Expenses Involved in Buying a Home

If you feel that your rented home no longer meets your family's requirements, you will probably want to move into a little space of your own. But before you start looking for homes, you need to make an honest assessment of your existing financial situation. Have you got the financial capacity to afford a home?

Interest rates are at their historical lows now, so if you have got a stable income you will not have much difficulty making monthly mortgage payments. Let’s do the math.

These days, interest rates hover around 3 percent. At that rate, if you have a 30-year mortgage of $250,000, you will have to make a monthly mortgage payment of around $1000. You will probably be paying a rent of approximately the same amount each month. In this case, you can purchase a home without having to upset your monthly budget. Better still, your home is a great investment because its value will appreciate over time.

Remember that you will need to make a down payment. The lender will contribute up to 95% of the sales value of the home. You need to come up with at least 5%. You will need to consider some other expenses as well.

Energy

When you move into your own home, you will have to take care of your energy expenses. Make sure that you will have no difficulty setting aside a certain amount each month to pay your utility bills.

Notary

There is a legal fee associated with the acquisition of a property. The notary fees depend upon several factors and hence a little research is required to find out how much you will have to pay. In any case, expect to pay around $1,200.

School and municipal taxes

You will have to pay the municipal tax and school tax to the municipality every year. Some lenders set aside a certain percentage of your monthly mortgage payment to save the money required to pay these taxes on the due date. This arrangement will save you the trouble of having to come up with a bulk amount, but you should be prepared to pay a slightly higher EMI.

Renovations

Your home might require some renovations. If you are really handy, you could perhaps do these projects on your own and save some money. However, if the home requires major repairs, you will have to hire a contractor. Ask the contractor to give you a quote and plan your budget accordingly.

Mortgage insurance

If you contribute less than 20 percent of the value of the property, you will have to buy mortgage insurance. The mortgage insurance premium you pay varies between 0.5 percent and 2.90 percent of the principal amount.

Life insurance

Your lender may be ready to insure your mortgage, but that is not the best solution. Buying life insurance is a better idea because the premium payable depends on your age, health, and habits e.

Inspection

Before buying the property, you should consider getting it inspected by a professional. This is necessary to ensure that the home is in great shape. A home inspector may charge around $400.

Should You Offer Homebuyer Incentives?

You want to sell your house on an urgent basis. You’re thinking of giving some incentives to prospective buyers so that they’re better inclined towards your home. You want to add a sweetener to the process in the form of a decorating allowance, a big-screen TV, or a home warranty.

This appears to be a smart marketing tactic per se. But sometimes homebuyer incentives can prove to be money wasted. You need to ensure you’re sending out the right signals to buyers with your homebuyer incentive in place.

Here are some dos and don’ts you need to follow if you don’t want a wasted effort:

Do’s:

Use incentives that will make your home stand out amongst others. If all the properties up for sale in the neighborhood have a similar patio, by equipping yours with a brand new luxury patio set with a shiny stainless steel BBQ, you stand a good chance of your home being picked over others.

Compensate for drawbacks by offering a homebuyer incentive. If you have ancient floral wallpaper in your living room, you could offer a decorating allowance which will cover your buyer’s cost of replacing it. If your furnace looks as if it’s on its last legs, offering a home warranty can allay your buyer’s concerns that they’ll have to spend thousands of dollars for replacing it in the near future.

Don’ts:

Don’t presume that it’s legal to offer homebuyer incentives. Some states may put a ban on homebuyer incentives. Sometimes laws can be maddeningly confusing regarding whether this practice is illegal or not. Confirm the way to go with both your attorney and real estate agent before you actually declare details of the homebuyer incentive you’re offering.

Don’t underestimate the smartness of buyers. There’s a strong probability that buyers will probe deeper to find out the motivation behind the homebuyer incentive you’re offering. Offering an incentive might make you appear desperate. Suspicious buyers might begin to wonder about the hidden flaws existing in your house that compelled you to throw in a freebie for making a sale. Your apparent anxiety could also result in buyers making a considerably lower offer.

Don’t mask an exorbitant price using a homebuyer incentive. If you offer a very high priced homebuyer incentive, something like a luxury car or a high-end TV; buyers might regard this as a gimmick for avoiding a reduction in the sale price. Almost all experienced real estate agents recommend listing homes at more competitive prices rather than offering homebuyer incentives.

The price of a property is what buyers look at first and foremost. If a house is priced even slightly below its real value, it attracts both buyers and buyers’ agents. The home will be considered a good pick and will be bought quickly.

The bottom line

If you’re sure that offering a homebuyer incentive is beneficial, make sure you choose one that’s a value addition or that neutralizes an existing flaw in your home.

