped up. You should get going by clearing up the front and start working your way to the back.

Preparation By Demolition

Get the demolition and clear-out out of the way as a preamble to the main event. Any project like fixing up a home will require a little bit of planning or a lot and you will get much further faster with a clear site and a simple plan. That is why it is a great idea to base that plan o the principle of starting at the curb and working your way back.

That is not to say that you can do this without some preparation. Before you start at the curb you will need to take care of all of the demolition and junk removal. Get the heavy, dirty moving and smashing out of the way and then you are clear to push to the back fence.

Planning Is Everything

Even before you commit to buying a fixer-upper you should have a plan of action. That is the only way that you can have enough information about what it will cost and how long it will take. You definitely need that for your own estimates and most likely your bank will want to know what you intend to do as well.

So, to avoid becoming overwhelmed at the thought of turning the neighborhood dump into the envy of the block, get a plan and make it simple. For residential property rehabilitation demolish dismantle and remove all of the junk. Once it is cleared out start at the curb at the front and work your way through the home and out to the rear boundary, creating charm and sparkle as you go.

Is It Safe To Start Hunting For A Home Yet?

Comments Off on Is It Safe To Start Hunting For A Home Yet?
Bookmark and Share

Before You Purchase Your HomeTiming Is A Personal Thing

The right time to hunt for a home is when you are ready. That is a different time for everyone. The time that you are ready is when it is a point in your life to change your home or to buy your first home. That is a personal issue and a financial one; the two sides are interrelated.

The state of the economy and the housing market are things that cause tremendous fascination and intimidation. The certainly do have an impact on whether it is time to purchase a home or not. But it still comes back to how it impacts you as a potential buyer, this is why:

The State Of The Nation And The Markets

If the economy is going to cause you to lose income or lose your employment altogether it can be extremely traumatic and put your home at risk. This was the cause of many foreclosures in the last downturn.

The whims and surges in the housing market can also be a real hazard to the homebuyer. In the mid 2000s when prices soared and credit was easy many buyers were roped in on the belief that huge obligations to adjustable rate financing could be overcome as prices continue up and refinancing would be the way out of future high payments.

Conversely the downward turns in the housing market present opportunities to those who are positioned to take advantage. When the housing market collapsed in the late 2000s investors who had piles of cash to spare had a field day investing in properties at discount prices.

The personal financial cycle is never the same as that of the economy and the housing market. Unless you are a fictitious person that is exactly on the average, and nobody really is, you will have some factors in your personal situation that make timing in home buying a very specific and personal experience.

Three Questions For Home Buyers

The true way to determine the right time is first, to ask yourself if it is a personal choice that you would favor? Is it the right time to be tied into the obligations of home ownership and would you thrive in the lifestyle? Second, are you formally in the right financial situation to qualify for home homeownership in the community of your choice? The way to determine this factor is to speak to your bank or finance company to find out what and how much you can get pre-approval for.

Finally, can you find a suitable home in which to settle? This is down to the affordability of the market in the location where you would like to settle. Alternatively, if nothing is in your price range it might be time to cast a wider net. You’ve already decided that you want to buy a home and assuming you are pre-approved for something then it is just a matter of an affordable market.

The Short Answer To The Question

The answer to the question of whether it is safe to start hunting for a home is that it depends on you as much as anything else. As long as prices grow steadily in line with inflation there is probably not a real estate bubble to worry about. So, the true focus should be on your financial condition and then matching your pocketbook to the marketplace for homes where you would be happy to live.

Buying A Home With Bad Credit

Comments Off on Buying A Home With Bad Credit
Bookmark and Share

buying-home-bad-creditYou May Have More Options Than You Think

Buying a home rather than renting is a very rewarding lifestyle choice that has been the core of the American Dream for the last one hundred years or more. For those who do own their homes, even with a high level of finance, it is an entirely different experience from paying rent to a landlord every month.

Regardless of that fact, all too many people wrongly assume that homeownership is out of their reach. The downside of the easy credit on which the consumer culture is built is the risk of bad credit that goes with it. It is a trap that is easy to enter and difficult to exit but the good news is that it might not exclude you from homeownership.

You may be pleasantly surprised, possibly even a little bit skeptical, to find that consumers who have less than stellar credit histories still regularly buy first homes for themselves and their families. Before you dismiss this as a joke, here are a few pointers on how that can work.

Get Your Credit House In Order

You have the right, once a year, to receive a free copy of your credit report from all three of the credit agencies, Transunion, Equifax and Experian. The website was set up expressly for that purpose. Warning! It is the only official site to provide this service.

