Buying a Home – HomeownersInsurance.org http://www.homeownersinsurance.org Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Housing Options That Will Not Break the Bank http://www.homeownersinsurance.org/housing-options-that-will-not-break-the-bank/ http://www.homeownersinsurance.org/housing-options-that-will-not-break-the-bank/#respond Wed, 23 May 2012 16:16:14 +0000 http://www.homeownersinsurance.org/?p=1525 Following the devastation of the housing market, Americans are looking for alternatives to expensive and burdensome mortgages. Affordable housing has become a No. 1 priority for many citizens. Short of living in a trailer, these are the four most financially gentle options for housing.

 

Renting

The Wall Street Journal highlighted the mindset of potential home owners in their findings in a study done by the Demand Institute division of the U.S. Conference Board. The study revealed that the majority of Americans still aspire to own a home in the near future, yet their expectations have taken on a more reasonable turn. In addition to reconsidering their preference for a mansion and aiming more pragmatically, many Americans have decided to rent for the time being until the market recovers a little more.

In fact, Market Watch reported that renting is the primary cause of the recent market improvements over the last few months. Renting boosts the economy in two ways: landlords focus more of their financial resources in property and home improvement, and renters provide a market for the many homes that can’t be sold otherwise. Slowly but surely, the increasing shift to renting is causing the market to stabilize.

Renting is not only a cheaper option for housing, but it comes with fewer responsibilities as well. Often, landlords will include free yard work and repairs as part of the contract, and taxes for a renter are much simpler than those with a mortgage and title. For those not quite ready to purchase a home, but still able to afford the next best thing, renting is an attractive and affordable option.

 

Apartments

Apartments appeal to the younger generation more than anyone else, but recent trends show that senior adults are also considering them for retirement as opposed to an expensive home. This is primarily because many of the retirees are saddled with expensive mortgages that they won’t be able to pay off before ending their employment.

Out of necessity, they are forced to consider more affordable living quarters, and the fact that apartments are generally located close to town is a major benefit to those who might not be driving in the near future or who want to live close to extended family.

For young singles, married couples, or small families, apartments are a great way to build credit history and save for a house. With all the amenities that apartments offer as well as landscaping and repairs, this housing option is not only practical, but fairly hassle-free.

The only financial concern associated with apartments is that rates often increase after each lease is up. Sometimes you can negotiate terms with the landlords, though, to keep the rent the same rate in return for continuing with that complex. Otherwise, it’s not terribly hard to find another apartment in the general vicinity offering lower rates.

 

Mobile Homes

If you are planning to build a house or buy a home, a mobile home can be a great, affordable option for the temporary time being. The Census Bureau produced an annual report noting that the average price for a new manufactured home costs between $37,100 and$83,800 depending on the size and region.

If the home is set up in a development zone or park, additional fees may be required for renting space or facility use — up to $800 a month or more, again depending on location. Since most mobile homes rapidly decline in value over time, they are hardly a long-term investment other than providing a housing situation while saving for a real home.

The other benefit of mobile homes is their transportability. They can be moved almost anywhere and if you have property you plan on building on eventually, putting a mobile home on it temporarily is a simple solution.

 

Government Housing

Although most common in Asia and Europe, there are select places in the United States where government-provided public housing (otherwise known as social housing) is available. Of all the “affordable” options, public housing is the least attractive for safety reasons.

Intended to provide decent and safe rental housing to low income families, elderly, or disabled people, crime poses a serious disincentive. Because the majority of residents are low income, public housing is notorious for high crime rates. The New York Police Department released data about the increase in shooting incidents — a 55% increase from 2009 to 2010. Although authorities suspected that crime didn’t increase overall, but rather relocated, it still highlights the safety risks of public housing.

Nevertheless, in a pinch, public housing can keep you from living on the streets and for those in a low-income situation, it may be their only option.

Depending on your needs, income level, and financial state, any of these options would be easier on the pocketbook while still providing a sensible housing solution.

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8 Essential Home Inspection Tips for Home Buyers http://www.homeownersinsurance.org/8-essential-home-inspection-tips-for-home-buyers/ http://www.homeownersinsurance.org/8-essential-home-inspection-tips-for-home-buyers/#respond Fri, 18 May 2012 20:26:03 +0000 http://www.homeownersinsurance.org/?p=1515 The home inspection is one of the most important steps before buying a home. For home buyers, it may be grounds for negotiating price offers, renovations, or necessary fixes. As a fairly comprehensive diagnostic test on the condition of your future home, it is designed to educate both buyers and sellers about deficiencies and problems that should be taken care of to prevent long-term damage. Some issues require immediate attention, and others may be grounds for negotiating fixes prior to moving in. Here are some essential tips on what to pay particular attention to when getting a home inspection.

