Tuesday, January 30, 2007

Fire the Landlord

Buying vs. Renting

Should you buy or rent a home?

Is home ownership the right path for you? Should you rent instead? If you rent will you be jeopardizing the possibility of home ownership in the future due to rising real estate values? How fast will your family grow and how much space is needed for your family and their activities? How much money do you have to pay for housing? When is the best time to buy a house?
With the rising cost of home ownership in America today, combined with low mortgage rates, many first time buyers face are challenged by the answers to these questions.
Buying and owning your own home is more complicated than just having the money for the down payment and monthly mortgage payments. Owning a home requires a tremendous commitment of funds, time, and attention. For some people, owning is not the best or only way to have a comfortable and safe living environment.
The following topics should help make your decision a little easier.

Advantages and disadvantages of renting a home

For some, renting can be the best option. Considering the high cost of a down payment on a home, financial considerations are of top priority. Renting can be viewed as a temporary solution while you plan your future.
The advantages of renting a home
You are excused from the bulk of home ownership responsibilities such as:
Grounds maintenance
Appliance repairs
Home Improvements
Property taxes
Your rental many include amenities such as:
Tennis courts
Social/activity rooms
Laundry facilities
There is no large down payment, only a security deposit.
Many of your monthly expenditures (rent, utilities) are fixed making budgeting easy.
You are not taking any equity risk on the property should there be a downturn in the market
Close proximity of neighbors often create a sense of security.
If you do not like where you live, moving is relatively simple.
It is easier, especially if you travel/commute often.
The disadvantages of renting a home
No special tax deductions.
There are no equity gains in the rising value of property.
Space and storage is usually less than a home.
Changes to accommodate your life or growing family cannot be made or are limited in scope.
Rents can rise with inflation and or supply and demand in the rental market.
You will probably have restrictions on noise level, pet ownership, or children.

Advantages and disadvantages of buying a home

The advantages of buying a home:
The home may increase in value, resulting in a significant gain in net worth.
The emotional high derived from ownership and the sense of status created both at home and in the community.
Homeowner's tend to have better credit ratings.
The longer you live in a home, the more equity you build that can be leveraged using an emergency loan.
Mortgage payments contribute to an investment, particularly if the property is located where it increases in value over a period of years.
If you have a fixed loan, your payment will remain relatively constant for the life of the loan.
The interest paid on your loan and taxes are legitimate income tax deductions.
Ownership may contribute to security, especially in retirement years when income normally decreases.
A homeowner can borrow against his/her equity, as the value of the home increases.
More space may be available for family members and their activities.
As a homeowner you have the freedom to make improvements and changes to the home and surroundings as desired (although a development or association may have restrictions and prohibitions).
Home ownership can contribute to the general well-being and sense of "roots" of the family, especially for children.
Homeowners generally are concerned about community affairs and how they may affect their property.
The disadvantages of buying a home

A substantial down payment is needed.
Owning a home requires a substantial commitment in time, emotions, and money.
Homes may decrease in value if the neighborhood deteriorates, changes quickly, or the real estate market suffers a decline.
Due to the initial expense of buying a home, financial resources may be limited or reduced for other purchases or activities.
Maintenance and repairs are inevitable and could be costly.
Part of home ownership includes procuring enough income to afford insurance of all kinds including loss of the house as a result of a natural disaster.
Budgeting is cumbersome and a must in preparation for maintenance, repairs, home improvements, and/or home ownership/association dues.
Depending on where you live property taxes could increase dramatically.
The cost of buying a home should also include the cost of moving into it and furnishing it.
Shifts in the neighborhood could drastically affect ones lifestyle.
Security is an issue if you are not home often due to travel.
Unexpected loss of income due to job termination or unemployment may limit money available for home ownership costs.

Define Your Values

Decisions, decisions. The very best way to proceed is to list all the factors about your life that are important to you.
What type of living situation would make you feel the best about yourself?
Do you have certain neighborhood preferences that would be limited by either decision?
Which decision would strap you the most financially?
If you have family (married, children) which decision would impact their lives?
Which is more important to you, what type of place you reside in or the furnishings within, or both?
What are your lifestyle requirements? o Do you like to entertain? o Do you own a boat or RV? o Do you need a garage because of your hobbies)? o What is the distance you would have to travel to work, school, church, shopping?
How important is privacy?
How much time and what skill sets do you need to have to devote to maintenance and upkeep?

