Questions to Ask Before Buying a House

Featured

Share:

What to Know When Buying a Home For The First Time

Buying a home for the first time can be daunting. Before you put down your hard-earned deposit and sign away the next 15-20 years of your lives, there are a few points to clarify, and this is the time to ask the questions.

When you are spending hundreds of thousands of dollars, there are no questions that are too trivial. If you have a real estate agent, make sure you lean on them for advice. If they are worth their salt, they will be someone to lean on for all the things you’re unsure of.

Having a first-time home buying guide is always useful. You can also seek assistance from family and friends that have already been through the process.

Consider a few of the following points as a first time home buyer. These are great questions to ask yourself as you journey towards owning your first house.

  • How far will you be from work, and how good is the public transport?
  • How long does the commute take?
  • Do you want to live near shops, schools, hospitals, cafes, and parks?
  • Will you be near enough to Mom and Dad so you can drop in for dinner?
  • If you are pregnant, how near is your hospital?
  • Can the kids walk to school? Homes in sought after school districts always sell really well! So even if you are not having children consider this fact from a resale perspective.
  • You want a neighborhood with a good community appeal, where you have a large enough population to support cafes and diverse restaurants, and possibly a good pizza/sub shop.
  • Do you have a dog? You will want an off-leash dog park, to take Fido for a run, and a local vet.
  • You are busy, so look for a home requiring minimal renovation. Major renovations are not affordable when you are in your first home. It would help if you got a bit more equity first. Having said that, even minor renovations require a handy hardware store nearby.
  • Try not to exceed your budget. The lender will look for some leeway in the budget, so when you choose a home, make sure, based on your combined salaries, that you can afford it. You want to keep your housing costs, including insurances, between 25% and 28% of your monthly take-home pay. This is a bit easier for a couple than for a single buyer.
  • Are you eligible for any first home buyer grants or incentives? The United States Department of Housing and Urban Development (HUD) also provides grants to first home buyers. If you apply early in the new financial year, you may be eligible to receive one, important to apply early as the program has limited funds, is soon exhausted, and is not refunded until the following fiscal year. You just may qualify!

Questions to Ask When Buying a Home

Questions to Ask and Things to Do Before Buying a Home

Get a Mortgage Preapproval

Once you have everything in place, try to get your mortgage preapproval in writing from a well-known lender. It is always a good idea to comparison shop a few lenders as well before settling on one.

Be prepared to have your financial information (proof of employment and income) verified for written preapprovals.

These last for about three months and you are then ‘buyer ready.’

Make Sure You Have a Professional Home Inspection.

Have a look to be sure that the roof, foundation, HVAC systems, flooring, and walls are all in good order. Make sure you have a house inspection before closure done by a well respected local professional.

You really want to know before you put the escrow deposit down if there is anything to be done. Home inspections are also a great learning exercise about the property you are purchasing.

The home inspector will go over all the systems, especially the furnace, air-conditioning, and electrical. They will check the basement for dampness and mold. A good inspector will also have a keen eye for evidence of termites, other insects, and rodents.

Getting a home inspection done is especially important when you are purchasing a fixer-upper home.

Is The Home Low Lying?

Is the house near a river or a low lying flood plain. You don’t want to be paying for flood insurance as it is costly. If the area is a flood zone, it might be why the home is cheaper. Once a house is flooded, it is never the same again. So, avoid any possible flood area.

Is The House on a Busy or Noisy Road?

Houses on major roads are usually less expensive. If you decide to purchase on a major road, make sure that the house has insulation, as a major road can be very noisy and polluting. Avoid big thoroughfares if you can, because it won’t have a good resale value.

Think About Using a Buyer’s Agent?

If you are having difficulty sifting through the choices available, you may decide to hire a buyer’s agent. It likely won’t cost you anything as real estate commissions are typically paid by sellers.

A great buyer’s agent will be in your corner working hard to find you the right home. The best agents will not offer any pressure for you to purchase. If you are a busy professional, having someone scouring the multiple listing service for you every day can be a godsend.

Make an Offer Stick

Start attending open houses to get a feel for the market. Are real estate values rising, falling, or stable. If home prices are falling, that will be good news for you. It might be possible to find a house you previously thought to be unaffordable.

