Tag Archives: homebuyer

Eliminate The Deal-Killers!

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Deal-Killers!

In her year-long house hunting adventure, Brooklyn-based realtor.com writer Margaret Heidenry recently likened home shopping to dating. “I toured countless homes, and that first visit is a lot like a first date. It can be going great until you spot your personal deal breaker—like a pack of cigarettes in her purse, or white socks with sandals. Check, please!”

Deal-breaking rooms can appear anywhere in a house, and there might be more than one. Realtors can quickly list the most common offenders that make buyers cringe. Here are a few examples:

Empty rooms with echoing voices rarely entice buyers to ask for a second visit. It’s like realizing you have nothing to talk about on a date. Empty rooms make buyers question their potential uses, even if there’s a closet in the corner. The emptiness highlights flaws—like ceiling stains, windows overlooking brick walls, or peeling floor moldings. The solution? Don’t leave it empty. Stage it as something—a home office, a library, a sitting area, or a guest bedroom. Simply adding an IKEA desk, chair, area rug, lighting, and a potted plant can make a huge difference, encouraging buyers to continue their tour.

Light is essential. No one wants to walk into a dark room. Open the curtains, raise the blinds, add light fixtures—do whatever it takes to make the room feel welcoming, even if it means lightening the paint color. No one cares that it might have been your migraine sanctuary. Just do it. Adding a real plant (not a fake one) also helps, as live plants suggest there’s enough light for them to thrive.

The bathroom from hell is a major turnoff. What qualifies? Carpeted floors. Ew. Or a bathtub hidden behind a tacky shower curtain, preventing buyers from seeing its Psycho-like depths, which might reveal dirty grout, chipped porcelain, pitted fixtures, or a collection of shampoo bottles in pools of water. Realtors agree that, regardless of a house’s size or price, every woman heads straight for the bathroom to inspect the tub. They recommend either refinishing or replacing the tub. And that carpeting? Replace it with tile. Such scenes suggest future expenses to potential buyers.

Kitchens can either sell homes or drive buyers away. They are the heart of the home. Just as your homemade lasagna brings joy, buyers need a similar reaction to your kitchen. Easy fixes include clearing counters of everything, including canister sets, toasters, Nespresso machines, the Vitamix, and cookbooks, to suggest more prep space. Quick solutions with high visual impact include refacing or painting old cabinets or upgrading outdated appliances.

Other rooms and areas can also scare buyers away, such as creepy basements, cluttered entryways, purposeless formal living rooms, overstuffed closets, and Tupperware-filled cupboards.

Ask your Realtor to give you an honest assessment by pretending to be a potential buyer seeing your home for the first time. Then get to work. Be warned, though—by the time you make all these improvements, you might decide not to sell after all. It happens.

Source: TBWS

Secret Ingredient to Selling

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Being open to flexibility can often be the secret ingredient to selling your house.

The idea of downsizing can feel daunting, like trying to fit your entire life into a tiny car. Yet, for those who’ve invested time and money into a large family home, the thought of moving into something smaller can seem overwhelming.

However, downsizing doesn’t erase the memories made in your old home – those family gatherings, the first steps of your children, or the grand holiday celebrations. As life evolves and your nest empties, the idea of downsizing can become more appealing. Many Americans embark on this journey, especially after retirement, seeking a simpler lifestyle, reduced housing costs, and freedom from maintenance tasks like painting and mowing.

According to Emmet Pierce’s article on downsizing for MoneyTalksNews, opting to rent can make selling your home and relocating a more straightforward decision. “Renters have the flexibility to live wherever they choose and experience life in different communities. And once your lease is up – sometimes even before – you’re free to move on.”

But whether you choose to sell and rent or buy something smaller, dealing with clutter becomes inevitable. An organization expert quoted by Pierce explains, “Retirees in large homes often find themselves using only a few rooms, while other areas collect clutter because maintaining such a vast space becomes overwhelming.” Downsizing offers liberation from unused items, providing more breathing space.

Moreover, downsizing can enhance your quality of life and reduce stress, according to aging experts. Letting go of unnecessary furniture, outdated gadgets, and unused exercise equipment can be liberating, giving you more room to relax.

Are you tired of navigating stairs daily, burdened by the constant ups and downs? Downsizing can address mobility issues, offering homes with better accessibility, enabling you to age in place comfortably.

If you miss the convenience of urban living after moving to the suburbs for a larger home, downsizing could be the answer. Transitioning to an apartment or condo in the city center brings you closer to amenities, entertainment, and even potential job opportunities, reducing the need for long commutes.

Source: MoneyTalkNews, TBWS

Is it time to buy an investment property?

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Is it advisable, at the age of 25, to consider purchasing a house for rental purposes as an investment, leveraging rental income to pay off the mortgage?

Real estate has historically proven to be a lucrative investment avenue due to its potential for cash flow, particularly through rental income, and appreciation over time. While the aftermath of the 2008 financial crisis saw a decline in home values, most areas have since rebounded, returning to pre-crash levels.

