Category Archives: Buying a Home

Buying a house on emotion

You’re Buying a House – Not Dating It
 
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going with your instincts means that you recognize that you’re getting a great house for a good value. Going with your emotions is being obsessed with the paint color or the backyard. It’s an investment, so stay calm and be wise.

Why buy a home?

10 Reasons People Decide to Buy a Home

Renting is a very frustrating way of life. The money you pay every month disappears, leaving you with few benefits other than a roof over your head. Compared to owning a home, renting is a futile exercise that leaves you with nothing after your lease is up. It’s no surprise that people want to get out of the rent race, and here are 10 reasons why people decide to buy a home versus renting.


1. They Want to Build Equity

Homebuyers build equity as their property increases in value over time. This equity has many benefits, including the ability of a homebuyer to leverage equity in lines of credit to make repairs or additions to their home. Equity is a powerful thing and a natural consequence of home ownership. Renters never gain equity in their rental space, and at the end of their lease they are thrown out on the street with nothing to show for years of on time rental payments.

2. They Don’t Want to Throw Their Money Away

Without equity, what does paying your rent on time gain you every month? The truth is that paying rent guarantees a roof over your head for about 30 days and nothing more. In that sense, renting is like an extended stay hotel in that at the end of your rental period or lease you have nothing to show for the money you’ve paid. This makes renting a terrible investment when compared to home buying.

3. They Want More Space

It’s incredible how little you get for your rental payment each month. Most renters are lucky to have even a tiny balcony, let alone roomy closets o storage space. Many homes come with luxurious yards and spacious garages for storage. This makes buying a home an attractive option for those who prefer to stretch their legs.

4. They Want to Make Upgrades

Most leases forbid the renter from altering the rental space. For those do it yourselfers, this can mean a boring living experience. Home buyers are not only allowed to make upgrades, but doing so can be a great investment and raise the overall value of your home. From an investment perspective, this is a no brainer.

5. They Don’t Want to Pay Extra to Own Pets

For those pet lovers out there, renting can be a major financial undertaking Pet deposits can be very expensive, and some apartments add a monthly premium to rent just for having a pet, and separate deposits/premiums for each pet. These fees can add up fast! Homebuyers don’t have to deal with these sorts of fees, and they can also typically provide a better environment for their pets as well.

6. They Don’t Want to Be So Close to Noisy Neighbors

Have you ever lived on the second floor of a 3 story apartment complex? Wild partiers underneath blaring music at 4AM and home fitness gurus doing jumping jacks above you can make you realize just how annoying living so close to your neighbors can be. Homebuyers can sometimes deal with annoying neighbors as well, but at least they’re not rattling your chandelier when they stomp their feet down the hallway.

7. They Don’t Want to Deal With a Landlord

Sometimes dealing with a landlord can be tough. Some landlords are not very friendly or flexible, and won’t hesitate to throw you on the street if rent isn’t on time. Other landlords can be so distant that problems with rent or appliances don’t get resolved for months or even years. As a homeowner, there’s no landlord to deal with and you have the freedom and independence of conducting business on your own terms.

8. Their Hobbies Make Renting a Bad Idea

Drummers and musicians need a place to live, but do you want them living above you in a cramped apartment complex? For those renters who have hobbies or professions that are noisy or require space, renting just isn’t an option for them. Owning a home with plenty of space is their only way to go.

9. They Don’t Want to Deal With Deposits

Security deposits? These never seem to work out in the renters favor and come moving time it always seems like every little problem leads to forfeiture of the sometimes huge security deposits we have to pay just to sign the lease. Home buyers don’t have to deal with this as their home is more closely tied to their assets and their individual independence.

10. They Want to Live the American Dream

Owning a home is a big part of the American dream, and most people would say that the independence, autonomy, and sense of accomplishment that owning a home brings is an essential part of the American way of life. Does renting an apartment do the same?

Take a good look

Don’t Overlook a Home’s Potential

Cosmetic issues are easy to remedy

By Michele Dawson



Home shopping for first-time homebuyers it’s an exciting, albeit nerve-wracking, experience. If you’re like others in the market for their first home, you probably have in mind exactly how your soon-to-be home will look.

 
But it’s important not to fall into the bad decorating, dingy walls and dirt-bare back yard equals bad-home trap. If you don’t see past the hideous wallpaper, funky light fixtures and avocado green carpeting, you may miss out on a home with great potential.
 