When you find the home that makes you happy, you’ll want to pounce on it, especially if it is an excellent deal. Get together with your real estate agent and write the offer. Be prepared to have some give and take, which is often the case. Negotiating is something buyers, and sellers do. Try to make it a win-win if you can.

If the seller has already bought elsewhere, you will probably be in the driver’s seat as there will be some urgency to get a deal done.

On the other hand, if you are in a hot seller’s market, be prepared to move quickly. There could be multiple offers and bidding wars. Unfortunately, there will be less flexibility. To get the house you really want, you’re probably going to need to step up to the plate and give the seller their desired terms.

It is vital to be proactive at this stage, as you want to get into a house before your preapprovals expire. The financial markets are very mercurial, and especially in a rising market, conditions change very quickly.

Prepare For Moving

One of the most arduous tasks when buying or selling a home is moving. The move can not only be physically stressful but mentally as well. There are so many things to get done. Did you change your address with the post office? How about getting one of the best moving companies in the area?

Maybe you have found that hiring professional movers will be too expensive and rent a moving truck instead? Lots of folks choose to rent a moving truck from U-Haul because of the convenience and lower cost.

These are all things that should be thought about well in advance. Proper planning goes a long way when buying your first house.

Final Thoughts on Buying a First House

Once you have the finance approved for your new house, it is important to be ready to recognize and grab a good deal when it comes along. Buying a home for the first time can be a full time and stressful job. You will have a limited amount of time to perform what seems like an endless list of tasks. The good news is, it will soon be over, and you will be in your own home.

Hopefully, you have found some of these first-time homebuyer tips to be useful.

5 Common Problems That Arise When Rehabbing Properties

Share:

Whether you’re a savvy investor looking to buy a bargain foreclosure or a first-time home buyer purchasing a fixer-upper, rehabbing homes has never been more popular. But it’s not easy.

From contractors who ghost you to unforeseen expenses that wreck your profit margins, all kinds of problems can arise and derail your renovation. 

1. Pricing Problems

The success of a house flip depends upon the sale price of the rehabbed home. That’s because the projected sale price determines how much you can pay for the property and how much you can budget for renovations that will increase your returns. But projecting “after repair value” (ARV) is more of an art than a science. 

House flippers often seek a projected ARV in the form of a broker’s price opinion, but those can vary wildly.

Although some brokers do actually work in the markets where they project post-renovation property values, many do not, which can limit the accuracy of their opinions. 

Another way to determine an investment’s ARV is to hire an appraiser who’s experienced with rehabs to estimate a value based on your renovation plans. This can be complicated, too, because as any house flipper knows, renovations rarely go exactly as planned. 

In addition, two appraisers looking at the same renovation plan may come to two different conclusions. Unfortunately, there could be appraisal problems. In the end, one of the most dependable ways to determine your property’s post-rehab price is to get several appraisals and average them together. 

Problems to Avoid Rehabbing a Home

2. Contractor Complications

Renovations will often unfold differently than you planned, often because of contractor problems. 

Everyone who’s remodeled knows that finding a dependable, honest contractor is the first step when flipping a house. Even with the ideal contractor, there are a lot of factors, such as  sourcing materials, scheduling, and subcontractor availability, that are out of your control.

These problems have only gotten worse in the post-pandemic era. Materials in short supply have gotten more expensive, and lead times have gotten longer, meaning there’s even more potential for scheduling snags.

Contractor delays are one of the most common problems that house flippers encounter. They’re also one of the most expensive because carrying costs, such as insurance, taxes, and utilities, eats into your profits day after day. But if you’re a homeowner, some of these costs, such as mortgage interest, can be valuable tax deductions

However, if you’re funding renovations through credit cards or out of pocket, there are few things more frustrating than living in a half-renovated home.

Of course, you might be stuck with a contractor who does poor-quality work. This can be a very serious problem, especially if you have to fire them and start over with someone else. 

If you find yourself in this situation, document the problematic work through time-stamped photos and written correspondence, so if you have to go to court, you can present a real-time record of what happened. 

