Home, Property, and Real Estate

For a first time home buyer, the process can get quite overwhelming, giving you the feeling that the financial decisions are rapidly spinning out of control.  When it comes to real estate, most people don’t have a lot of experience or know a lot about it.  In all actuality, buying a home is actually a simple process.  All you need to do is understand the basics, which will go a long way in helping you buy your very first home.

The first thing you should know is to avoid pre payment penalties at all costs.  What this means, is that if you buy the home then later want to sell it before the balance of your mortgage is due, you’ll have to pay a penalty.  You can find a variety of great loans that don’t include these types of penalties.  If you find a loan that does include pre payment penalties, you should immediately turn it down and look for another loan.

You should also be on the lookout for good ARM’s.  If you have a good ARM, then your interest rate and monthly payment will adjust at the exact same time.  This will make sure that your interest doesn’t affect your monthly payment.  If your interest rate does affect your payment, then you will notice the unpaid interest reflecting the overall amount of your loan balance.

You’ll also want to get pre approved for your house as well.  This lets the seller know that you are serious about buying, and will normally work in your favor to give an edge – which is especially handy if there are several others interested in purchasing the home.  Getting pre approved will also save you a lot of time as well.  If you can’t get approved for a loan, you shouldn’t waste your time inspecting it, trying to get a good interest rate, or negotiating with the seller for your ideal price.

Before you purchase a home, you should always be aware of how much you can afford.  Before you attempt to purchase a home, you should always go over your budget and figure out how much money you can spend on a mortgage payment.  If you manage your money smart and know your finances, this shouldn’t take you hardly any time at all.  On the other hand, if you don’t know your finances, this will take you a long time indeed.

If you’ve already purchase your first home, you should always avoid taking any type of home equity loan.  These loans can be very tempting when you get in an emergency and need cash, although most home equity loans add up to more than the value of your home.  You should never, under any circumstances take a home equity loan, as there are many other ways that you can clear up your personal problems without having to jeopardize your home.

Keep in mind that the above are just a few basic tips and that there are many other things you’ll need to know before you buy your very first house.  You’ll need to be familiar with private mortgage insurance, special loan programs, fixed rate and adjustable rate mortgage, and several other things.  Buying a home is an easy process, once you know a bit about it.  If you familiarize yourself with buying a home and learn all that you can about what is involved, you’ll find the home buying process to be easier than you ever thought possible.

With today’s rising prices it’s all most people can do to stay afloat financially. So how does a young couple save enough money to break into the housing market? Sometimes you have to think outside of the box and come up with creative financing options. One such example is Lease-to-Own, or Rent-to-Own house purchases.

Basically, in this scenario, the landlord and the tenant come up with an agreement to purchase the house within a designated period of time (usually 3 years or less), for a specific price. An option fee of 1 to 5% of the price is credited to the purchase price and a premium is added to the rent payment to accumulate a deposit. If the buyer backs out of the purchase agreement they lose both the option fee and the rent premium.

Typical Rent-to-Own Contract Features

The rent and home price are usually established and documented based on market value plus any negotiation between the buyer and seller.

A rent-to-own contract will have an option period where the borrower can build equity while living in the home. Once the option period expires, the borrower is counting on successfully qualifying for a mortgage to purchase the home. It is imperative that the borrower has a good idea of their ability to assume a mortgage; speak to a lender before entering on a rent-to-own agreement to have your financial situation examined. You may only have to improve your credit rating, and this can be accomplished by making timely minimum payments any loans or credit cards each month.

Often a lender will want to see that an amount above the market rent price has been set aside. This ensures that the seller is not providing the borrower with a kickback by artificially inflating the selling price. Usually the bank will also request an appraisal for this reason.

If at the end of the option period, the buyer discovers problems with the home, it may be cheaper to walk away from the deal than purchase a house which may develop into a money pit.

The selling price of the home is agreed upon at the beginning of the option period. This means that after a 3 year option period if houses prices drop the borrower may request a down payment based on the new value. For instance, a 5% down payment on a $225,000 home would be $11,250. If the home drops 3% in value, or to $218,250, the 5% down payment from this would be $10,912 – bringing the maximum loan amount to 207,338. You need $225,000, now you have to make up the difference.

However, the price may indeed go up 3% in price and the seller is out the amount of the increase. It is for this reason that some contracts are drawn up with no final price quoted, just specifying the house will be sold at fair market value at the end of the option period.

There are shady sellers out there who will create a contract with an easy escape clause, such as the right to evict a tenant with only 3 days notice. It is in the buyer’s best interests to have their contract reviewed by a lawyer before entering into a binding agreement. Also, pay your rent on time and do not give the seller any opportunity to renege on the agreement.

Many people are looking for ways to earn an income either as a part-time gig or to replace their jobs and work full-time as an entrepreneur. One of the hottest and most popular ways of doing this is getting into real estate purchase and resell.

Overview of a Real Estate Investment Business

A very basic type of real estate investment is buying a home and then renting it out in hopes of keeping up with mortgage payments and coming out with a nice profit at the end of each month. This often entails making some repairs to the home you want to rent, as well as giving the home some perks that will raise its value from its original cost.

This is a lucrative business, and people make a nice living from their real estate investments. It takes work, a good understanding of the real estate business and determination. Now take a look at the pros and cons here.

Pros of Real Estate Investments

One way people obtain real estate is through foreclosures. Often these homes are auctioned off for less than they are worth, which is the prime scenario. In this case you may have to fix up the home a bit, and then have the option of renting or selling it. This is an easy way to get started in the real estate investment business.

Another way to obtain real estate is through buying a fixer-upper and making needed repairs. This type of investment makes sense, as you get to see the house before you make a bid to buy it, so you know what types of repairs it needs ahead of time. The key here is to make a bid early and try to get the lowest price for the home. This works especially well with sellers who want to make a quick deal.

Cons of Real Estate Investments

A foreclosure sale is almost always a “buy as is” type of sale, and you have no recourse, if you want to back out of the sale. In the case of a foreclosure, you could find yourself having just purchased a home that has way more damage than you expected, leaving you to have to make major repairs before the house can be put on the market. These repairs can add up quickly and soon you find that you have put out more money than you can recover.

The same goes for buying a fixer-upper home on the market. If you do not pay close attention to the condition of the house you are interested in purchasing, you might be paying for costly repairs that you did not count on. The ideal situation is to buy a home that is in need of little or no repairs, so you can concentrate on additions and other cosmetic changes that will raise its value. You don’t want to sink your money in major repairs caused by a careless previous owner.

It all boils down to the fact that a careful buyer must take the time to research homes, including their locations, up for sale before making any purchases. Real estate investment should be profitable to you. You should learn the ins and outs of buying homes that will make you money rather than cause you headaches. Be informed, and you should do well.