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homeownership

Find Out If You Can Really Afford a House

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Owning a home offers advantages alongside a slew of responsibilities. Prior to committing to years of mortgage payments, it’s crucial to grasp the full scope of what homeownership entails.

Initially, consider the financial implications. Homeownership comes with various expenses, including a downpayment, home insurance, and closing costs. Additionally, moving into a new home involves purchasing furniture, appliances, fixtures, and landscaping, with the possibility of property depreciation.

Transitioning from renting means assuming responsibility for maintenance and repairs. As a homeowner, you’ll be accountable for issues like plumbing, appliances, painting, roofing, and more, all of which require financial investment. Older homes, in particular, may entail higher upkeep costs.

To determine readiness for homeownership, follow these steps:

1. Assess property values with assistance from a real estate agent, comparing them to similar properties in the area.
2. Familiarize yourself with various mortgage loan types, considering downpayment requirements and potential PMI costs.
3. Estimate closing costs, encompassing taxes, inspections, and insurance premiums, typically ranging from 2-7% of the property value.
4. Calculate upfront expenses, including downpayment, closing costs, and potential moving costs.

Beyond initial expenses, ongoing financial obligations include property taxes, insurance premiums, and maintenance costs. Major repairs, such as roofing or electrical systems, can incur significant expenses.

If financial constraints arise, explore alternative funding options such as loans or creative solutions.

Furthermore, don’t overlook the importance of home insurance, as factors like property type and age, credit history, and emerging issues like toxic mold can impact insurance rates.

Despite financial considerations, homeownership offers stability, potential tax benefits, and the prospect of property value appreciation over time, ultimately providing the satisfaction of owning one’s residence.

Clear the Clutter and Sell Your House

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If you’re planning to sell your house, it’s essential to go beyond just cleaning and scrubbing; you also need to declutter. This means not only removing obvious trash, like empty paint cans or unused items that have been sitting in the garage for ages, but also taking out personal items. While these things may feel integral to the home for you, to potential buyers, they are simply clutter.

Buyers need to visualize themselves living in your house, which is difficult if there are too many personal items like souvenirs from vacations, personalized wall decor, or family photos. Instead of helping them see the house as their potential home, such items can make them feel like intruders.

No matter how clean your house is, if it’s cluttered, it will seem crowded and unappealing. I understand that these items are important to you, so moving them can be tough. However, you don’t have to get rid of them permanently—consider renting a storage unit to keep them safe until you move.

Your goal is to make the house look neutral, not empty. Here’s how to start:

  1. Classify your belongings into items to keep, donate, or throw away. It’s a good opportunity to part with things you haven’t used in years.
  2. If you have time, you can sell items through yard sales or online platforms like eBay and Craigslist. However, donating many items can save time and benefit others.

Here are some decluttering tips:

  • Remove unnecessary furniture to make rooms look more spacious.
  • Clear the foyer or mudroom of shoes, coats, and other outdoor items.
  • Remove large equipment like drum sets or treadmills.
  • Take down personal photos so buyers can envision their own in the house.
  • Discard old magazines, newspapers, and books, or recycle them if possible.
  • Arrange wires neatly to avoid a messy look and prevent accidents.
  • Clear nightstands of all items except a lamp, clock, and a book for a staged look.
  • Organize bookshelves and add a decorative item like a vase or artwork.
  • Clear kitchen countertops, leaving only essential appliances like a microwave and toaster. Remove personal items from the fridge.
  • Put away any unhealthy-looking plants.
  • In the bedroom, remove shoes, clothes, and toys from the floor and make sure the bed is made.
  • Tidy up the bathroom by hiding razors, toothbrushes, and shampoos in a cabinet, and enhance the room with fresh soaps, towels, or a plant.
  • Remove some clothes from closets to prevent them from looking overcrowded.

Following these steps will help make your house more appealing to potential buyers by allowing them to imagine it as their own.

Co-buying a House

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Owning a home is a big deal, right? It’s like the ultimate goal for many folks out there. But let’s face it, it’s not exactly pocket change. Sometimes, even with all the determination in the world, you just can’t muster up enough cash or get the right funding to make that mortgage dream come true. Enter the idea of co-buying.

You know, teaming up with a friend or family member to make it happen. It’s like pooling your resources to snag that perfect pad. Brian Free shared his experience with U.S. News & World Report, talking about how teaming up with a buddy helped them both land a place in a great neighborhood. They couldn’t swing it solo, but together? Piece of cake.