Check carefully that each agency has accurate information and be prepared to dispute any errors or inaccuracies with them directly. Beyond that you may have to still do some savings or pay off credit card debt, but if you wish to have better credit you should be doing that anyway.

One of the greatest obstacles to homeownership is the down payment. There is often more than one way around this problem and to get you in the door and in possession of the title to real estate.

Government Financing Makes All The Difference

First there is government financing through the programs of the Federal Housing Administration (FHA), The FHA’s little brother, the Federal Home Loan Mortgage Corporation, AKA Freddie Mac and, for those who have served in the Unites States military, the Veterans Administration has an excellent program.

Possibly you might have a wealthy relative who is willing to provide financing or lend you the down payment. If not, it is not uncommon for sellers who have capital that they wish to put to work to carry finance. This means they will hold a mortgage note or trust deed in return for payments of principle and interest.

Prepare To Pay For The Privilege

In all cases, you will be paying interest on your financing that will reflect your credit history. Quite simply, better credit gets better terms; poorer credit pays higher interest rates. It is the opportunities that come from the FHA and other programs to make a low down payment that gives consumers with poor credit the chance to buy their own homes.

All is not lost if you have poor credit but you may have to do some work to get to where you can buy a home with bad credit. In any case, you should be working to improve your credit with a sense of urgency. With programs that are available and the vast, diverse nature of the American residential real estate market, you are likely to get the home ownership result that you desire, even with some blemishes on your credit record.

Planning Your Relocation Across The Nation

Comments Off on Planning Your Relocation Across The Nation
Bookmark and Share

movingCross Country Planning

The rhythm of life is often determined by the need to balance careers and family. Sometimes to best support the family you have to take that job across the country and bring the family with you. This can be a good thing if you have the resources to make the experience as simple and stress-free as possible.

When You Have To Go There Should Be Help Available

Fortunately, companies who hire across country appreciate the importance of supporting the moves of their valuable employees and pay the cost of the move. This is something that you should reasonably expected when you take a new position that requires relocation. Moving is expensive and stressful at the best of times. If you will be making the move for a large multinational corporation you will find that they are well versed in the process and willing to carry much of the cost. Your employer, who needs you where they are sending you, should have a relocation manager within the human resources department to help you move.

When You Have The Initiative You Can Still Have Support

These days, it is increasingly common to relocate in response to great opportunities that come from small companies or startups. These organizations often don’t have the resources or the knowledge base to support your move. Fortunately, relocation services have developed over the years to fill that role. These services can ease you into a new community, avoiding the stress and missteps of dealing with unfamiliar places and cultural ways.

Planning ahead will help make the move as easy as possible. So, speak to relocation service agencies as soon as you decide that relocation is an option, to find out how they can help you and what the cost of their services will be. Also speak with national moving companies, who will ship your possessions and have many years of supporting transfers from one location to any other, many of them truly far afield. Movers are an integral part of the process and the leading companies consider it an important service to help with relocation issues.

Go As So Many Have Before

Before you decide to make the move make sure you have considered the cost of living at the new location. For example if you are moving to New York City or The Bay Area of California you might be shocked to find the extreme cost of the local real estate markets there. There are also issues of local taxation that vary widely across the country or even within counties and local communities; it’s not just about home sales prices but the price of living there, as a whole.

Your real estate professional in your future community is the person who can tell you the most about a community from the perspective of a new homeowner. Speak with a relocation service before you travel and also your moving company to make connections on the other end. You will find that what matters most as you set foot in a new location and step into a new career opportunity is not having the distractions of house hunting in an unknown new town. So research these issues carefully as early in the process as possible. Ideally you will know whether relocation is worthwhile before you accept that appealing job offer.





Do Fixer-Uppers Still Work For Locking In Wealth?

Comments Off on Do Fixer-Uppers Still Work For Locking In Wealth?
Bookmark and Share

Investment Property BasicsYou Make Your Profit When You Buy

It is a common misconception that you make your money in high value asset transactions when you sell and get the cash or equivalents. This is not actually the case as you put the asset on your balance sheet when you buy, and the liabilities.

Did you know you have a balance sheet? Maybe not but the document is really just a representation of your assets. It is literally your assets that are real and the value is there whether you have recorded it or not. Keeping track of your assets is certainly a powerful way to track the value and will likely cause you to act in a way that produces more wealth.