Are You Ready for Home Ownership

The Neighborhood:
Life can be greater than you thought or it can be a nightmare if you do not consider the neighborhood as part of your decision. Here's a list of things to check and consider.
Local history
Local government
Its proximity to:
Whether the neighborhood is appreciating or depreciating in value.
Safety and security.
Little things like driving through traffic bottlenecks or through industrial zones to get to shopping, schools or work can be a real issue over time. Consider the convenience of your desired neighborhood in relationship to:
Shopping areas
Entertainment and lifestyle activities
Places of worship
Condition of the roads
Available public transportation
Community Facilities
Unless you are on the Internet 24 hours a day seven days a week, you will want to use the local resources to enhance your life. Consider looking into the following:
Fire stations
Health facilities
Sanitation services
After school activities
Recreational facilities, such as parks, golf courses, hiking trails, etc.

Other considerations

If you are buying consider what the neighborhood offers for you and your particular lifestyle. Furthermore, this might be a good time to evaluate your particular needs and how they might affect the potential to sell the home in the future. As an example, suppose you choose a home far from schools and children's parks because that is not a concern for you in your life now. What you might want to consider is how distance from these facilities might affect the ability to sell your home one day to buyer who may have a keen interest in those things. Conversely if you are renting, these may or may not have a bearing on your life now or after you move.
The apartment or home itself
Space, arrangement, and condition
Bedrooms and bathrooms (enough space and privacy)
Kitchen and work area (well planned and step saving, adequate work and storage areas)
Dining and living areas (adequate for family entertaining and resting)
Storage (adequate and well placed)
Room sizes, shapes, and wall areas to permit use of furnishings and equipment on hand or planned
Interior and exterior finishes (acceptable types, condition, and ease of maintenance).
Heating and lighting (adequate and efficient systems)
Outdoor space (patio, deck, lawn, garden space, outdoor storage)
How much house can you afford?
Buying a house commits you to a long-term relationship with a mortgage and requires a considerable amount of time and energy that most homeowner will tell you becomes second nature. American consumers spend from 21% to 54% of family income on their housing. How much each family spends on housing depends on many factors.
Three basic considerations that can help a family determine how much home they can afford
The amount of take-home pay the family can reasonably expect.
The family's living costs and other debt payments.
The total amount of housing expenses, including: taxes, insurance, energy, furnishings, maintenance, and mortgage payments.
You can find more in depth information and a real person to answer your questions about new Minnesota First Time Buyer Programs at www.firstHomeGuide.com or find a "first-time buyer's" agent at www.MNagents.com