How to Inspect a Home Security System

Are you hunting for a new home? There are quite a few things that you need to consider while inspecting a home. For example, you need to ensure that the home seems safe. But what constitutes "safe?" What do safe homes look like? In this article, we will give you an overview of the important features of a home security burglar alarm system.

For many home owners, their security system is just another feature that increases the value of their home. But just about any security system will not do. Only a well-built security system can enhance the value of a home.

Here are two things you need to consider while evaluating a home security system:

Does the home security system cover all the entry points?

This is very important. A good security system should cover all entry points. Most bargain alarm systems only cover 1 or 2 doors and a few windows. These systems are usually installed at the front door on the first floor. They do not take into account the possibility of an entry through the second floor.

A burglar alarm system that does not cover all entrances cannot be considered as a good security system. While inspecting the system you must check what areas are covered by it. Don't accept a system that does not cover all entrances. And by entrances, we mean the garage and entry points in fenced areas as well.

Is the system fully functional?

Don't take the seller's word. You should ensure that the security system is in good shape and ready to use. Ideally you should get it inspected by a professional.

You can also perform some inspections on your own. Here are a few things to consider:

Make sure that batteries are well-maintained. If batteries are low, the system may produce those dreaded false alarms. Worse still, it may not raise an alarm when it should.

You should also ensure that all door and window contacts are properly calibrated. If the alarm contacts on your system are too sensitive, they may go off unnecessarily. In this case, even a gentle breeze can set off the alarm. On the other hand, if they are not sensitive enough, the contacts may miss a burglar.

The motion sensors, too, need to be properly calibrated. They are often calibrated in such a way that they do not normally register anything too low. However, this is a major mistake and it is often easily exploited.

Does the security system include cameras? And if so how are they installed?

The security cameras need to be installed in a sturdy location that cannot be reached easily. The cameras must have a clear and unobstructed view of the property.

The noise detectors are equally important. They are installed with the objective of detecting the sounds of forced entry and breaking glasses. However, noisy pets can complicate things pretty easily. The noise detector should be adjusted in such a way that it makes allowances for these.

If you don't know the important aspects of a security system you won't be able to know whether the home is well-defended. Consider these important aspects while checking a home security system.

How to Sell Your Home When the Market is Down

When the market is down, the easiest way to sell your house fast is to lower the price. But lowering your asking price isn't the only solution. You can also attract buyers by adding new features that enhance the value of your home.

Here are a few tips to sell your house at the best price:

Differentiate your home from your neighbors

You can attract buyer attention by differentiating your home from your neighbor's. For example, custom additions such as a new roof, landscaping, or high grade windows can make your home stand out from the rest. These features not only make your house more attractive but also enhance its value.

 

While adding new features, it’s best to opt for designs and colors that will impress most people. Any new feature should complement your home. For example, building a patio next to your outdoor swimming pool is a great idea.

However, resist the temptation to overspend. Of course, enhancing the appearance of your home may attract buyers, but it is not always easy to recover all the costs while you sell it. There is absolutely no example to prove that the new shingles on your roof will substantially increase the value of your home. If you're planning to invest a lot of money in improving the appearance of your home, do some research and add features that are more likely to recover their costs.

If you have recently added some interesting custom features, don't forget to include them in your home's listing. 

Clean the clutter

Make sure that your home is free of clutter when potential buyers come to see it. Clutter turns off people immediately. You can make your rooms look larger by removing some furniture. Also put away personal items and family photos. And if your budget permits, you should consider hiring a stager. Be willing to shell out a few thousand dollars if you are planning to rent modern furniture for showing your house.

Sweeten the deal

You can attract more buyers by sweetening the deal. You can, for example, offer to pay the buyer's closing costs. These deal sweeteners will help you to attract more buyer interest. You can also consider offering a transferable home warranty.

Improve curb appeal

Don't overlook the need to enhance your home's curb appeal. When a buyer takes a look at your house, the first thing they see is its external appearance. So make the exterior as attractive as possible. Apply a new coat of paint before listing your home for sale. You also need to keep your garden and lawn in good condition. Appearance means a lot in real estate.

Make sure that your home is ready to move in

Make sure that your plumbing and electrical fixtures and appliances are in working order. They should also comply with existing building codes. When potential buyers visit your home, they should get the impression that the home is ready to move in.

Price it right

Your home should be priced appropriately. You should consult a real estate agent to know what comparable homes in your area are selling for.

Your home doesn't have to be the least expensive home on the street. That said; it must still be reasonably priced.

 

The bottom line

It is not exactly easy to sell your house when the market is down. However, by adding a few interesting features and keeping your home in great shape, you can improve your chances of finding a buyer.