It Is All In How You Price It

The secret behind making money on fixer-uppers is that you must begin by pricing the purchase based on the profit you are intending to make and then subtract all of the costs of getting there. Only then can you consider a purchase price.

This works because the profit is a discount based on the full market value in pristine condition. In real estate that discount is traditionally twenty percent or as high as twenty five percent in depressed or recessionary markets.

If you follow this formula you are on the right path to locking in wealth. What you do afterward will determine how your wealth grows. You could sit on it and let it ride the market, this works great if you rent out the property or use it as your own home.

Having financed the transaction and the fix up you could then refinance based on the equity you’ve built in. Remember that discount? You can now refinance with conventional loans that do not require private mortgage insurance, giving you the most efficient revenue situation. Your monthly cost will be based on loan repayments, property tax and insurance. Add in the cost of maintenance and property management and you’re done.

Profits Exchanges And The Certainty Of Taxes

Alternatively you might be determined to realize the value of the home as rapidly as possible. That’s a fancy way of saying you want to flip it for a quick profit. This can be a great way to earn a year’s income or more in one deal, depending on your market. However there are some tax implications that will put you on the hook for capital gains taxes.

You can limit your tax liability by putting your profits directly back into a new project as part of a 1031 exchange. This will limit your tax bill calculation to any funds you keep as cash, known as a boot. Also the time limits on 1031 exchanges are generous; you will have a reasonable amount of time to hunt for the next property in which you can invest profitably.

Do The Work And Realize The Value

So, yes there is a strong argument that fixer-uppers do lock in wealth. The trick is to find them in the first place. You may find that in a typical marketplace you will most likely have to look at many dozens of properties before you find the right one to rehabilitate. If that sounds like investigating one hundred properties or more, you are very likely to be correct, it is a very profitable investment opportunity because of the work you put in both before you find the right property and the work that you put directly into the property itself. Get with you local real estate agent who specializes in working with buyers get ready to do some work and happy hunting!

Breaking Down The Fees For Closing On A Home

Comments Off on Breaking Down The Fees For Closing On A Home
Bookmark and Share

Home Purchase BasicsA Long List Of Fees For Services

At the end of the day there is a very strong argument that buying your own home is an excellent value proposition. Unfortunately, getting to that point is a very formal, legalistic process that requires hundreds or even thousands of pages of documentation and it might seem like a signature on every page.

Likewise, when you buy your next home it will seem like there are too many fees and expenses to shake a stick at. That is normal and to be expected because the transfer of land and improvements, i.e. selling real estate is a complex and high value process.

When you are buying a home you might be forgiven for thinking that you still have a stack of nickel and dime services to pay for that just keep adding up. You will be glad to know that your escrow professionals are there to guide you the process and to ensure that all of the payments go to the right places and the, when the dust settles, the home is yours to enjoy without surprises and hidden costs.

Fees For Finding Things Out

When you are the buyer in a transaction you will have costs and expenses that are mostly due at closing, which means that you give them to the escrow company. The first type of these can be filed under fees for finding things out such as the appraisal, your Tri Merge Credit Report, flood zone determination and a fee to courier your sensitive documents between different professional services and on to the escrow company when it all finally comes together.

Fees For Professionals

The next could be classified as fees for professionals. These are the attorney fees for you and for the lender. You will pay for the title company title search or exam fee to make certain that nobody can come forward in the future with a claim to your home.

If the home is part of a common interest development such as a condominium complex, there will be a homeowners association. That means you will also need to pay your apportioned part of the HOA payment for the part of the period you take over.

Let’s not forget the pest inspection and survey fee! This makes the bank happy now and it will definitely not make you unhappy in the future. Nobody wins if something like termites turn up in the structure of your home after you have committed to ownership.

Fees To The Powers That Be

When you close there will be institutions that expect to receive their due. The first and foremost of course is the government, whose fees include prepaid property tax, transfer taxes and recording fees. You will pay the policy title insurance for yourself and for your lender along with any insurance for being in a flood zone, if it is determined to be required.

Your lender will require the release of prepaid interest and loan discount points as well as underwriting and processing fees. There will be a closing fee that goes to the escrow company for handling all of the distribution and confirmations before the release of the property to you.

All Part Of The Process

All these things certainly do add up and they can be very daunting to see listed as itemized charges. The thing to remember is that you have professionals there to help you, to make sure the process goes smoothly from start to finish. Don’t hesitate to question your realtor, your lender or your escrow company about anything you do not understand. Even with all of these fees, you will be so glad once you have the keys in your hand that it will all fade into insignificance, once the process of purchasing your own home is done.