And, if you’re looking for a home in a seller’s market where homes are being snatched up as soon as they go on the market, you’ll come to realize you can’t be choosy if you want to make a competitive offer.
 
One of the first things to do is to get pre-approved for a loan and determine the maximum you can afford to offer for a house. Don’t look at homes that are asking for more than 5 percent above your maximum, otherwise you’ll be setting yourself up for disappointment if you find the perfect—but outside your budget—home.
 
So what to do?
 
The floor plan of the home is extremely important. If a floor plan isn’t quite to your liking, consider rearranging it or adding on. If you’re looking at an existing home and will need to remodel or expand to suit your needs, the estimated cost of renovation needs to be considered when making an offer.
Also, consider the features of a home:
  • Walls. While these are among the easiest to remedy, they also make a huge first impression. If the walls need to be painted, are covered in wallpaper or are painted a color you find distasteful, picture them crisp and clean in the color of your choice—that’s how they could look after you paint them.


  • Floors. Like walls, carpet or floor surfaces that are old or outdated can be easily replaced. You could even ask for a carpet allowance in your bid, especially if you’re in a buyer’s market.


  • View. Things like old, ugly—even dirty—windows and window treatments can make a view appear less desirable. Those things can be improved, so unless the only view you have is of your neighbor’s clunker on the side of the house, don’t get hung up on what is surely a fixable view.


  • Landscaping. Your best bet is a moderately landscaped yard because you can always improve landscaping without spending too much. Worst case, even if you’re looking at dirt, landscaping is one of the easier projects to tackle. Plus you get to design it however you’d like if you’re starting from scratch.


  • Closets and garages. You can never have too much storage space, which is why so many newer homes have three-car garages. But if you encounter a converted garage that is now a bedroom or storage room, don’t give up. Converted garages can almost always go back to their original purpose without much cost or labor.


  • Kitchen. The most popular room in the house, many homeowners want their kitchen to be large and have modern appliances. Don’t let outdated color schemes deter you because there’s nothing like a fresh coat (or two) of paint to make a kitchen your own. Plus, if you like the rest of the house enough to make an offer, you can give the kitchen a minor spruce-up with some new appliances or a major overhaul complete with new countertops, cabinets, and flooring.


  • The exterior. If the home doesn’t have good curb appeal, try to picture it with a fresh coat of paint and revitalized landscaping.


  • Pools. If you want a pool, buy a home with a pool already built in. Pools are expensive and you will not get a full return on the cost when you go to sell. Let someone else lose the return. The cost of repairing a pool is less than putting one in, so if you’re looking at a home with an old pool that looks like it’s in bad shape, it’s still a better bet than putting one in later.


When making an offer, consider what you can’t live without, as well as your budget. Also, be sure you hire a professional home inspector to inspect the house. If the home’s systems are in good working order and the house has everything you want except a minor item or two, make an offer accordingly.
 
Most importantly, keep in mind that unless you’re building your dream home from scratch, you’ll probably never find the perfect home. But seeing past a previous owner’s bad decorating choices to the core of the home and its potential for livability will yield you the home you’ve always wanted. It may take some work, but hey—it’s yours.

Women and Home Buying

A Single Woman’s Guide to Buying a Home

THE PROS AND CONS OF BUYING WHEN SINGLE

By Aviva Friedlander
 
Finish school, find a job, get married, buy a house. In that order. While this is often still the traditional pattern of life events for many women, more and more single women are buying their first house earlier in their lives.
 
Whether it’s because rents are high, home prices are affordable in the desired area or simply because of an aversion to living with roommates, single women are becoming a stronger force in the real estate market. In fact, according to the Joint Center for Housing Studies, more than one in five homebuyers in the U.S. is a single woman.
 
If you’re single and ready to make the big purchase, make sure you know what it takes to go it alone. 
 

Going over finances

 
Make sure you speak with an accountant or financial advisor to figure out what you can afford. Consider the amount you will need for the mortgage payment itself, property taxes, insurance premiums, utility bills, as well as money for repairs and maintenance. The main reason that buying early in life is a smart choice is appreciation value. Your home gains in value over time and when you sell it, that extra money can go a long way toward a down payment on a new home, or other investments. 
 

Finding a reliable real estate agent

 
If real estate is foreign to you and even if it isn’t, you would be best off working with a real estate agent to help you find that perfect place and to guide you down the road to homeownership. Consider finding a real estate agent close to your age, and even better, one who is single and successful just like you. A good Realtor should also be able to recommend a trustworthy financial advisor, lawyer, inspector and contractor to help you with the process.
 