3. A Less-Than-Ideal Market Fit

You’ve probably heard of seller’s remorse — when a recent home seller regrets their sale. But rehabber’s remorse is also a common sentiment. 

A typical mistake made by novice home flippers is that they renovate the property according to their own tastes instead of what future buyers will want. Then they find themselves with an unsellable property.

Although you may love stainless steel appliances and quartz countertops in the single-family home you just rehabbed, the high-end features might price the property out of reach for first-time homebuyers who are the primary buyers in that neighborhood. 

Carefully consider all renovation plans that hinge on matters of taste, such as open floor plans, carpet, finishes, or outdoor space. Rehab to the market, not what personally appeals to you. If you’re not sure what local buyers are looking for, ask a good real estate agent.

4. Old Pipes and Wiring

Outdated and dangerous plumbing and electrical fixtures are some of the most common problems that remodelers face, especially if they work on older properties.

When it comes to plumbing, most homes built before the 1960s use galvanized pipes, which are notorious for becoming corroded or clogged. Although it’s a big and pricey undertaking, you’ll want to replace those pipes with newer copper or PVC pipes. 

It’s less troublesome if you’re doing a gut renovation because the pipes will be exposed anyway. If you’re not doing a gut renovation, you’ll probably have to tear up some floor.

Old wiring presents a similar problem. Outdated electrical wiring is easily overloaded and can be a fire hazard. You’ll want to rewire the home and replace all the outlets. That’s work that will have to be done by a licensed electrician and can be very time consuming.

5. Hazardous Materials

Many rehabbed properties are on the older side, which means they could contain hazardous materials, such as asbestos or lead.

Lead is most commonly found in paint or water pipes. The federal government banned lead paint in 1978, but many homes built before that year contain some. If the paint begins to peel, flake, or chip, it can spread harmful lead dust.

Home sellers are legally obligated to disclose facts about lead paint to buyers. If you’re rehabbing a home for the market, it could make your sale a lot easier if you remediate the problem yourself. If you’re an owner who’s planning to live in the home, you’ll definitely want to remove anything that could harm your health. 

The expense and scope of the process is going to depend on how much lead paint is in the home. If the exterior is covered in lead-based paint, you’ll have to encase the home in a protective shroud while professionals carefully remove the paint. That’s a process that’s as expensive as it sounds, but hopefully you can get a home buyer rebate to help with the cost. 

Soil may also have to be removed if it’s contaminated. Even if you only have a little lead paint inside the home, you’ll need professionals to remove and dispose of it according to safety regulations. 

Asbestos is even more dangerous than lead and can be found in insulation, floor tiles, siding, wallpaper, and even fabrics made before 1980. Like lead, asbestos removal requires special expertise and should only be handled by professionals. 

8 Ways to Save on Moving Costs

Share:

Moving often signifies an important new chapter, and while preparing is exciting, there’s also a lot of stress involved. One of the biggest stressors? The cost. 

There are many expensive costs of selling a house and moving is one of them.

There’s no way around it — moving is expensive! To minimize the financial burden of moving, it’s important to get a head start on what to expect. 

With proper planning, preparation, and research, you’ll find plenty of ways to cut costs. Here’s what you should know.

Save When Moving

1. Sell Furniture You’re Unsure About

Furniture from one home often doesn’t quite fit in another home. Because moving furniture can be one of the biggest expenses, it’s best to get rid of any pieces you’re unsure about.

The good news is, selling furniture has never been easier. Websites such as Craigslist and Facebook Marketplace make it simple to connect with buyers. If you price your items competitively, you shouldn’t have to deal with sifting through too many messages.

Selling furniture in advance can also be one of the easiest ways to make a quick buck and offset some of your moving expenses. 

2. Purge Unwanted Items

As you begin to pack your belongings, this is a great time to assess which items you should toss.

Trying to take it all with you is expensive, and will require two very important resources when it comes time to unpack — time and energy. 

If you’re already on the fence about keeping that box of toys or bag of clothes, now is the time to get rid of it! If you haven’t used it or worn it in the last 6 to 12 months, consider it something you probably won’t miss. 