  1. Attend the inspection

    It is to your advantage to attend the home inspection for your potential new home. Professional inspectors always encourage clients to go to their inspection and accompany them throughout the process in order to see first-hand what is going on. Inspectors will point out problem-areas and arm you with valuable, detailed information regarding the home you may be purchasing. Not being present during an inspection may make it harder to understand the home inspection report, which puts you at a disadvantage when negotiating terms with the seller.

  2. Look for foundation movement

    A common and major problem found in home inspections are signs of foundational movement. Grade sloping or erosion may contribute to cracks in the foundation, which could lead to expensive problems in the future. The inspector will look out for these signs, but it doesn’t hurt to be also be on the lookout for misaligned windows and doors, hairline cracks on the walls or foundation, and uneven gaps on the floor. Don’t hesitate to move furniture and rugs to get a closer look.

  3. Check all electrical systems

    Older homes are notorious for ill-equipped electrical systems. For example, bathrooms may not be wired sufficiently for modern gadgets and are prone to overheating. Be sure all electrical outlets have enough load to support TVs, computers, and other large electrical items. The heating and cooling system also must be top shape; if the system is outdated, consider replacements for an energy efficient model. Also, be on the watch for any exposed wires, which should be corrected by a licensed electrician.

  4. Expect the worst, but assess deal-breakers

    Before an inspection, you should make a mental note of certain deal-breakers the inspection may find. Major fixes can be potentially a major financial blow, so research major red flags and assess your willingness to deal with these issues. Things like mold, termites, cracked foundations, and wiring issues can be quite problematic and hazardous to your health. Knowing what you’re willing to fix and not fix will help you make a more educated decision when faced with inspection results.

  5. Inspect the inspector

    Not all states require home inspectors to be licensed or adhere to a certain standard. There is also no comprehensive background or certification that fully trains an individual for all the conditions that may exist in a home. Even in areas where licensing exists, some programs fall short. It is your responsibility to make sure the home inspector is formally trained or certified to perform a thorough home inspection. This may be done by confirming that the inspector is backed by the National Institute of Building Inspectors (NIBI) or other formal organizations like the National Association of Certified Home Inspectors (NACHI), which insures their knowledge of inspection and the home buying process. It also helps to ask for a reference from your realtor or other people you know.

  6. Insist on detailed descriptions in the inspection report

    The inspection report should provide comprehensive and detailed descriptions for each item inspected. Words like “good,” “fair,” or “poor” without an accompanying explanation can be interpreted in many ways. If your inspection report is filled with vague words and no succinct description or recommendation for repairs, ask the inspector to elaborate with a more descriptive report. Take time to make sure you understand the conditions of each item and ask questions.

  7. Make sure utilities are on in vacant homes

    Prior to your inspection appointment, make sure with the seller that utilities will be turned on to avoid rescheduling another inspection. While vacant properties may be easier to inspect (visually) than an occupied one, there are some major disadvantages. If homes have been vacant for a long time, it may have caused accelerated deterioration of mechanical systems due to bearing and seal damage. There also may be some loopholes in the inspection like undetected leaks and water stains that are not visible due to lack of normal water usage.

  8. Compare home inspection checklists

    All home inspections can be drastically different and vary from state to state, as well as from accredited associations, counties, and cities. Compare the guidelines of reputable organizations and see which checklist suits your potential home best. There are some inspections that do not include asbestos, radon, rodents, lead, or mold, so be aware of what your inspection includes before hiring an inspector.

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9 Surprise Costs That Come With Home Ownership http://www.homeownersinsurance.org/9-surprise-costs-that-come-with-home-ownership/ http://www.homeownersinsurance.org/9-surprise-costs-that-come-with-home-ownership/#respond Tue, 01 May 2012 20:43:47 +0000 http://www.homeownersinsurance.org/?p=1427 Owning a home is the epitome of the American Dream. However, as a first-time homeowner, you may be faced with many challenges. Leaky roofs, maintenance issues, and repair costs can make any first-time buyer long for those simpler renting days. If you’re like most people, preparing a budget is one of the first steps you’ll take before buying a property. Unfortunately, before many first-time buyers close the deal on their dream home, unexpected and extra costs force them to go back to the drawing board. It’s important to create a sound budget plan before starting the process of home-buying, as it will be much easier once you have added all other extra costs such as legal charges, moving costs, and realtor fees. Here are some other surprise costs that come with owning a home.

  1. Closing Costs

    Inexperienced home buyers may believe that “zero down” deals means not paying a dime up front. However, closing costs are usually 4 to 6% of the total cost of the home. Your real estate agent may advise you to have at least $1,000 to $5,000 on hand before you even start the process of looking for potential homes. You also may want to negotiate with your real estate agent, as sometimes closing costs can be split with the seller, but as a rule of thumb, plan to spend a couple thousand bucks for closing fees. This includes inspections, code violations, and title transfers.

