Things to think about before buying a home

If we talk about the big investments, one thing that people spend their whole life's hard-earned money is real estate. No matter whether you are extremely rich or a common man saving every penny to buy a home for his family, you can't afford to make an impulsive decision and turn your moment of joy into remorse by settling down for something you never wanted. The list of the options that any average home seeker can look for in the real estate market includes:

Condominiums

Condominiums are the individual flats located in a multi-story building. The condominium building generally has its own recreation centers, parks, shopping hubs and is governed by an association that determines the monthly fee and takes care of the maintenance and improvement of the building. The major drawback of living in a condominium is the lack of privacy and increased depreciation during a housing- market downturn.

Foreclosure Property

Foreclosure properties are known to be an inexpensive alternative for the people looking for a previously owned home that require minor repairs and modifications. A foreclosure property is also known as Real Estate Owned property and is often owned by the lender as the previous owner defaulted on paying back loan. Foreclosure properties are usually up to 65% below the market and are considered to be best deals on the market.

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What to know about renting versus buying a home

Here's where it makes sense to rent:

You have limited funds. If you don't have the money for a down payment and additional costs of owning a home, renting is the best option. Use rent-versus-buy calculators at Trulia or Bankrate.com to see what you can afford.

You are uncertain about your employment. If you are unsure about your job situation or living paycheck to paycheck, focus on conserving cash for future living expenses and building up your emergency fund, said Evelyn Zohlen, a certified financial planner and president of Inspired Financial in Huntington Beach, California.

More millennial are moving into the real estate market. About 65 percent of people ages 25 to 34 years old surveyed by Realtor.com in mid-June said they plan to buy in the next three months.

But buying is not always the best option. When deciding one of the biggest financial decisions of your life, keep these things in mind to see if you're better off buying or renting.

You have a short-term time horizon.

If you are on a work assignment that lasts two years or less, it makes more sense to rent rather than taking on the high transaction costs of purchasing a home. Same goes if you plan to move in the next couple of years or want to start a family in a few years. On a similar note, if you are going through a significant life transition, like divorce or loss of a spouse, renting is a better idea while you get a little better footing.

Real Estate Investing in a High-Interest-Rate Environment

With the exception of the real estate market in 2010 where interest rates and housing prices were both low, characteristically, interest rates and property values have an inverse relationship. For example, when housing prices are high, interest rates are low, and when housing prices are low, interest rates are high. For home buyers or private real estate investors who plan on keeping the property for at least seven years, it is advisable to buy real estate when interest rates are lower and property values higher because property values generally appreciate over time. Furthermore, a lower interest rate with a 15- or 30-year fixed mortgage keeps the monthly mortgage payment affordable.

 

High interest rates affect real estate investors regardless of whether the real estate investment is in the private market or public market. The difference between real estate investing in the private market versus the public market is the private market includes an investor purchasing a real estate property himself, while the public real estate market includes the investor purchasing a security in a publicly traded real estate company, most typically as real estate investment trusts, or REITs.

However, for a private real estate investor who can afford a larger down payment on the property and pay off the mortgage faster with larger payments, it is advisable to buy property with lower property values and high interest rates. This is because the investor can refinance the property when interest rates go down or opt for an adjustable-rate mortgage where the interest rate on the mortgage is below the market rate.

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Biggest Mistakes While Buying a Retirement Dream Home

Without proper financial planning, committing to a retirement home can be a serious mistake with long-term implications. Here, according to financial and retirement advisers are some big mistakes people make when they buy a retirement home.

. Not having a plan

You must have a plan for what type of house you need and what are you looking for. I hear people all the time say they will sell their home and buy an RV. Have you even tried an RV? You should rent one. Maybe you don’t like campfires. I find it unusual that people will spend on thousands on an RV and haven’t tried it.

. Forgetting Friends

Not considering how important it is to be near friends and the social life you’ve enjoyed for years is “a problem I see people talk about the most,” said Larry Rosenthal, president of Rosenthal Wealth Management in Northern Virginia. “Even if they stay in same community, it may be across town, 20 minutes. Or across state. A lot of it revolves around social activities, families, friends, kids and grandkids. Those are the biggest mistakes. They may say I want to go to New Mexico and the kids end up in California with the grandkids” noted Rosenthal.

. Insuring properly

Heafner said most people, unless they have large incomes, don’t think much about a personal umbrella policy until it’s too late. “It is so inexpensive to shield yourself with a $1 million or $2 million policy.”

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When to buy or sell a Home

Yes, real estate is seasonal. In some cities this is more apparent than others, especially places with harsh winter weather. In the D.C. area, however, many buyers jump into their home search in January instead of waiting until March or April as conventional wisdom dictates. When Redfin crunched the numbers over the past five years, we found that 51 percent of homes listed in the winter sold above asking price, compared with 50 percent in the spring. If you want the best shot at selling your home quickly and for the most money, list in the first half of the year. The percentage of homes that sold over asking price dropped to 44 percent and 43 percent in the summer and fall respectively in our region.

Spring and summer are the most active seasons of the year for real estate and property management alike. Most people use this time of year for moving because the kids are out of school on break and the weather can be counted on for clear skies and sunshine. Buying and selling a home this time of year can be exciting, whether the move is across town or across the Country. But, the process can also be hectic and overwhelming.

Be aware. Do some research, talk with friends and family. It is important for you to be knowledgeable and aware of what is going on with the housing market in your area. If homes in your neighborhood have sold recently, find out for how much and how closely the home resembled your own. If you are moving into a new area and you are shopping for a home, do some research on how long the home has been on the market and what it has sold for historically. After all, buying a home is the single biggest purchase most people will make in their entire lives. You want to make sure that your investment is protected and will continue to accrue.

If you are buying or selling a home this summer – congratulations and good luck with all of your future plans. Following these steps will help to make the process that much smoother.

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