Questions to Ask Before Buying a House

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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.

New Data Shows Just How Much Income You Need to Buy a Home in 2021

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Are you ready to make the big financial leap and purchase your first home? Going from your parent’s home or even a rental property to your own house is a significant financial decision.

There are many questions to be asked, especially when it comes to your finances.

A new research report shows that while U.S. home prices are skyrocketing, income has remained mostly flat, making homeownership for Gen X, millennials, and younger generations more of a dream than a reality.

Since 1965, home prices have increased 7.6 times faster than income, and 3.1 times faster since 2008. Average home values grew from $171,942 to $374,900, an increase of 118%, while median household income grew from $59,920 to $69,178, an increase of just 15%, adjusted for inflation.

Financial experts recommend home buyers use a house-price-to-income (PTI) ratio of 2.6 when estimating how much mortgage they can afford. But from 2019 to 2021 alone, the median PTI ratio increased by 14.9% — from an already elevated 4.7 to 5.4 — meaning homes in 2021 cost 5.4 times what the average person earns in one year.

The PTI ratio crisis in the U.S. may impact both current and aspiring homeowners. Homeowners who paid top-dollar prices when they bought during the pandemic may currently be enjoying high home values, but they could be in trouble if those values plummet in the next housing crash.

Likewise, more home buyers are getting priced out of the market as mortgage rates climb (up from 3.14% to 3.18%), supply remains low, and prices remain high.

Read on for more insights into how these shifts are affecting the U.S. market and how home buyers can determine if they’re ready to get a foot in the door of homeownership.

Income Needed to Buy Home

How Much Income Do Americans Need to Buy a Home?

The median household income is currently $69,178. To afford a home in 2021, a U.S. home buyer needs an average income of $144,192 to afford the current median home price of $374,900.

The current PTI ratio of 5.4 translates to the number of years the average home buyer needs to save in order to purchase a home.

But more than a down payment and closing costs, sky-high home prices also translate to monthly mortgage payments that may be out of reach for some buyers who may already be at the limits of their home-buying budget.

Don’t forget to factor in the monies needed for escrows on taxes, insurance, and mortgage insurance.

Homes that need renovations and other improvements require even more financial considerations.

Housing affordability is a combination of home prices and income, and while the price-to-income problem is widespread with historic highs, it is low-income service workers who are most affected.

Though wages may be higher in larger metro areas, the lack of new affordable housing and exorbitant prices on existing housing stock undermine any wage advantage

The Most and Least Affordable Places to Live in the U.S.

The same research study found that nearly 90% of major U.S. metros have a PTI that exceeds the 2.6 ratio considered healthy by economic experts.

Only six out of the 50 largest major metro areas have a PTI ratio in the recommended range of 2.6 or lower:

  • Pittsburgh (2.2)
  • Cleveland (2.4)
  • Oklahoma City (2.5)
  • St. Louis (2.5)
  • Birmingham, AL (2.5) 
  • Cincinnati (2.6)

California is home to the least affordable housing in the U.S. with exceptionally high PTI ratios:

  • Los Angeles (9.8)
  • San Jose (9.1)
  • San Francisco (8.3)
  • San Diego (7.8)

The gap between soaring home price growth compared to relatively flat income growth touches other corners of the U.S. besides California. New York’s home-price-to-income ratio clocks in at 6.6, Miami at 5.6, Seattle at 5.5, and Salt Lake City at 5.2.

And as home prices outpace income rates nearly everywhere in the U.S. in the 50 most populated cities home values between 2017 and 2021 on average increased 17.8%, while income increased only 6.2% — meaning home prices grew 2.8 times faster than income.

Average home values in America’s 50 most populated cities grew from $271,70 in 2000 to $304,589 by the 2008 housing crisis, to $376,826 by 2021, reflecting the effects of the COVID-19 pandemic on the U.S. housing market.

Not surprisingly, in America’s most expensive cities, housing got more expensive: The average PTI ratio increased 61% since 2000, creeping up to 6.9%. In comparison, cities with the lowest PTI ratio grew just 10% since 2000, averaging 2.3.

More Equity Now Could Sink Homeowners Later

Climbing home prices increased homeowners’ equity from 2015 to 2020, likely a factor for the 54% decrease in underwater mortgages in the largest metro areas, a change of 12.2% to 5.6%.  

The cities with the biggest decrease in underwater mortgages include:

  • Salt Lake City (1081% decrease from 18.5% to 1.6%)
  • Las Vegas (513% decrease from 21% to 3.4%)
  • Phoenix (471% decrease from 16% to 2.8%)
  • Seattle (467% decrease from 10.3% to 1.2%)
  • Tampa, Fla. (315% decrease from 16% to 3.9%)

While homeowners are seeing increased equity now because ofo high home prices, it’s possible they could find themselves underwater in the next housing crash.