Of course, going halfsies on a house with someone you know comes with its own set of risks. But fear not! There are ways to navigate these murky waters and minimize the chances of things going south. It’s all about careful consideration and planning.

First things first, let’s talk titles. How you hold title can make a world of difference when it comes to legal stuff. If you’re not tying the knot with your co-buyer, you can go the route of tenants in common (TIC) or joint tenants with right of survivorship (JTWROS). Married couples have a couple more options like community property or tenancy by the entirety.

Now, let’s break down TIC versus JTWROS. With JTWROS, it’s all about equality. Each owner has an equal stake, and if one owner passes away, their share automatically transfers to the surviving owner(s). Simple enough, right? TICs, on the other hand, can be a bit more complex. Shares might not be equal, and when one owner passes away, their share doesn’t automatically go to the others. Instead, it can be willed to whoever the owner wants. If things get messy, TICs can be dissolved or the property sold through legal action.

But hey, there are some common threads between TICs and JTWROS. Both give co-owners rights to the property, and when it comes time to cash in, everyone gets their fair share.

Now, let’s talk about laying down some ground rules with a co-ownership agreement. This document is like the holy grail of co-buying. It spells out who owns what, how expenses are split, and what happens if someone wants out.

Speaking of expenses, it’s crucial to figure out how ongoing costs are divided. Mortgage payments, property taxes, utilities—you name it. These should all be outlined in your co-ownership agreement. Maybe you split it based on ownership shares or who’s putting in the elbow grease on maintenance.

And what if one co-owner wants to sell? Well, they can’t just go rogue. The other co-owner has a right to step in and buy their share first. It’s like a built-in safety net to keep things fair and square.

So there you have it, folks. Co-buying can be a game-changer for getting your foot in the homeownership door. Just make sure you’re on the same page with your co-buyer and have all your bases covered. Happy house hunting!

12 Red Flags That Should Raise Concern

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According to HouseMaster, a leading home inspection company with offices in over 390 cities across the United States and Canada, at least 40% of homes on the market have one or more major defects. Kathleen Kuhn, CEO and President of HouseMaster, notes, “Virtually every ‘used’ home needs some repair or improvement. That’s to be expected. But with today’s high prices, you want to be aware of any major problems in a house you’re considering purchasing and what it will take to fix them.”

Based on over one million home inspections, HouseMaster has identified the most serious home defects to watch for:

  • Aluminum wiring
  • Cracked heater exchange
  • Chimney settling or separation
  • Defective roofing and/or flashings
  • Environmental hazards (radon, water contamination, asbestos, lead paint, underground storage tanks)
  • Horizontal foundation cracks
  • Insect infestations (termites or carpenter ants)
  • Major house settlement
  • Mixed plumbing
  • Moisture in the basement
  • Undersized electrical system

Kuhn emphasizes that while most of these defects can be repaired, the cost can be significant depending on the severity of the damage, particularly if major systems are involved. This is an important consideration when buying a house. For example, a new air conditioning compressor might cost around $1,200, while fixing damaged plumbing in a basement could cost about $5,000. When negotiating the purchase of a house, ensure there is a provision to back out if the home inspection reveals too many or too severe problems.

Eric Tyson and Ray Brown, authors of “Homebuying for Dummies,” explain, “If the property inspectors find that little or no corrective work is required, you have little or nothing to negotiate. However, if inspectors discover that the $200,000 house you want to buy needs $20,000 of corrective work for termite and dry-rot damage, foundation repairs, and a new roof, big repair bills can be deal killers.”

If you decide to proceed with the purchase despite needed repairs, consider these options:

  1. Ask the seller to allocate sufficient funds in escrow for repairs, with instructions to pay contractors once the work is completed.
  2. Have the lender withhold part or all of the loan amount in a passbook savings account until the work is finished.
  3. Request the sellers to provide a credit for the repairs, although lenders may disapprove as there’s no guarantee the repairs will be made.

Hire a qualified home inspector, whose fee typically ranges from $250 to $400. Look for inspectors affiliated with organizations like the American Society of Home Inspectors or the American Association of Home Inspectors, which require members to meet professional qualifications and adhere to business ethics. You can also ask for referrals from friends.

Make sure you are present during the home inspection. The time and money spent on this is a wise investment. During the inspection, ask about potential problems to expect and warning signs to look for. Learn how systems work and how to maintain them. “A pre-purchase inspection is your best protection against buying a home based more on emotions than as a sound investment,” says Kuhn of HouseMaster.

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