Preparing to buy a home is a bit like preparing to go on a very long journey.
You have to have your finances in order, know where you're going, what you're
hoping to accomplish and how much time and how much money you can afford to
spend.
Financial matters. When it comes to owning real estate nothing is more
important, for obvious reasons. As we've seen, if you get locked into a mortgage
you can't afford, the result can be devastating. But even if you can afford the
mortgage, you might not want to be "house rich and cash poor". You have to
consider other things that are important to you such as travel and your spending
habits. If for instance, you like to travel for months at a time, it might be
wise to consider a smaller house with a less expensive mortgage instead of a
large home with a big mortgage, which could cause you more work and less
financial ability to spend on other things you like.
Another consideration is the length of time you want to have the mortgage.
Many young people choose a 30-year fixed mortgage but if you're a senior citizen
you might want to opt for a 15-year loan. The best thing you can do is make a
list of your financial matters and the questions you have about buying a home
and then consult with a highly experienced loan officer. A knowledgeable loan
officer can be like having a tour guide with you all the time in a foreign
country where you don't speak the language. The jargon used in the mortgage
industry documents can be confusing. Having someone who can clearly explain the
documents, what to expect, the time frame, and the process is priceless.
Debt-to-income. The ratio of your debt-to-income is vital when
purchasing a home. These guidelines have become more strict since the housing
crisis so it's critical to consult with experts about your personal financial
situation. Generally speaking, you should have a debt-to-income ratio of no more
that 36 percent–meaning all you owe (including your mortgage, taxes, and
insurance) should not equal more than 36 percent of your income. Remember there
are still monthly expenses of your home on top of your debt. And, of course, the
less you owe and the more you make, the better position you're in for buying a
home and creating your own financial freedom.
These days, along with keeping your expenses and debt manageable, a key
factor to buying a home is having a healthy downpayment. Most lenders would
consider 20 percent a good downpayment. The more you bring in, the less you have
to borrow. Remember the collapse of the housing market was brought on by small
or no downpayment loans and many buyers who simply didn't understand the risks.
Know how long you'll stay. This is really important because the cost
of buying and selling a home is expensive and very time-consuming. If you're not
planning on staying in your home more than seven to ten years, think about
renting. You may still decide to buy, but you need to understand the cost of
purchasing and maintaining a home. Investigate the economic difference between
buying and renting. Be realistic about how frequently you've moved in the past
and whether you're now ready to settle in for several years. You can always rent
your home out but this assumes that you'll be a landlord (willing to take on all
those duties) and then also have to find another place to live and either rent
or buy.
After considering all of these factors and making certain that you're ready
to buy, then take the next step and find the best agent in your real estate
market. Your agent will help you further prepare to buy the home of your dreams.
Written by Phoebe
Chongchua
January 25, 2013
Thinking
about Buying or
Selling?
Call Alvin's Team Today!
877-651-7810
Or visit our
website:
www.LivingLakeTahoe.com
Friday, January 25, 2013
Thursday, January 24, 2013
Rental Increases Should Prompt More Home Buying Moves
Rents are still going through the roof, just not as quickly.
Rents were up for the third consecutive year in 2012, when they rose a bit
slower than in 2011, but forecasts call for rent increases in 2013 to match
2012's increases, according to MPF Research.
That puts more pressure on housing consumers to buy and lock in housing costs to beat both the rising cost of
rent and the growing costs of owning a home.
Buyers who move now can still enjoy record low interest rates, distressed property bargains and relatively
affordable home prices.
However, most renter movement in the apartment sector consists of households
opting for one apartment over another.
Loss of renters to the owner-occupied housing market sector is having only a
very small impact on apartment sector fundamentals, according to MPF Research.
"While the number of apartment renters opting to buy is rising a little, it remains far below
the levels apartment operators were accustomed to prior to the recession," said
Greg Willett, MPF Research vice president.
"Families that have been renting single-family homes, rather than apartments,
comprise a big portion of the first wave of homebuyers seen in the cycle. By far
the biggest component of the apartment resident base, particularly within large
urban areas, consists of young singles living alone or young-couple households.
Single-family homes just aren’t the right housing option for many of them,
regardless of shifts in the pricing relationship," Willett added.
MPF Research said apartment rents climbed 3.0 percent in 2012, down from 4.8
percent in 2011, but a bit above the long-term norm of 2.5 percent recorded
during the past two decades.
An increase of 3.0 percent is similar to the average results posted during
shorter past periods when occupancy was sustained at strong and generally stable
levels, according to MPF Research.
Those shorter periods of annual price increases of 3.0 percent came in 2005
through the middle of 2008, and earlier in the middle to late 1990s.
Among large individual metros, top markets include three San Francisco Bay Area markets - San Francisco, San Jose and
Oakland - where rents rose 8 percent, 7.7 percent and 7.1 percent, respectively.
Other top rent increases were in the Denver-Boulder area where rents rose 5.9
percent in 2012; 5.1 percent in Nashville and New York; 4.8 percent in Houston;
4.6 percent in Charlotte; 4.4 percent in Portland and 4.3 percent in the
Seattle-Tacoma area.