Saturday, January 27, 2007

First Time Home Buyer Process

Simple 9 Step Home buying process
First Home Guide is constantly working to simplify the home buying process. Our first time home buyer program is a simple 9 step home buying process.
  1. Determine your budget.The first step in any first time home buyer program should be to determine a monthly budget, income minus expenses and savings, to determine how much of a mortgage payment you want to take on. (click here for budget form) In addition to your mortgage payment, which includes principle and interest on your loan, you will also have a monthly tax and home owners insurance payment. Most borrowers roll their taxes and insurance into their loan payment, (principle, interest, taxes, and insurance or "PITI"). If you are purchasing a Condominium or a townhouse, you will have a monthly "association" payment and usually that takes care of your home owners insurance. Either way, an important first step is to determine how much of your total monthly budget you will spend on your housing.
  2. Find out how much you can borrow and determine the best type of mortgage.The next step in a first time home buyer program should be to find out how much of a mortgage payment you qualify for. You can use our mortgage calculators ( how much house can I afford ) to get an idea of how big of a loan you qualify for using your income and expenses. In addition to a traditional 30 year fixed rate mortgage, there are many other types of mortgage available to first time home buyers. Depending upon things like, how long you plan to live in your home, your debt to income ratio, how much of a down payment, if any, you have, and how much of a monthly payment you are comfortable with, you may want to consider another type of mortgage that has a lower fixed rate than a 30 year mortgage. These loans typically have a fixed rate for a shorter period of time such as 1, 3, 5, or 7 years. A mortgage professional can help you sort through all these options and chose the one that best meets your financial needs.
  3. Get pre-approved. In order to get a true loan amount, you will need to speak with a mortgage Loan Officer who is familiar with a first time home buyer program and can factor in things like your credit score, debt to income, and other issues that determine how much of a mortgage we ultimately qualify for. This process can be initially be done over the phone in as little as 10 minutes, but ultimately you will need to meet with your loan officer to sign pre-loan documents and to provide the loan officer with your personal documents like, bank statements, pay stubs, W-2's, etc., to determine exactly how much of a loan amount you can qualify for and get you pre-approved.
  4. Using the Internet, or a realtor, find homes in your chosen areas (city, zip code, etc.) and price range.Using the Internet to identify some homes saves time for both you and your realtor. Generally, most of the homes available for sale in any city are viewable on the Internet. Using a site like http://www.firsthomeguide.com/default.asp you can search for a home based on the city, price range, features, and other things. This allows you to quickly and efficiently narrow down your search to only those homes that meet your criteria. Using the Internet in this manner also helps educate the home buyer as to what is available within their price range. Our first time home buyer program strongly recommends using the internet in your process, especially if you are a first time home buyer.
  5. Contact a Realtor and start visiting homes you are interested in. After you have familiarized yourself with what is available in the marketplace and found a number of homes that look interesting and affordable, you should contact a realtor. If you don't know a realtor, First Home Guide can help you find one with an expertise in the city where you want to buy a home, and who understands our first time home buyer program. A good realtor can make home shopping easier by using different tools available to them to search through even more homes, get you appointments to "walk through" homes you are interested in, and ultimately negotiate the price and write a purchase offer for the home you choose.
  6. Make an offer and sign purchase agreement. In this step of our first time home buyer program, you will be making an offer on home. Generally when you make an offer on a home, if your offer is below the asking or listing price, the seller will respond with a counter offer. This is where it is important to be working with a good realtor as there are many things that can be considered in the negotiations like; who pays closing costs, will things like appliances and washer and dryer be included, day date and time of closing, etc.. This process is even more critical if you are buying your home with no down payment and you have little or no money for closing costs as well. Once the seller agrees to accept your offer, the next step is to have the home inspected and appraised. Generally all offers and purchase agreements are contingent on a satisfactory home inspection and an appraisal that supports the selling price.
  7. Home inspection and appraisal. Your realtor can provide you with the names of some quality home inspection companies or you can use one of the companies listed in First Home Guides resource center. Your Mortgage loan officer will order an appraisal.
  8. Close loan. The closing takes place at a title company and generally takes about 1-2 hours. The attendees include the Sellers and their agent, the buyers and their agent and the mortgage loan officer. The buyers/borrowers must bring a valid drivers license and a cashiers check if they are bringing money to the close.
  9. Move into your new home!! This is the final step in the first time home buyer program. Once your closing is complete, and you are given the keys to your new home and it's off to the moving van! Call First Home Guide toll free @ 877-270-8100 for details about other First time home buyer program
    For more information and free resources for First Time Home Buyers, visit http://www.firsthomeguide.com/ Real estate agents can post your listings for free!!

Monday, January 22, 2007

First Time Home Buyers Resource Blog Launches

Thanks for checking out our blog, dedicated to helping first time home buyers find and finance their first home. As the First Home Guys, we bring a wealth of experience and knowledge to the home buying process. We are two guys, one a real estate agent and the other a loan officer who have years of experience helping people buy and finance homes. Having both been first time home buyers, we know how you feel when you begin the process. In the begining, it all may seem very confusing and scary but the good news is when you team up with people who specialize in working with first time home buyers, your dreams can become a reality instead of a nightmare. Not all real estate agents and loan officers are equal and it is important to find professionals who specialize in working with buyers like you, because finding and financing first homes requires a little more patience, a greater ability to explain things and a willingness to take the extra time to make it happen.

We are able to simplify the process and make it a suprisingly easy. We will be posting information from both the real estate and mortgage points of view on a regular basis. Feel free to comment or ask questions anytime. If we don't have the answer, we'll get it for you promptly. You can also see homes for sale in the First Time Homebuyer price range and many other resources at our website like information about first time home buyer seminars in your area and first time home buyer programs at www.firsthomeguide.com. For more information about us you can visit our personal websites at www.thegreatrate.com or www.mnagents.com
Enjoy our blog and happy house hunting!