Starting small
 
Buying a smaller place, with two bedrooms or less, has a number of advantages for a single. The lower purchase price will likely net you a mortgage payment that is lower than rent in that same area. You will save on utilities, maintenance and cleaning costs. You will have fewer rooms to furnish and decorate. And, when the time comes, it may be easier to sell when you are ready to move on.
 
Considering alternative dwellings
 

Living in a single-family home with a landscaped yard and a picket fence is the stuff dreams are made of. Reality says that buyers must do what’s practical for them. Many singles choose condominiums, co-ops or townhouses over single-family homes for some very good reasons. Aside from being more affordable, they may provide maintenance services, security in the form of a buzzer-operated front door or doorman and a built-in social network of neighbors. Overall it’s a smart idea for single women to invest in a home. By navigating the ins and outs of homeownership when you’re single, you’ll be in an excellent position to guide your husband through the process should you want to buy again once you’re married.

How to know if you are ready to buy a house

Are You Ready to Buy a House?

Answering these eight questions will help you decide
 
The idea of owning your home is an exciting one, but how do you know if you’re ready? Before you take the plunge, answer the questions below.


What’s your financial situation?
Having a clear understanding of your finances is necessary when you’re considering buying a home. Prior to speaking with a real estate agent, you should make a budget to see how much you can reasonably afford to pay. Don’t forget to factor in the cost of taxes, insurance premiums, maintenance and other upkeep.
 
Can you afford even the initial costs?
 
Down payment amounts vary based on the type of loan you’re offered or if you’re eligible for a first-time homebuyers’ program, but remember that the more you put down, the lower your mortgage payments will be.
Other initial costs can be substantial: loan set-up fees, home inspections, insurance, property taxes and other fees will cost you about 2 to 4 percent of your home price.
 
Is your money organized?
 
Hopefully you’re the kind of person who balances your checkbook and understands where your money goes, but if you take a more lackadaisical approach to your finances, you’ll need to step up your game. Get organized, check your credit report and keep building your savings. Getting your affairs in order helps you improve your credit score, qualifying you for better interest rates, and good financial records will help you take full advantage of tax deductions.
 
What are your future expenses?
 
Think ahead to the next few years. Are you making any big life changes that will hit your wallet hard? If you’re planning to have children or start paying tuition soon, you should factor that cost into your decision now. It can become difficult to replace an aging car or take an expensive vacation once you’re paying a mortgage.
 
Do you have an emergency fund?
 
Before you devote all your savings into a down payment or upkeep for your house, look at the bigger picture. You need to build a financial cushion in case of financial setbacks like unexpected unemployment or serious illness.
It’s not just money that should affect your decision to buy a home.
 
Are you flexible when it comes to getting what you want?
 
Your first home may not have all the bells and whistles you’re looking for. Are you willing to defer on your wish list now in order to have a home of your own? In a few years, you may be able to find a home that better suits your needs, but in the meantime you could also consider fixing up a less
expensive home, buying a home with friends or renting out part of your home for additional income.
 
Do you plan to move in three to five years?
 
There is a lot of effort, time and cost involved in buying a house – you want to make your investment pay off for you. In addition to the price of the house itself, you should also take into the set-up costs already mentioned.
 
If you’re planning to move in a year for work or school, you may want to wait until after that time. Otherwise, you might find yourself in a tough spot if you’re forced to sell your home for less than its purchase price in a slow market.
 
Do you enjoy home improvement?
 
If you’re already looking at homes, it’s hard not to imagine how adding a fresh coat of paint to the walls or changing the light fixtures will make a house truly yours. But if you’re used to calling the landlord for anything that goes awry in your home, owning a house might be a jarring wake-up call. When you own your house, any issue becomes your responsibility, from replacing blown electrical fuses to installing a new roof.
 
Now is the time to consider whether you enjoy home improvement projects. Are you confident in your ability to patch drywall or install a ceiling fan, or would you rather pay someone else to do it? If it’s the latter, consider that even if you hire someone else to handle your home improvement issues, you will still have to invest not only money but your time by researching contractors and supervising their work.
 
 
Once you’ve answered these questions and taken the first steps toward purchasing your new home, be sure to find out the going home values in your area –just contact Remax Realty Center in Wisconsin!
 
By Tasha Schroeder 

Now or Later – You make the call

I can help you determine what makes the most sense for YOU! 

Contact me to help you get a plan in place to buy a house, whether now or next year! 