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  3. Taxes

    Property taxes are a big part of the costs of your home each month. Even if you have a fixed-rate home loan, chances are your property taxes could go up according to the market and increase your monthly fees.

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  5. HOA and Condominium Fees

    When moving into a condo, or a home in certain neighborhoods or gated communities, you will be required to pay a monthly or quarterly fee. Whether these fees are for general upkeep, trash disposal, utilities, or other services, don’t be surprised if your homeowner’s or condominium association raises the price per month at their discretion. They may also charge you a separate fee for large projects such as fixing a community gate or repaving a driveway.

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  7. Lawn Maintenance

    Maintaining the appearance of your lawn or backyard is another hidden expense you may want to calculate into your budget. Lawn equipment, installing a sprinkler system, or hiring a lawn care professional can be quite expensive, especially if your budget is already tight. You may want to consider buying a home with a smaller yard if you don’t want to deal with so much lawn care.

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  9. Home Repairs and Re-modeling

    When moving into a home, there are many repairs that you may need. While fixing loose tiles, customizing your bathrooms, removing dead trees, or other small repairs may not cost a lot, they may add up over time. Older homes will have even more unexpected fixes like repairing your roof, garage door, or paying for mold mitigation. The best thing a homeowner can do is set aside a separate part of the budget for emergency repairs. You’ll have to calculate a reasonable amount depending on the condition, size, and age of your home.

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  11. Home Insurance

    Even if you have had renter’s insurance in the past, there are many differences when it comes to home insurance. The most distinguishable difference is cost. Since you are essentially paying for the ability to rebuild your home, replace your valuable possessions, and damages to your property, there is much more at stake than with just renter’s insurance. In addition, consider that you may also need supplemental insurance if you live in natural disaster zones which are prone to flooding, earthquakes, or hurricanes.

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  13. Moving Costs

    If you’re moving within several hundred miles, it may not be such an imposing problem. However, consider a drastic move across state lines, or even to a different country, and you’re looking at a hefty bill just for moving costs. Not only will you need to pay for a moving company, rent a truck, or ship your belongings, but you may need an immediate deposit just to start your utilities.

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  15. Furnishings

    Although this is more of a discretionary expense, many first-time home buyers face the challenge of moving into a much larger space and not having nearly as enough furniture to fill the space. You can always wait a bit to buy extra decorative items, but you’ll at least need some new furniture to start. Keep your expenses in check by waiting to buy larger items only after you’ve shopped around or compared prices. Sometimes, a home will not come with key appliances like a refrigerator or washer and dryer and you’ll have to furnish it yourself, so budget accordingly.

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  17. Utility Bills

    Moving from a smaller apartment to a home also means an increase in your costs for electricity, gas, and water. You may also face different garbage collection fees, along with changing your internet, cable, and home phone service. It’s always a good idea to over-budget, rather than end up shorthanded, so before you make your move, factor in higher utility bills per month.

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Now Is the Time to Buy http://www.homeownersinsurance.org/now-is-the-time-to-buy/ http://www.homeownersinsurance.org/now-is-the-time-to-buy/#respond Wed, 04 Aug 2010 14:27:03 +0000 http://www.homeownersinsurance.org/?p=820 If you want to own a home in the United States, the government and private lenders seem willing to do whatever they can to help keep your dream alive. Even those who have fallen severely behind on mortgage payments are being given second and third chances by lenders, largely due to a variety of government programs which encourage mortgage companies to seek other alternatives to foreclosure. Of course, if you are behind on your mortgage, you should contact your lending institution for specifics. And while you’re in the process, do your best to make mortgage and homeowners insurance payments on a regular basis.

Home ownership has long been seen as one of the benchmarks of the American Dream. It has long been believed by politicians and citizens on both sides of the political spectrum that home owners make more involved citizens, and that a culture of home ownership is beneficial to all of us.

Unfortunately, the percentage of Americans who own their own home has been decreasing steadily over the past five years. Much of this is due to the bursting of the housing bubble and people not being able to afford mortgages after ARM rates went up.

This is a great time to buy a home if you have the credit to do so, though. The price for housing is cheaper than we are likely to ever see it again. So are the interest rates. Of course, banks are very hesitant to lend to those with poor credit, so if your credit is in rough shape, you’d do better to spend a year or two repairing it before you seek to take on a mortgage payment, property taxes, and homeowners insurance payments.

If you’ve never bought a home before, there are a number of programs that are designed to help you buy your first house. If you’re willing to live within many of our cities, you may even qualify for grants and low interest loans to fix an older house up.

There’s never been a better time to be in the market for a house. After five years of declining home ownership and two years of sharply declining property values, the housing market is starting to show the first signs of a recovery. As with any investment, the best time to jump into home ownership is when values are at their lowest but starting to rise.