Before delving into rental property investment, it’s crucial to define your expectations thoroughly. This involves evaluating potential cash flow, which may occasionally be negative. Here’s a structured approach to analyzing this:

Start by researching market rental rates in your area, utilizing online resources or the rent survey typically required by lenders for appraisal purposes. Consider adjusting your gross income estimate to account for vacancy and collection losses, as well as potential expenses associated with eviction, albeit rare.

Factor in repairs and maintenance costs, acknowledging that despite the current condition of the property, these expenses are inevitable. Additionally, allocate funds for replacements, such as estimating the remaining lifespan of major components like the roof.

Expect to provide a larger down payment for a rental property compared to an owner-occupied loan. Lenders may also require reserves, typically around 6 months’ worth, although this varies. Maintaining cash reserves is prudent regardless.

Bear in mind that interest rates for investment properties are typically higher than for primary residences. Utilize spreadsheets or online calculators to calculate principal and interest payments, and estimate property taxes and hazard insurance premiums.

Subtract all negative figures—vacancy, repairs and maintenance, replacement reserves, and monthly mortgage payments (including taxes and insurance)—from the property’s gross income to determine cash flow. A positive result is ideal, while a negative one indicates a monthly deficit that needs covering. Assess whether your stable income or liquid assets are sufficient to offset this deficit.

Consider other pertinent factors:

Is your regular income stable and ample to cover potential shortfalls?
Have you set aside emergency funds for both property-related issues and personal contingencies?
Are you prepared to hold onto the property for an extended period, perhaps five years or more?
Will your job situation permit you to remain in the area? If not, budget for a property manager, typically charging around 10% of monthly rent.
Is your current living situation satisfactory? You might weigh whether purchasing your primary residence should precede investing in rental properties, given the lower cash requirements and financing costs.

I trust this guidance proves beneficial. Best of luck!

PMI or Larger Down Payment?

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Determining whether it’s cheaper to pay for private mortgage insurance (PMI) or to put up a larger down payment on a house depends on your specific financial situation and goals. Here are some steps to help you make an informed decision:

Calculate the cost of PMI: If your down payment is less than 20% of the home’s purchase price, your lender may require you to pay PMI. PMI costs can vary based on the loan amount, credit score, and other factors. Your lender can provide specific details on the PMI costs associated with your loan.

Assess the cost savings with a larger down payment: Compare the total cost of PMI over the time you expect to pay it (until the loan-to-value ratio reaches 78%) with the potential savings of making a larger down payment. A larger down payment means a smaller loan amount, which can result in lower monthly mortgage payments and less interest paid over the life of the loan.

Consider alternative uses for your cash: If you have the money for a larger down payment, weigh the opportunity cost of using that money for a down payment versus other financial goals. For example, paying off high-interest credit card debt or investing the money might yield higher returns compared to the savings from a larger down payment.

Factor in future home value appreciation: If you expect the value of the home to appreciate significantly in the coming years, it may impact when PMI gets automatically canceled (at 78% loan-to-value ratio). If the home appreciates rapidly, you may reach that threshold sooner, reducing the overall cost of PMI.

Evaluate your overall financial situation: Consider your long-term financial goals, current income, job stability, and other financial commitments when deciding between a larger down payment and paying PMI.

Consult with a financial advisor or mortgage professional: Seeking advice from a financial advisor or mortgage expert can help you better understand the trade-offs and make a decision that aligns with your financial objectives.

Ultimately, the decision depends on your unique circumstances and financial priorities. Whether you choose a larger down payment or opt for PMI, buying a home should fit comfortably within your budget and contribute to your overall financial well-being.

Credit or Debit?

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Once, someone inquired about the benefits of using cash or credit cards, considering my assertion that I maintain a surplus over my expenditures. There are indeed advantages to both options, but some considerations need to be taken into account.

Firstly, it’s essential to recognize the fundamental differences between credit and debit cards. While both offer fraud protection, fraudulent activity on a debit card immediately withdraws money from your account, potentially leading to significant problems. On the other hand, with a credit card, disputing a charge results in an immediate credit to your account.

Personally, I settle all my credit card balances monthly, ensuring that I avoid any interest charges. This approach allows me to enjoy various rewards, such as cash back, discounts, and airline miles, essentially offering a no-cost bonus. Moreover, I utilize Quicken to download and easily monitor all my transactions.

Nevertheless, credit cards can lead to overspending due to the ease of swiping the plastic, which somehow feels less like spending real money. Consequently, when the statement arrives, many individuals opt to pay only the minimum amount, succumbing to the less painful option. Credit card companies capitalize on this aspect of human psychology, earning substantial profits each month. They also make significant income from late fees when people overlook due dates. To avoid this, I ensure that all my cards are set up for automatic minimum payments before the due date, as paying unnecessary late fees is an avoidable and wasteful expense.

I hope this explanation proves helpful!