Second Homes And Two Perspectives On What They Can Do For You

Comments Off on Second Homes And Two Perspectives On What They Can Do For You
Bookmark and Share

Second Home / Investment Home BasicsDo You Mean A Vacation Home Or An Investment?

If you are purchasing a second home there is plenty of ambiguity in the terms used to describe different types of real estate for ambiguity and misunderstanding. That is why there are two perspectives that need to be explored to get a valid definition. Read on to get the breakdown.

The dividing question is whether you intend to use the second property entirely for your personal enjoyment and you have the resources to fund it. Or you need to finance the project to a greater degree and recoup the costs with rental income. In the latter case you might wish to maximize rental income and treat it as a pure investment or you could seek a balance between repayments and enjoyment.

Funding Is The Question And The Answer

The difference in status matters if you are borrowing to fund the purchase of your second home. Loans for vacation homes are usually less expensive than loans for investment properties. Also investment properties will usually have a requirement for a larger minimum down payment. Loans for vacation homes will have restrictions on where they are located, either near some resort location or a minimum distance from your main home.

So the one extreme is the pure vacation home, on the other is the pure investment property, and in between there are the grey areas that lie within the investment property category. You might consider purchasing an investment property primarily, leasing it out as a vacation rental but reserving a particular time of year for personal use.

The additional cost of funding in interest and deposit can be offset by the rental income you receive. For those who have the resources to either self-fund or partially fund, this strategy will yield a minimal cost or possibly even a profit throughout the year.

So investment properties and second homes are really two things in the eyes of the law. However, as a resourceful owner you can make an investment property act as a second home and still get the benefits of both. However, if the idea of a second home that has no investment function appeals to you and it is affordable then why not pursue that option?

Opportunity Outlook In Second Homes

For vacation homes and investment properties the long-term outlook is good. For those of us with the ability to invest and to be patient the value of the property will prove to be a strong asset over time. Ultimately you may wish to cash out and use the proceeds to fund your retirement. Or you can exchange for a larger like-kind property, deferring capital gains for some serious tax advantages under a 1031 exchange.

In every case you should be aware of what you are getting into before you make any commitments. Speak with your financial advisor and your local real estate expert, either can point out the possibilities. You may be surprised at the potential that you can unleash by purchasing the type of vacation or investment home that is right for you.

Your Second Home and The 1031 Exchange

Comments Off on Your Second Home and The 1031 Exchange
Bookmark and Share

1031-exchange-basicsPronounced Ten Thirty One

Let’s say that you have had a second home, a vacation home for a while now, it is a proven good investment, one that has appreciated considerably and you’d like to dispose of it by sale. Technically there could be some problems with the increase in value that has accrued, if you’ve had it for a while. Which means that any cash that you take out of a sale is going to be taxed as a capital gain. Fortunately, there’s a plan for that, as long as you want to keep the value in further real estate investments.

The 1031 exchange refers to the section of the Federal tax code that covers re-investing your profits from the sale of a second home into another of higher value. Because it is defined in the tax code there is a whole host of rules that go along with it. This is a perk for investment properties only; you can’t use it to move up to a nicer home.

The Name Of The 1031 Exchange Game Is Flexibility

You get to exchange like properties for like, the term “like” is very broad in this context. You could exchange commercial space for residential or even undeveloped land. You can even delay the process so that you get the right property to replace your old one.

The great advantage in using a 1031 exchange is that you don’t have to deal with the capital gains tax that arises from the sale of an investment that has grown substantially in value. It prevents a big tax bill when you file your tax returns for that year. If you end up taking out cash in the exchange then that cash will be taxed as a capital gain, charmingly referred to as “the boot”. This is a key point because the tax deferment comes from not taking out the value that you have gained by investing wisely.

Put The Boot Away Until You Are Done

There is one limitation you must keep in mind when you take advantage of a 1031 exchange. It is a deferment, so that when you do finally break the chain, stop reinvesting in real estate and cash out there will be some sort of tax bill to be paid. But that is a good thing because although the tax bill might seem quite large compared to your original investment it is reduced by the compounding gained on the value not given to the government previously, each time you sell and buy new assets.

If you have a vacation home that earns income or you have cash in a bank account that you want to put into a second home or other investment properties the 1031 exchange is a real sweetener. Deferring the capital gain, even as you trade your way into a real estate empire, is a feature that makes investing in real estate so attractive. In fact, it is a great tool for small investors who wish to be big investors one day.

Mortgage Rates