 Lisabear@remax.net




Are you self emplyeed and wanting to buy a house?

Self-Employed? The Mortgage Rule You Need to Know

When applying for a mortgage, lenders will classify you as a wage earner employee or self-employed. Furthermore, if you also own a business or a percentage of a business, you might be considered self-employed even though you are a W-2 wage earner. If this is you, here’s what you’ll need to know to complete a mortgage application.

To start with, here are the income classifications for lending:

  • Employee: Individual is a W-2 wage earner and receives a paycheck. Taxes are withheld from the paycheck.

  • Self-employed: This includes everything else — a sole proprietorship, any business entity where income is derived or lost (including all affiliated corporations), and income derived from real estate or dividend income.

Where the Two Worlds Intersect
Bona fide employees who also have an ownership interest in the company can actually be considered self-employed. For example, if you’re a W-2 wage earner employee and you also have more than a 25 percent ownership interest in the company that employs you, this would earmark you as‘self-employed for the purposes of completing a mortgage application. If you happen to be a W-2 wage earner, but you have a percentage of ownership in another business, you would be considered both an employee and self-employed.

Business Ownership and Getting a Home Loan
Your federal income tax returns are required for the purposes of documenting your ability to repay when securing a new mortgage. On your tax returns, as a sole proprietor you file a Schedule C, and this income carries over to Schedule A. Most sole proprietors don’t have separate business entities, so corporate returns are not required as it is 100 percent ownership. However, things are different when you have an ownership interest in a company.

  1. Schedule E identifies whether there is additional business income and/or that you are an owner in an additional business.
  2. If an additional business is present on the return, the mortgage lender will require a K-1 to determine the percentage of ownership.

Mortgage Tip: If you own 24 percent of a business, you are not considered self-employed for the purposes of the loan application, and the lender will not need to obtain the corporate income tax returns. However, if you own 25 percent or more of a business — whether it’s your current employer or another business entity, as identified on the K-1 — then, yes, you’ll need to provide additional income tax returns for the entity in addition to your personal tax returns for obtaining the mortgage.

Why All Income Examination Matters
An ability-to-repay analysis is required on all mortgage loans. Simply providing W-2s, pay stubs and personal tax returns is not enough if you have more than a 25 percent business ownership interest in another company. If you’re receiving additional income from another business, and that income is tied to your personal tax returns necessary for securing that mortgage, it becomes necessary for the lender to have the additional tax returns because they support your reported income and subsequent ability to repay. Lenders are required to average your income in most cases during the past 24 months (including the business income) and that averaged income or loss will be used on the application in accordance with obtaining the new mortgage.

A financial word to the wise for the self-employed: You don’t need to provide the additional tax returns if you are a small minority share owner in a company.

Don’t move it!

Keep Your Money Where It Is

It’s not wise to make any huge purchases or move your money around three to six months before buying a new home. You don’t want to take any big chances with your credit profile.


Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible. If you open new credit cards, amass too much debt or buy a lot of big-ticket items, you’re going to have a hard time getting a loan.

I was already PRE- Qualified

Get Pre-Approved for Your Home Loan

There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. 

Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.

How Much Does My Agent Need to Know About My Finances?

How Much Does My Agent Need to Know About My Finances?
How Much Does My Agent Need to Know About My Finances?
Money is a delicate issue. How much we earn and how much we owe is information many of us prefer to keep close to the vest.

If you’re concerned about detailing your finances to your real estate agent, rest assured that there’s plenty of privacy in the client/agent relationship.

In their wheelhouse, Real estate agents don’t need, or expect, you to disclose everything about your money. That said, they must understand your overall situation to help guide you to a home that’s within your budget.

An agent’s job is to negotiate a home purchase or sale on your behalf, keep the transaction on track and help you navigate real estate paperwork. His or her strength lies in understanding home values, and property and neighborhood features. Home financing is an altogether separate story from a home search or sale; therefore, agents usually don’t delve into your finances to crunch the numbers.

Leave it to the lender

Agents are happy to let your mortgage lender handle the financial questioning. A loan officer at a bank or mortgage company calculates your maximum purchasing power and your monthly payments based on your loan application, financial documentation and debt-to-income ratio.

Be prepared to supply your lender with your last two years of tax returns, recent pay stubs, bank statements and investment accounts. Agents then present a lender-generated preapproval letter to listing agents, indicating the amount you’re able to borrow.

Contact your local RE/MAX agent if you have questions about buying a house or selling one. These real estate professionals can guide you – with discretion – toward your next home.