MPF also said property owners and operators didn't push as hard for higher
rents in 2012 as they did a year or more ago. They'd rather hold onto existing
tenants.
"Many on the operations side of the apartment industry have focused on
sustaining their very tight occupancy levels during a period when job growth and
new household formation have been fairly sluggish at the same time that renter
movement has begun to inch up from the unusually low levels experienced in the
previous few years," Willet said.
The average apartment occupancy rate of 94.9 percent at the end of 2012, was
up a tiny bit from 94.7 percent at the end of 2011. The rate was 92 percent in
2009, when the nation's apartment occupancy rate bottomed, MPF reported.
MPF says look for 2013's rental market performance to be similar to the
strong 2012 marlet.
"Most places are starved for new product right now, so properties that will
complete over the coming year appear likely to do incredibly well, generally
without hurting the results for the existing stock," Willett said.
Written by Broderick Perkins
January 24, 2013
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Written by Broderick Perkins
January 24, 2013
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Monday, January 21, 2013
What Are The Financial Implications of Transferring Home Ownership?
Q: "Hi Robert. My parents would like to transfer ownership of their home to either me or one of my siblings. They’ve asked me to look into this. I’m not sure where to start. The home has been paid in full. Can you point me in the right direction?"
- Ricardo, San Jose, CA.
A: Sounds like a wonderful gift! Ricardo, transferring ownership of your parents’ home to adult children is a relatively simple process that requires documents from a title company.The transfer may also require you or you parents to pay property transfer taxes, depending on the city or county.For example, if your parents bought the home for $100,000 and then remodeled and upgraded the property at another cost of $50,000, the "cost basis" would be $150,000.
Let’s say that the property transferred to you is worth $300,000. Later, you sell the home for $300,000. You could be taxed on the difference between your cost basis and the sales price – $150,000. At a capital gains rate of 15 percent, you could be looking at a $22,500 tax bill.
However, if you were to inherit the property at your parent’s passing, then the current value of the home would be based on a "stepped-up basis" of the property. Under that scenario, if you sold the home for its inherited value, you would not have to pay any capital gains taxes.
In another approach, if you moved into the home now or when you inherit the home, if you live in the property for at least two out of five years before you sell, you would avoid the capital gains tax.
If you are married and you and your wife lived in the home and filed a joint tax return, you would have a $500,000
The transfer itself is a relatively simple process, but only after you’ve ironed out the details with certified public accountant or real estate attorney and the title company to determine how you want to accept transfer the property.
An accountant can examine financial and tax issues, an attorney considers legal matters and the title company will handle title insurance and determine if there are any liens or other claims against the property.
Even if the home’s mortgage is paid off, the title could have encumbrances filed against it.One good hour of solid advice will be better that tens of thousands of dollars that you could end up owing to the IRS if you make the wrong move.
Written by Robert Aldana, Published by Realty Times
January 21, 2013
Thinking about Buying or Selling? Call Alvin's Team Today! 877-651-7810 Or visit our website: www.LivingLakeTahoe.com |
Friday, January 18, 2013
What A Real Estate Expert Can Do For You
Decades ago. you had to go to a real estate agent in order to get information
on property listings. Huge books filled with all the local real estate listings
were distributed to real estate offices. The agents would review the books and
find homes that matched their clients' needs. Then the address was given to the
clients so they could do a "drive by" to see, at least, the outside of the home.
This information was not readily available to the public.
The times have drastically changed. Today, much of the once-private
information is now public. So does that mean you can handle the entire real
estate transaction on your own? Not likely... especially if you want a highly
successful outcome.
Understanding the value of an agent: Expert real estate agents are trained to
help streamline your real estate transaction. Good agents are highly
knowledgeable about the industry. They bring to the table more than just good
listings for you to view. They help you understand the information that you're
getting. They help you sort through comparable properties and decipher
information listed in the Multiple Listing Service. They can help you spot
potential issues and make you aware of important documents. Having an agent
guide you through the process of buying your home can help save you time and
money.
Pricing experience: One of the biggest values an experienced agent can offer
has to do with pricing. Whether you're buying or selling your home, having an
agent help you understand the current market conditions is vital. Agents can
craft negotiation strategies to help ensure that your interest is protected. The
negotiation skills of a highly knowledgeable agent can be critical to your
transaction. When you hire agents to work on your transaction. they have a
vested interest in the sale. However, their commission is far less than the
amount of interest you have in the property. Therefore, experienced agents can
leave emotional interest out of the negotiations and work for the best outcome
by presenting their client's situation in the most appealing way possible. They
also must keep their client information confidential.
Coordinating the process: Another very useful function of real estate agents
is the assistance they provide with coordinating the complex home-buying and
home-selling process. Real estate transactions require an enormous amount of
paperwork. Real estate agents can't provide legal advice about the documents,
but they can point out important papers and disclosures, and alert you to the
filing time-frame for when these materials must be signed. They typically also
have a good network to direct you to other experts for more specific answers to
your questions. Agents also are very used to coordinating and keeping on
schedule things like hiring inspectors, staying in touch with the other party's
agent, explaining how repairs will be fixed and who should pay for them, and
directing you to resources for financial matters.
