Buyers

Should I rent or buy?

The one major advantage of renting a home is that when you rent, you are free of most maintenance responsibilities – your landlord will probably take care of everything for you. You are also free to relocate without much hassle, of course. However, when you rent a home, you write a monthly check and then that money is gone forever – in other words, you lose the chance to build equity and the opportunity to take advantage of tax benefits.

When you buy a home, you build equity with every mortgage payment you make, and this is an investment. You can deduct the property taxes you pay and the cost of your mortgage loan interest from your federal income taxes, and often from state taxes as well. All these tax breaks can save you a lot annually and help you cope with your new financial responsibilities. Another advantage of buying a home is that you are not at the mercy of a landlord, and can feel free to decorate as you wish and have pets if you want to (since many landlords don’t allow it).

What are the other costs associated with buying?

Aside from mortgage payments, you will have to consider the cost of monthly utilities (something that may be new for those of you that have been renting). You also might have to pay condo association or homeowner association dues, depending on the community where you live. Additionally, you will be responsible for paying property taxes, and possibly city/county taxes as well. Speaking to your broker would be the best way to develop a ballpark estimate of these costs.

What’s a better value – an older home or a newer home?

It depends; there really isn’t a black or white answer to this question. Each home should be judged based on its individual characteristics, since there are so many factors to consider. Generally speaking though, older homes tend to be in more well-established neighborhoods and have lower property tax rates than newer homes. They are usually built on larger lots and have more mature landscaping. They tend to be more affordable, but maintenance and replacement costs should be kept in mind.

On the other hand, newer homes tend to have more modern architecture and “greener” designs, and thus may be more energy-efficient. Though they may be on smaller lots, new homes often have more indoor living space, and are known for increased closet and bathroom size. One of the largest advantages of owning a new home is that maintenance and upkeep of a new home is almost always more straightforward and affordable.

How much should I offer when I find the home I want?

When making an offer, the first thing to think about is how badly you want the home. The closer your offer is to the asking price, the higher the chances of your offer being accepted. With that said, it’s important to find out how long the home has been on the market. If the home has been on sale for quite a while, chances are that the seller may be more willing to accept a lower offer. On the other hand, if you know you there are competing offers and you really like the house, you may want to increase the offer above the asking price to make it more likely your offer will be the one chosen. Either way, see whether the asking price is in line with prices of similar homes in the area. You should also consider whether the home is in good condition or not. If you will have to spend a considerable amount of money on repairs for the home, that can be factored in to your offer amount. It would be wise to get a professional home inspection done before making the offer.
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Mortgage

How do I find a lender?

To finance your home, you can use a loan from a bank, a credit union, a savings and loan, a private mortgage company, or several state government lenders. Different lenders offer largely different loan fees and interest rates in some cases, so it is important to take the time early on to look around for the best prices so that you can save as much money as possible in the long run. Before making a final decision, be sure to consult with various different lenders. The entire loan approval process usually takes most lenders 3-6 weeks.

To find an appropriate lender, it would be a good idea to ask your real estate broker, who will be familiar with lenders in the area and their offers. Another option would be to look in the real estate section of your local newspaper, where interest rates being offered by local lenders are usually listed.
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