Here Are The Most Commonly Asked Questions About Purchasing A Home

Why Should I Buy a House?

1. House prices tend to rise over time, so a house is one of the best investments you can make. Home prices have risen three to six percent a year for the last 20 years and the trend is likely to continue. So if you buy a home now, you’ve put your capital in a safe investment where it is likely to grow.

2. You’ll pay less tax. You can deduct the interest you pay on your mortgage from your total income. The value in this tax break depends on factors like your personal tax bracket, the size of your mortgage, the rate of interest you pay on it and how long you’ve held the mortgage. As a rule, the newer the mortgage, the greater the amount of interest you pay each month and the bigger the tax break. Therefore, recent buyers with young mortgages tend to get the greater benefit.

3. You’ll be buying a piece of real property rather then putting money in to your landlord’s pocket every month. The real cost of renting is higher then the monthly payment. There is also an opportunity cost equal to the amount you would gain by using the money to purchase a home instead. Even if the house you purchased did not appreciate in price, you would be able to sell it and recoup some of the money you put into it.

4. Interest rates are still very low historically. This makes it inexpensive to have a mortgage. The lower the interest rate, the less you actually pay for you house and the faster you pay the mortgage off.

5. You’ll be able to use the equity in your home for low cost loans for other purposes. You can access the paid up equity you accumulate in your home in the form of a home equity loan home equity line of credit. Because they are secured, home equity loans and lines of credit generally carry a lower interest rate then other types of consumer loans, such as auto loans. The interest on them is generally tax deductible, as well.

5 Must-do's for Home Buyers

1. Get pre-approved for a mortgage before you make an offer. When you are trying to buy a house in a competitive market, your offer to purchase should contain as few conditions as possible. An offer that is conditional on obtaining financing is often a deal killer. The seller may accept a competing offer for less money rather then take the risk that you won’t be able to raise Mortgage Money. A pre-approval letter from your lender tells the seller you are ready and able to commit.

2. Know when to quit. When you act on emotion, rather than reason, you may end up paying too much money. This can happen when you fall in love with a particular house and start fantasizing about how great it will be to live there. Another reason you may be driven top pay too much is that a bidding war triggers your competitive instincts and you must buy the house at all cost- which you will regret later.

3. Set enough money aside to cover closing cost. You’ve put together a down payment. Be aware that there is also a long list of expenses you may have to pay at closing, depending on where you live and who your lender is. Closing costs can add up between two and six percent of your loan. Get a Good Faith Estimate of the loan related fees you’ll have to pay. Also get your real estate agent to compile a list of other expenses.

4. Try to coordinate the date you take possession of your new home and your moving date. If possible, avoid a situation where you’ve got to camp out with relatives or find a short term rental because you must vacate your old house or apartment before you can move into your new home. Moving once is enough.

5. Insist on a home inspection. The first really cold day you spend in your new house is way too late to find out that the furnace doesn’t work. The one condition you should always include in an offer to purchase is a home inspection. Find out how much it will cost to fix any serious defects and have the seller fix them before you agree to buy or deduct the estimated cost from the final price you offer. If the seller won’t help bear the costs and you want to go ahead with the purchase, make sure you can afford the necessary repairs on top of your mortgage.

 What mistakes should I look to avoid when buying a home? 

1. Buying a house that doesn’t fit
When buying your home, consider how long you plan on staying in that house. You don’t want to find your self in too much or too little of a house. Plan for any lifestyle changes that may occur during that period and search for a home that fits your needs.

2. Buying a property that will be difficult to resell
When you buy, think about the day it comes to sell. It’s easy when you’re house hunting to forget what it’s going to be like to sell your home down the road. Most first time buyers sell within four to six years. Walk yourself through all the negatives and think of how you will sell the property prior to buying it.

3. Not having a house inspection
Everything looked just fine. How were you to know that the house had a termite problem, asbestos, a leaky roof, cracked foundation and electrical problem’s. You would have known if you had a professional home inspection. A home inspection generally costs between $300-$700 and is well worth it.

4. Forgetting about closing cost
You’ve been saving for a long time and you finally have enough money for a down payment on a new home. You search for the perfect home, and you realize that you have enough for the down payment but not enough for closing costs. When saving for your down payment take into consideration the closing costs which include lenders fees, title fees, escrows for property taxes and home owners insurance. In most cases you negotiate with the seller to pay a portion of the closing cost. Most sellers are willing to contribute since it will help sell their home.

5 Things You Must Do Prior To Selling Your Home

1. Understand your options:

• A fixed-rate mortgage, your monthly payments remain the same during the entire length of the mortgage.
• An Adjustable-rate mortgage, you will often receive a lower initial interest rate, but your monthly payment amount can rise and fall as interest rates fluctuate.
• A Balloon or reset mortgage, you once again may be offered a low interest rate, but it will hold for a limited time.

2. Become a rate watcher:

• Your daily newspaper tracks these rates, so stay current by watching whether rates are rising, falling or remaining stable.

3. Get Pre-approved:

• Getting pre-approved for a mortgage loan gives the homebuyer additional bargaining leverage when competing with other buyers for a home.
• A home seller will be more likely to accept an offer from a pre-approved borrower.

4. Consider making a higher down payment:

• Making a higher down payment will reduce your mortgage.
• Putting a higher down payment can often get you lower-cost financing.

5. Select your lender carefully:

• Seek the advice of your real estate agent about who to choose when acquiring a loan for the purchase of a home.
• Never trust a mortgage offer that arrives via email, as it is likely originated from a spammer.

5 Tips Prior to Selling Your House

1. Get Pre-approved for a Home Loan
Seller sometimes sign a contract to sell their house before they know if they qualify to buy another. Financial circumstances sometimes change since the last purchase, and they could no longer qualify for a loan or they weren’t able to sell at a price that allowed them to buy a type of replacement house they want.

2. Check your mortgage payoff
Call your lender to check the payoff for your current home mortgage.

3. Determine how much your house is worth
Determine your home’s fair market value, you can get a professional real estate agent to help you.1. Over extending your budget
Buy a home that’s way out of your price range and you could find yourself feeling pinched every month. Just because you have been pre-qualified for a certain loan amount and payment doesn’t mean that is where your comfort level lies. Plan for emergencies, entertainment, vacations, savings furnishings and other amenities. Then take into consideration your future mortgage payment and all of your liabilities. That will give you a better idea of what kind of payments you can really afford.

Trust us when we say, "Not all real estate agents are the same."  You pay the same to hire the BEST, The Costa Group.

4. Make necessary repairs
Make all needed repairs unless you want your house to be regarded as a fixer-upper. Fix anything that is obviously broken that the potential buyer will notice to lower the price.

5. Get your house ready to show
Great curb appeal, fresh paint, organized closets and cabinets, clean windows and appliances and a clutter free look are essential if you want to appeal the buyers.

5 ways to speed up the sale of your house

1. Price it right. Set a price at the lower end of your property’s realistic price range.

2. Get your house market ready.  Do necessary repairs/fixes before and not during the sales process.  Ask Andrew about certain repairs before you fix them.  In this market, it may not be a good idea to fix specific things. 

 3. Be flexible about showings. It’s often disruptive to have a house ready to show on the spur of the moment, but the more often someone can see your home, the sooner you’ll find a buyer.  The Costa Group believes in courtesy by providing 24 hour notice on all our clients showings whenever possible.

4. Be ready for the first offer.  Typically, the first offer is the best offer. Decide in advance what price and terms you will accept.  We will advise you on this.

5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days with out an offer, be prepared to lower the asking price.

A few tips on pulling together a down payment