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Monthly Archives: July 2016

Why Delay Purchase Home?

The main thing you want to avoid when buying a home is being put in a position where you will have to sell it too soon. If you have to sell a home before it has appreciated enough to cover the costs and commissions of selling, you could find yourself in a financial bind. This is especially true for those who buy a home with a down payment of ten percent or less.

Real Estate commissions traditionally run around six percent of a home’s sales price. The seller’s closing costs generally come to about one and a half percent. You can see how this can easily exceed the first year’s appreciation. If you made a minimal down payment, you could actually have to come up with cash out of pocket to sell your home.

# Uncertain Job Future

You could be right out of college or expecting a promotion and a transfer. Or your company has announced an impending “restructuring.” If any of these apply, it might be best to wait to buy a home. When you have a more accurate picture of what your next few years will be like, that will be the time to buy.

# New to the Area

A very good to reason to delay buying a home is if you have just moved to an unfamiliar area or region of the country. It makes sense to rent for a number of months before deciding on exactly where you want to live. Often when people buy a home immediately they find that they might have made a better decision if they had waited awhile.

# Marital Problems

Real estate agents see a lot of life unfold before their eyes. One of the saddest occurs when former clients divorce and are forced to sell a recently purchased house. It happens all too often when a family in turmoil decides that buying a new home may help resolve their problems. Perhaps it is inevitable that such problems occur, but selling a home before it appreciates can create an additional financial burden in an already difficult situation.

Things You Shouldn’t Do while Buy Home

Don’t Move Money Around, When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.

So leave your money where it is until you talk to a loan officer.

About Insurance Cost for Homeowners

Homebuyers are required in almost every instance to buy a homeowners insurance policy for their desired piece of real estate. This protects the owner and the mortgage lender against losses caused by damage to the property, either from natural disasters or from human-made destruction. One of the main concerns of many homebuyers, however, is how much the insurance will cost. While there is no standard answer, understanding the factors that determine the price can help give buyers a good estimate of their premiums.

 # Fire Protection Accessibility

The closer your home is to a fire hydrant and a local fire station, the more likely your home is to be saved should a fire occur. This means less damage to repair and your insurance costs will be lower if you live close to these fire protecting features.

# The Size and Type of Home

The price of your premium is partially determined by things like the amount of the homes’ square footage, age and type of building materials used in the structure. It is also important to note whether your home has been recently updated or renovated as well as if there have been any additions made to it. All of these aspects will help the insurance company figure out how much it would cost to rebuild your house in case of a disaster. The more expensive the rebuilding costs the more expensive your insurance policy will be.

 # Local Crime Statistics

Since part of a homeowners insurance policy covers the cost of damage or loss of personal property due to theft or vandalism, the local crime rates will be factored into your premium price. A home located in a crime-ridden urban area will certainly mean higher costs than one situated in a quiet, suburban neighborhood.

# Regional Disaster Characteristics

If your home is in an area that is particularly prone to hurricanes or tornadoes, your homeowners insurance costs will be higher to account for this increased risk. Remember that earthquake and flood protection are not included in a standard policy. If you need to purchase either of these, you will obviously have to pay higher insurance premiums.

# Policy Extras

There are many nice insurance features that are not necessarily included in a standard policy. These include things like guaranteed replacement cost coverage, inflation guard clauses, and building-to-code endorsements. If you plan on adding any extras to your policy, you should expect to pay higher premiums.