Photo via Cicciofarmaco | Photography

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Home Ownership: The Ultimate Investment? http://www.homeownersinsurance.org/home-ownership-the-ultimate-investment/ http://www.homeownersinsurance.org/home-ownership-the-ultimate-investment/#respond Mon, 19 Jul 2010 15:25:53 +0000 http://www.homeownersinsurance.org/?p=748 Most of us have grown up being told, and dutifully believing, that home ownership is the first key to building wealth. Even Oprah Winfrey has chimed in to the discussion, claiming repeatedly that owning your own home is the first step to accumulating wealth (of course, hosting the nation’s most watched talk show doesn’t hurt either). Buying a home is, of course, the best investment we will ever make. Or is it? The truth of the matter isn’t as simple as it sounds. Don’t get us wrong, home ownership can be a great thing. But when you factor in related costs such as homeowners insurance, property taxes, and maintenance, the cost of owning your own home ends up being a lot more than the bottom line of your mortgage. So what is it that made it seem like such a good deal for our parents and grandparents?

In many ways, the reasons why buying a home looked like the best investment our parents and grandparents ever made was because, in hind sight, it actually turned out to be their best investment. And depending on how you go about it, it can be yours, too. If you’re going to buy a house as an investment, however, take these lessons from the past:

  • Buy a home that’s within your price range. In past generations, people bought houses whose total purchase price was about three times their annual income or less. That generally meant making do with a modest home. Unless your income is miles north of modest, your choice of house should be modest, too. Especially if you’re buying it with the idea that it’ll be a good investment. Bear in mind that most of the other expenses go down with the price of your home, including utilities, homeowners insurance, property taxes, and more.
  • Don’t buy a house until you have 20% down. We know, you can buy a house with nothing down. Run the numbers, though, and that 20% down payment you bring to the table makes a huge difference in the amount of interest you pay over the years
  • Get a fixed rate. You’re better off that way. If recent events haven’t convinced you that ARM rates aren’t such a good idea, there’s probably not a pearl of wisdom in all the world that would. Suffice it to say there’s something to be said for predictability. Previous generations knew what their house payments were going to be and were able to plan other things around them.
  • Stay in the house. Our generation seems to get hot feet and feel the need to move every five to seven years out of principle. Stop it. A house is not a good investment (assuming a 30 year mortgage) unless you live in it for 20 years or more.

Photo via sanjoyg

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Is Buying a Home a Good Savings Vehicle? http://www.homeownersinsurance.org/is-buying-a-home-a-good-savings-vehicle/ http://www.homeownersinsurance.org/is-buying-a-home-a-good-savings-vehicle/#respond Mon, 05 Jul 2010 17:57:07 +0000 http://www.homeownersinsurance.org/?p=706 Until recently, most anyone would tell you that it makes more sense to buy a house than rent, if you are able to afford to do so. The reasons, they would claim, are simple. Namely, when you rent, you throw your money away, and will never see it again, but when you buy, you build equity. But, when you factor in other concerns like home maintenance and repair, homeowners insurance, and taxes, is it really the best way to build a nest egg?

It Depends

The answer varies, depending on a number of circumstances, including your location, your credit (and the resulting interest rate), and market factors over which you have no control and likely can’t predict with any degree of accuracy. Ultimately, if you really want to know what makes sense for your situation, you need to do a little homework.

Understand the Interest

With most mortgage loans, the overwhelming majority of what you will be paying for the first 10 years is interest. Interest paid is money thrown away that you will never see again, every bit as much as rent is. For the first 5 years, an average of 80% of what a homeowner pays covers interest. Years 6-10 still see the homeowner divesting 70% of his payment into interest. Unless your housing costs are actually lower than what you were paying to rent, you probably would do much better investing your money into something else.

What Constitutes Housing Costs

When determining your housing costs, it’s important to keep in mind that your mortgage or rent is just the beginning of it. If you’re a homeowner, you also need to factor in homeowners insurance. You also need to consider the costs of upkeep. Small things like gas for the lawn mower stack with larger tag issues like fixing plumbing or wiring, repainting every 8 years or so, and replacing the roof every 20 years. By the time many homeowners have any significant equity, they find that they need to borrow against it to maintain the house, keeping them in a cycle of debt.

If You’re Going to Buy

There are at least one very good reason to buy a house, in any market. To live in it. If you are going to be in the same house for the duration of a 30 year mortgage, then you can certainly make a case that it is a worthwhile investment. You will get back a good part of what you put in (though by no means all, in most cases), and you will have had the benefit of living there. Today, however, homeowners average barely 7 years in a home before trading it in for another house and another mortgage. And if you do that, in most cases, you throw away considerably more money than if you had just rented.

Photo via alancleaver_2000

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