3. Move During the Off-Season

Many moving companies and truck rentals have higher rates during the summer months. This is when many people choose to move because kids are on break and it’s a natural transition before the new school year. Unfortunately, that means companies can charge more because demand is so high. Moving between the months of October and April can save you a lot of money because companies generally have less business. 

4. Get Multiple Quotes From Moving Companies

On that note, shop around before choosing a moving company. 

Get a few different quotes to ensure you’re getting a fair price. Ask for these estimates in writing, not just verbally, to check for any hidden fees for things such as labor and gas. 

Further, be sure to check the online reviews for a company before you commit to anything. You can see reviews on Google, Yelp, and even Facebook. If you’re receiving a low quote from a company, but you find negative reviews describing poor service or damaged goods, you’ll want to reconsider if the savings are worth the risk

5. Find Free Moving Boxes

While asking for “free” anything can feel uncomfortable, rest assured many people are wanting to give their empty moving boxes to someone who needs them. You may even be doing them a favor by taking them off their hands!

Post to your Facebook or Instagram page to let friends know you’re looking for moving boxes. No luck? Don’t be afraid to ask around within your community. Schools, churches, and local grocery stores often have old boxes.

Pro-tip: Assess the quality and durability when using boxes that have been moved a time or two. Pack lighter items in any boxes that seem a little worn and save heavier items for new boxes that are still sturdy.

6. Consider a DIY Move

While doing it yourself is certainly going to require more time and physical work, your wallet will thank you. For many people, a DIY move is worth every penny saved. This is especially true for smaller moves or quick trips to a storage facility

If you’re already getting rid of older belongings and updating your furniture to suit your new home, moving yourself is going to help you get the biggest bang for your buck. 

Enlisting friends, family, and neighbors is important during DIY moves. Don’t be afraid to ask for a helping hand along the way!

7. Pack Strategically

The more you can consolidate your belongings to fit as tightly and neatly as possible within boxes, the fewer boxes you will need. 

This also means less trips back and forth to the moving truck, and if you’re hiring movers who are paid hourly, this can cut down on the overall cost. Fewer boxes arranged strategically could even mean a smaller moving truck. 

Packing strategically can also look like taking advantage of wasted space. For example, placing jewelry boxes in dresser drawers or using existing containers like laundry baskets, empty jars, and suitcases. 

8. Buy Discounted Supplies

As your move is approaching, be on the lookout for deals on packing supplies. 

While boxes are an obvious need, there are other things you’ll want to have, including permanent markers, large trash bags, packing tape, bubble wrap, and packing paper. Consider visiting warehouse stores that sell these items in bulk at a discounted price. 

Need cleaning supplies to ensure your home sells fast? Head to your local dollar store to find everything from mops to antibacterial wipes. 

Think Big When It Comes to Saving

You don’t have to wait until moving day to think about saving your hard-earned money. 

From day one, even selling your house can be expensive. Most homeowners will pay about 9.8% of their home’s sale price in selling costs. That’s a hard pill to swallow considering how much money is needed to make that initial investment to purchase a new home. 

Fortunately, you can take advantage of various programs that lift some of the burden. First-time homebuyer grants and loan programs help you minimize your down payment, leaving more money in your savings account. Not your first time buying a home? Search for a home buyer rebate, which is basically a commission refund offered by real estate agents who want your business.

Use all of these tips to boost your financial confidence as you navigate from one home to another.

What Will Happen to Your Home After Filing Bankruptcy?

Share:

Filing for bankruptcy is a difficult decision that is generally only recommended as a last resort. However, if you find yourself in an impossible financial situation, it may be the best path forward. 

If you own a home, you’ll want to understand how the bankruptcy process impacts your home ownership status. While it is possible to lose your home or other valuable assets when filing for bankruptcy, that’s not the only possible outcome.

We’ll walk you through everything you need to know about bankruptcy, the two different types of bankruptcy you can file, and help you understand what will happen to your home or any other property you may own after filing.

Home Filing Bankruptcy

First, what is bankruptcy?

Bankruptcy is a legal process that offers partial or total debt relief if you cannot repay the money you owe to creditors. The process of filing for bankruptcy typically requires a court order.