The housing crisis that was predicted in the first months of the COVID-19 pandemic never happened. Thanks to government aid, low-interest rates, and homebuyers seeking a geographic adjustment to pandemic problems, the housing market took off, sending prices skyrocketing as stock became limited.

In particular, homeowners who bought at the peak could find themselves underwater on their mortgages when the period of high demand and low supply tapers off as it historically does, and the housing bubble pops. And while it might be great for sellers, high home prices create a strain on the market if the pool of home buyers shrinks due to an inability to find an affordable property.

Can You Afford to Buy Right Now? 

Home buyers determined to purchase now should proceed with caution and consider the market and their personal situation carefully. Work with a qualified real estate agent who can help you navigate an uncertain climate.

Some questions to consider before you buy: 

  • Do you have 20% for a downpayment? Not only does a traditional 20% down payment lower your mortgage payment, but it also saves you the cost of private mortgage insurance, which can be anywhere between 0.3% and 1.2% of the balance of your loan.
  • How long do you plan to stay in the home? When the market pops, how likely is it you’ll be underwater on your mortgage? If you’re planning to stay in the home for the long haul, you’ll have time to build back any equity lost in a housing crash. 
  • What’s the post-purchase cost to live in this home? If you’re buying at the peak of the market, can you afford the monthly mortgage, plus taxes, insurance, and maintenance? 

Final Thoughts

Buying a home for the first time is a big deal both financially and mentally. A home purchase should never be ready until you are truly ready. Make sure your financial house is in order before making such a life-changing decision.

You should make absolutely certain you have the income needed to buy a home in 2021 and into 2022.

6 Key Factors That Make Home Renovation Reliable

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Home renovations are one of the best ventures explored by homeowners, helping them realize their dream of living in a house they have always desired.

The best feeling is being able to design and renew your house on your own, without having the need to intensely clean your house, or buy a new one. It is totally natural to get bored of the same paint color of your bedroom, or the warped flooring of your living room.

You might want to renovate your old kitchen or renovate the bathroom with stained tiles and discolored plumbing fixtures. Experts believe surrounding yourself with the things that are pleasant to the sight, have health impacts on the mind.

It reduces the levels of stress hormones. Therefore, if every now and then you think about home renovation, you shouldn’t feel guilty. It is in the very nature of human beings to desire perfection.

Remodeling your house isn’t only to change the appearance of your surroundings but also to make it convenient for day-to-day activities.

It is also a very reliable way of adding to the value of your house.

Considerations When Renovating a House

Top Factors to Put in Mind for a Reliable Home Renovation

If you have decided to work on your house, then we have come with hacks to help you get it done immaculately.

Careful budgeting

Before you daydream about a luxury bathroom or a beautifully designed kitchen make sure you have the money in your pocket.

Research about the prices of every product and service you will be hiring; compare the prices of new furniture and appliances you will be upgrading.

It is imperative that you keep a small amount of your money for hidden expenses, and services that might have skipped your mind during the budgeting.

It is also very important that you compare the prices offered by various contractors, or else you will be ripped off.

Detailed planning

Preplanning before you start any project is very important. Not even a lion gets out of his den to hunt for prey without pre-planning.

It would be an utter waste of money to not make a rough sketch of everything prior to the work being started – from your budget to the design you desire, from the cabinets of your kitchen to how you plan to make it spacious.

Discuss the plan with the contractor you hire. This will help them make an estimate. You might write down the details from the minor to the major, or just give them a pictorial idea to help them to realize your plan.

Sharing your idea with the right professionals will help them review it and decide whether it is feasible or not.

Besides the design and theme, your plan should also include the types of material you want to be used. For instance, whether you desire your floors to be covered with natural stone flooring or hardwood flooring. You prefer your walls to be covered with wallpaper or paint, the fixture you will want to use, mention everything in great detail.

You might also prefer eco-friendly roofing options for your house.

Pen down everything in the form of a contract, your services, the contractor’s prices, and the decided time. This is to make things solid and for your own good. So, in the future, if the contractor under any circumstance tries to deviate from the decided plan, then you have written proof to prove your word.

Choosing a contractor carefully

One of the most important things to do is research the service provider you are about to hire. It is this factor that decides if your project will be a success or a life lesson. See if they have a:

  • License:

Licenses are the most important certificates that help customers identify qualified service providers. Sketchy companies are mostly non-licensed.