In today's market, there isn't any industry that I say you should rely 100
percent on the experts. For example, if your health is compromised, it's my
belief that you should do your homework and learn more about what is causing the
suffering. The same is true for buying or selling a home. Get educated. Read
articles and watch videos from as many sources as possible. Study the market and
prepare questions to ask the experts when you meet with them. This will make you
more prepared to interview and hire an expert. Ultimately, you'll find having an
expert to help guide you through the real estate transaction will be a good
investment.
Written by Phoebe Chongchua
January 18, 2013
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Written by Phoebe Chongchua
January 18, 2013
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Friday, January 4, 2013
Buying A Fixer-Upper Home For Your First Home
For many people who have been sitting on the fence waiting and wondering if the housing market is rebounding, the signs are showing an improved chance to get into real estate while prices and loan rates are still low.
However, many of the homes on the market need some work and some need a lot of care. How do you know what to look for in a fixer-upper? If you're a first-time home buyer, purchasing a fixer-upper can be a good option because the price will be lower. But fixer-upper homes come with flaws and some can be huge.
Why a fixer-upper? In some areas, the housing market is very low on inventory, especially new and/or homes in top shape. Foreclosures and short sales, though, can offer better prices if you can deal with the home's maintenance needs.
Many first-time home buyers don't take into consideration the extra expenses needed to maintain a home. They carefully calculate the mortgage, downpayment, homeowners' association dues, property taxes, and other hard costs but they neglect to factor in the everyday repairs and maintenance for the property. Things like a new water heater, stove, microwave, central heating/air conditioning systems, washer/dryer and dishwasher repairs and even plumbing and roof repairs. These items might be new or relatively new when you move in but, in the not-too-distant future, they'll need repairing or replacing. When they do, the added costs can put a strain on homeowners' monthly budget.
With this in mind, buying a fixer-upper for your first home can be a great way to get into the real estate market at a good price. However, it's essential that you completely understand the home's necessary repairs before you buy. Things to consider include how much you'll save by buying a fixer-upper versus what you'll need to spend to make it livable, how old the home is, who will do the repairs, and how much patience you have for this project.
Real estate is also always about location for obvious reasons. You can have a fabulous home in a horrible location and then later nobody wants it. Or you can have an okay or fixer-upper home in an ideal location, and suddenly it's worth millions - easier to fix up a home than it is to change the entire surrounding location. So, when shopping for a fixer-upper, be very careful to survey the neighborhood and make sure it's in a location that is worth spending your time and money to fix it up.
You need to carefully study the cost and savings by buying a fixer-upper. People buy these types of home to save money but if you end up under-estimating the home's cost to renovate it, you'll be either short on cash or very upset. Get a home inspection to ensure you understand the basic repairs and maintenance needs. If there are problems with the home, make sure you consult with experts to give you an idea about how much the repairs will likely cost. Also, be sure to consider the age of the home. If a home is very old, it can certainly have some charm t but it also can have a lot of nightmare issues that aren't always easy to spot. This can be things like plumbing or electric wiring issues, lack of insulation, structural or foundation problems... the list goes on. You don't have to steer clear of an older home but do your homework before you buy.
Part of doing your homework is finding an expert team to help with the repairs. If you're a handyman, that's fine, but there will likely be times when you'll need to turn to other experts for help and advice. Start gathering these resource contacts now before you buy so that you can have them available to look at the fixer-upper homes you're considering buying.
Finally, be short on expecting super fast progress and long on patience. Remodeling and even just making minor repairs can take longer than you think. Don't get impatient. Remember you chose a fixer-upper to save money. Taking the time to properly care for it will ensure that you have a comfortable home.
Written by Phoebe Chongchua
January 4, 2013
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Wednesday, January 2, 2013
Is Home Buying a Safe 2013 Investment?
Q: I was wondering what your thoughts were in regards to buying a home today. What is your outlook for the housing market? We have seen prices jump recently and I was wondering if you think this will be a trend in 2013. Do you really think it is safe to buy a home as a good investment? - Ana, Morgan Hill, CA A: Ana, no one knows exactly what will happen in the future, but with some solid research, you can make a fairly sound prediction. For several years, after the housing crisis began, I announced numerous times, in my radio programs and articles, that buying a home was not a sound investment. At the time, there was no end in sight for declining property values. However, I also predicted that in late 2011 and 2012 the market would settle down and possibly hit bottom and become a good time to consider buying again. What we have at this moment is the “basketball effect.” Take a basketball and hold it up high, then drop it. That first bounce is the basketball's fastest upward bounce. During that first bounce, it begins to travel slower the higher it rises. The real estate market has reached the bottom and you are seeing the initial bounce in property values. I see this upward trend in values continuing, but the market cannot sustain such rapid appreciation acceleration. Just as the basketball begins to slow after that initial bounce, so will
Written by Robert AldanaDecember 31, 2012
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
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