During the bankruptcy process, your assets may be liquidated. This means that anything you own of value, like your house, your car, and other items, may be turned over to your creditors. However, there are some exceptions, particularly depending on which type of bankruptcy you file.

Filing for bankruptcy is not a decision you should take lightly. While it can help eliminate your debt and allow you to start over again with a clean slate, it also significantly hurts your credit report. A bankruptcy mark on your credit report will lower your credit score, and you may find it difficult to obtain credit for several years after filing.

Depending on the type of bankruptcy you file, it will be removed from your credit report in 7 to 10 years.

What are the different types of bankruptcies?

There are two main types of bankruptcy an individual can file when facing financial challenges: Chapter 7 bankruptcy or Chapter 13 bankruptcy. Both types of bankruptcy can help you eliminate high-interest debt from credit cards — but there are a few differences.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is often referred to as straight bankruptcy. This type of bankruptcy will discharge all eligible debts by selling off certain assets and providing the money earned to your creditors. If you still have a balance owed to your creditors after your assets are liquidated, it will be wiped clean. If you own a home, you’ll likely lose your property when filing for Chapter 7 bankruptcy.

Some assets are exempt from this process, such as cars, home essentials, and equipment for your job. And, not all debt can be eliminated. While you’ll be able to get rid of credit card debt, your mortgage, medical bills, and personal or auto loans, you cannot eliminate alimony, child support, taxes owed to the IRS or your state, or student loans.

This type of bankruptcy also stays on your credit report for ten years, which can make it difficult for you to finance other purchases, like a car or home. 

What is Chapter 13 bankruptcy?

Filing Chapter 13 bankruptcy, however, can help you keep your home. The tradeoff is that you’ll agree to repay all or some of your debt — depending on what the court decides. Your lawyer and the court will work out a repayment plan (usually between 3 to 5 years) to repay all debts. At the end of the repayment term, any remaining debt will be eliminated.

Since you’re still paying your debtors, you’re often able to keep some of your assets. This may be a better option if you’re a homeowner who needs debt relief but is worried about losing your home. Just be sure to talk to your lawyer before filing, to make sure you’ll be able to retain your house.

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy only remains on your credit report for 7 years, reducing the amount of time when you might find it more difficult to obtain credit or financing.

How bankruptcy impacts co-owned homes

If you own a home with someone else and one of you files bankruptcy individually, what will happen to your home depends on the type of bankruptcy you file and the state you live in. If you file for Chapter 13 bankruptcy and agree to a debt repayment plan, you’re more likely to keep your home.

However, if you file for Chapter 7 bankruptcy, you and the co-owner of the home may lose the property depending on your state’s laws. While you, the filer, are likely to be removed as the homeowner.

For example, if your state has common law property rules, that means both you and the co-owner own half of the property individually. In this case, the court won’t be able to take the co-owner’s half of the property and it may be exempt from bankruptcy. However, sometimes the court can sell the entire property (and the co-owner who did not file will receive their legal share of the profits). 

If you live in a state with community property status and you’re married to the co-owner of the home, you’ll likely both lose the property. That’s because it’s seen as a shared “community property” that the court is entitled to take and sell if you file for Chapter 7 bankruptcy.

Can I buy a home in the future after filing for bankruptcy

Yes, but you’ll often have to wait a few years. Some home loans, like FHA loans, let you buy a home as soon as one year after filing for Chapter 13 bankruptcy, provided you meet some requirements. However, if you’ve filed for Chapter 7 bankruptcy, you often need to wait up to two years after your bankruptcy is discharged.

It may be difficult to secure a conventional home loan just after filing for bankruptcy. It’s a good idea to try to wait until you’ve had time to begin rebuilding your credit score before applying for a home loan. You’ll also want to make sure your debt-to-income ratio is low. Both can boost your chances of receiving better terms and a lower interest rate.

The bottom line

Filing for bankruptcy is a huge decision that could end up costing you your home and other valuable assets. However, if your debt is overwhelming, filing for bankruptcy can also help you get back on your feet. We recommend talking to a debt counselor or lawyer to find out if bankruptcy is the right move for you.