  • Insurance:

You certainly wouldn’t want to pay for the hospital bills of a worker, who encountered a mishap during your home renovation. Therefore, hire contractors who are professional enough to know the value an insurance company adds to the reliability of a company.

  • Upfront Prices:

Upfront pricing is the professional attitude of all reliable home remodeling contractors. Those with ambiguous pricing policies are sketchy and one has to be careful of them.

  • Warranted Services:

Last but not least is the warranted services offered by home renovation contractors. Renovation services are uncertain and things can go wrong after the completion of the work.

You might need to hire the contractor for the same services again for a mistake committed by them, so repaying will be unfair to you and unfriendly to the pocket.

  • Pull The Permits

When doing any kind of remodeling work make sure the contractor pulls all of the necessary building permits.

Without taking this essential step it is possible there could be building code violations. When it comes time to sell your home, you’ll be dealing with an unwanted headache.

Realistic programming of work

 Another very important factor to keep in mind is the time period required for the work to be completed. Be completely realistic.

Home renovation is time-consuming and one can’t expect it to get done within a few days. It is good for the service providers to take their time, and faster services can sometimes mean poor quality of work delivered. So, abstain from pushing the workers to be quick, or else your work quality will suffer.

Regular communication

It is very important that you are in contact with your contractor, so you have surveillance of your home remodeling.

You can visit the site once a week to check on the progress of the work, but don’t visit every other day, because your regular visits can cause delays, which is for your own bad.

Sometimes the contractor himself would want you to pay them a visit to discuss an important issue relating to your house.

Patience

Fruit of patience is never bitter. You always get good results after being patient. The more you wait, the better services will be delivered, because skilled professionals know at what pace to work to get things installed and repaired in the most efficient way.

5 other factors to consider

Consider these factors before hiring a reliable home renovation contractor.

ON-TIME DELIVERY

It is very important that you talk about the time period of the service being provided. Patience is certainly important, but delays can be very heavy on the pocket and inconvenient for you. So, make sure the contractor abides by the decided time in the contract.

REPUTATION & RECOMMENDATION

What the general people remark about a contractor says a lot about their proficiency. The better-reviewed ones will offer good workmanship.

It certainly doesn’t imply checking for reviews on their own websites, which could be manipulated. Rather, look for reputable websites that post authentic reviews of genuine past customers of any service provider.

You can even ask your friends about their experience with a reliable home remodeling contractor.

COMMUNICATION

It is very important that you are able to easily talk to the contractor throughout the project. The ease with which you can access a service provider determines its efficiency.

QUALITY OF WORK

It is very important that who you are hiring offers quality service, which can most of the time be determined by their experience. The foremost quality of a top-notch contractor is their experience. Long years of experience bring expertise and skills.

The longer a contractor has served the people, the greater the chances that quality service will be provided to you.

CUSTOMER SERVICE

See if they prioritize customer service. A home renovation contractor should listen, value their customer’s desire and strive to realize it.

Final Thoughts

Doing a home renovation can be both exciting and stressful at the same time. It is essential to keep on top of the work being performed. It is when you don’t pay attention that problems often occur.

Put your best foot forward and you’ll have a dramatically improved place to call home.

About the author: The above article on home renovations was written by Rohma Charlotte. Rohma is a senior content writer who enjoys writing about real estate and home improvement projects.

Would You Buy a Haunted House in This Real Estate Market

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Purchasing a Haunted House in 2022

With Halloween just around the corner we thought we would take a look at buying a home that has paranormal activity. Would you buy a haunted house?

If you said yes, you’re not alone. According to new research, 73% of Americans say they’d consider purchasing haunted real estate in a competitive market (but 52% say they wouldn’t pay full market value). 

Read on to learn more spooky stats and freaky findings from the survey.

76% of Americans Believe in the Supernatural in 2021 

Of those supernatural believers, 44% say they’ve experienced more supernatural events since the start of the pandemic. Millennials are 3x more likely than boomers to report an increase in supernatural activity. 

44% of Americans Believe They’ve Lived in a Haunted House 

Perhaps with 71% of Americans with remote-friendly jobs now working significantly more hours from home, there’s more opportunity to observe ghostly comings and goings than in the pre-pandemic days. In 2020, just 24% of Americans believed they have lived in a haunted house. 

Some Things Are Scarier to Homeowners Than a Haunted House

Only 5% of respondents said ghosts were the scariest part of homeownership. Homeowners, instead, are more afraid of:

  • ​​Mold (57%)
  • Foundation issues (56%)
  • Termites (54%)
  • Asbestos (54%)
  • Water damage (54%)
  • Pests (e.g., cockroaches, mice, spiders, etc.) (53%)
  • A leaky roof (53%)
  • Outdated electrical system (51%)
  • Lead paint (51%)
  • A leaky basement (48%)
  • Old plumbing (47%)
  • Radon (44%)
  • A broken furnace (41%)
  • Broken central air conditioning (41%)

Whether you’re buying a home for your family or are an investor taking advantage of a 1031 exchange, there may be worse things than ghosts when it comes to living in or flipping a home.

If the potential for ghosts or other paranormal activity is there it may be one of the questions you ask when buying a house.

Also Scary: Many Americans Lack Basic Safety Features in Their Homes

Although American homeowners fear floods, tornadoes and other natural disasters (54%), fires (49%), and other hazardous threats, many households don’t have basic safety features in their homes. 

For example, many homeowners lack a radon detector (66%), an alarm system (45%), a carbon monoxide detector (40%), fire extinguishers (38%), and smoke detectors (29%). 

Ghosts Are Not a Top Deal Breaker for Most Americans

Nearly half (48%) of Americans would rather purchase a haunted house than live within a mile of a dump or waste management facility. Other deal breakers that top home buyers’ lists include buying a home near the scene of a violent crime (47%), a former meth lab (45%), or within a mile of a prison (44%). 

Many homebuyers are also not interested in property located next to a cemetery (39%), where someone died of natural causes (26%), or with an address featuring “666” (33%).  It might take some sleuthing to know if your potential home has a haunted or notorious history, but if it means you’ll be more comfortable knowing, it’s time well-spent. 

Americans Find a Competitive Housing Market Scarier Than a Haunted House

Buying a home in the 2021 ultra-competitive housing market is tough, and 73% of Americans said they’d consider purchasing a haunted home — up from 59% in 2020 — especially if there were other benefits to offset the occasional paranormal activity. 

A surprising 27% of respondents even said they’d be willing to pay above market value for a haunted house. 

For the most part, though, 63% of respondents said they’d consider a haunted house if it came with a lower price tag. Respondents also said they would consider one if it had: 

  • A safer neighborhood (57%)
  • Friendly ghosts (53%)
  • Modern renovations and/or appliances (41%)
  • A larger yard or more land (39%)
  • More square footage (38%)
  • A better school district (37%)
  • Closer to amenities (28%)

In a competitive market, buyers have less opportunity to be selective based on limited housing stock. 

The tight market could also be why more than 1 in 10 Americans said they wouldn’t move immediately even if they saw signs of paranormal activity. In one survey, 48% of respondents said they’d try to get to know the ghost, 13% said they’d try to get rid of the ghost, 17% said they’d ignore the ghost, while 21% said they would sell their house

Buying or Selling a Stigmatized House in a Competitive Market

Although many homeowners apparently feel comfortable sharing their space with spirits, others said they would put their home on the market immediately under certain conditions, including if objects moved or levitated on their own (45%), they saw a ghost (37%), or their children suddenly behaved strangely in the home (40%).

Others said they’d move if a serious crime was committed nearby (38%) or if they learned about a crime previously committed in the home (34%). 

Buying or selling a stigmatized home in a competitive market can be either a blessing or a curse, depending on which side of the buying/selling coin you’re on. A home might be stigmatized from its reputation for hosting paranormal guests, but it can also suffer from negative associations with infamous crimes, violence or other unfortunate events that may have occurred in or near the home. A famous home featured in movies or TV might also be stigmatized if it attracts an endless stream of tourists or fans. 

Because stigmatized properties are harder to sell — typically they sell for 3% less and take 45% longer to sell — buyers willing to overlook the negative psychological impact of such a home may be able to get a bargain. As a buyer, tell your real estate agent that you’re open to the possibility of a haunted or other hard-to-sell home if it means you can make an offer that allows you to stretch your dollars further. 

Keep in mind that even if the house you’re buying is stigmatized, you still need to do your due diligence, especially if the market is ultra competitive. Make sure your credit score is healthy, your financing is in order, and this is the right house for you. Remember, chances are, you may encounter the same challenges in eventually selling the home in the future. 

Homeowners desperate to unload a stigmatized home and move as quickly as possible should be aware of the disclosure laws in their state. Some states require that sellers inform buyers of any stigmas associated with the property, but 62% of the survey’s respondents said they wouldn’t disclose a haunting to potential buyers if possible, (including 10% who would refuse even if the law required it). 

Work with a broker who can help you frame the sale as an opportunity for buyers looking to make a wise purchase and don’t mind working with, rather than against, the notoriety.