Tips for Lowering Homeowner’s Insurance Costs

1. Review the Comprehensive Loss Underwriting Exchange (CLUE) report on the property you’re interested in buying. CLUE reports detail the property’s claims history for the most recent five years, which insurers may use to deny coverage. Make the sale contingent on a home inspection to ensure that problems identified in the CLUE report have been repaired.

2. Seek insurance coverage as soon as your offer is approved. You must obtain insurance to buy. And you don’t want to be told at closing that the insurer has denied your coverage.

3. Maintain good credit. Insurers often use credit-based insurance scores to determine premiums.

4. Buy your home owners and auto policies from the same company and you’ll usually qualify for savings. But make sure the discount really yields the lowest price.

5. Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower. Avoid making claims under $1,000.

6. Ask about other discounts. For example, retirees who tend to be home more than full-time workers may qualify for a discount on theft insurance. You also may be able to obtain discounts for having smoke detectors, a burglar alarm, or dead-bolt locks.

7. Seek group discounts. If you belong to any groups, such as associations or alumni organizations, they may have deals on insurance coverage.

8. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.

9. Investigate a government-backed insurance plan. In some high-risk areas, federal or state government may back plans to lower rates. Ask your agent.

10. Be sure you insure your house for the correct amount. Remember, you’re covering replacement cost, not market value.

What a Home Inspection Should Cover

Home inspections will vary depending on the type of property you are purchasing. A large historic home, for example, will require a more specialized inspection than a small condominium. However, the following are the basic elements that a home inspector will check. You can also use this list to help you evaluate properties you might purchase.

For more information, try the virtual home inspection at www.ASHI.org, the Web site of the American Society of Home Inspectors.

Structure: A home’s skeleton impacts how the property stands up to weather, gravity, and the earth. Structural components, including the foundation and the framing, should be inspected.

Exterior: The inspector should look at sidewalks, driveways, steps, windows, and doors. A home’s siding, trim, and surface drainage also are part of an exterior inspection.

·  Doors and windows
·  Siding (brick, stone, stucco, vinyl, wood, etc.)
·  Driveways/sidewalks
·  Attached porches, decks, and balconies

Roofing: A well-maintained roof protects you from rain, snow, and other forces of nature. Take note of the roof’s age, conditions of flashing, roof draining systems (pooling water), buckled shingles, loose gutters and downspouts, skylight, and chimneys.

Plumbing: Thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate problems.

Electrical: Safe electrical wiring is essential. Look for the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.

Heating: The home’s heating system, vent system, flues, and chimneys should be inspected. Look for age of water heater, whether the size is adequate for the house, speed of recovery, and energy rating.

Air Conditioning: Your inspector should describe your home cooling system, its energy source, and inspect the central and through-wall cooling equipment. Consider the age and energy rating of the system.

Interiors: An inspection of the inside of the home can reveal plumbing leaks, insect damage, rot, construction defects, and other issues. An inspector should take a close look at:
·  Walls, ceilings and floors
·  Steps, stairways, and railings
·  Counter tops and cabinets
·  Garage doors and garage door systems

Ventilation/insulation: To prevent energy loss, check for adequate insulation and ventilation in the attic and in unfinished areas such as crawlspaces. Also look for proper, secured insulation in walls. Insulation should be appropriate for the climate. Excess moisture in the home can lead to mold and water damage.

Fireplaces: They’re charming, but they could be dangerous if not properly installed. Inspectors should examine the system, including the vent and flue, and describe solid fuel burning appliances.

Source: American Society of Home Inspectors (www.AHSI.org)
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Common Closing Costs for Buyers

You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:
·  Down payment
·  Loan origination
·  Points, or loan discount fees, which you pay to receive a lower interest rate
·  Home inspection
·  Appraisal
·  Credit report
·  Private mortgage insurance premium
·  Deed recording
·  Title insurance policy premiums
·  Land survey
·  Notary fees
·  Pro rations for your share of costs, such as utility bills and property taxes·  Insurance escrow for        homeowner’s insurance, if being paid as part of the mortgage
·  Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and         insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.

A Note About Pro rations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Pro-rotation is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

The Pros/Cons of buying a fixer upper

A fixer upper can be very a tempting choice when you are looking to buy a home. Whether you are a first-time home buyer or real estate veteran, here are some pros and cons to consider before purchasing a property that needs major renovating.

Pros:
A less-than-perfect house often allows buyers to own in a neighborhood they otherwise couldn't afford. A fixer upper located in a desirable neighborhood may often sell for less than the surrounding homes.

When redoing a home there is the opportunity to create a space all your own and make it exactly how you would like.

There are a lot of variables specific to each property, but often, there is a possibility for profit in resale once the property is renovated.

Cons:
You may be overwhelmed with the amount of work, time and money it takes to renovate. (This is why it may be wise to bring professionals with you to walk through the property before you buy to avoid underestimating the work and cost.) Always have a back up plan to access funds or credit if any unforeseen hurdles are discovered during the renovation.

There is always a possibility that you could lose money on your investment. It is common to go over budget on repairs and renovations. The housing market is another variable that can be unpredictable.

Whether you're hiring with a contractor or doing the work yourself, the renovation process is often stressful. Consider the commitment before you buy, especially if you plan on living on the property while doing the renovation.

5 Things to Know About Homeowner’s Insurance

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately. 

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

Lender Checklist: What You Need for a Mortgage

W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.

Copies of at least one pay stub for each person signing the loan.

Account numbers of all your credit cards and the amounts for any outstanding balances.

Copies of 2 to 4 months of bank or credit union statements for both checking and savings accounts.

Lender, loan number, and amount owed on other installment loans, such as student and car loans.

Addresses where you have lived for the last five to seven years, with names of landlords if appropriate.

Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.

Copies of your most recent 401(k) or other retirement account statement.

Documentation to verify additional income, such as child support or a pension.

Copies of personal tax forms for the last two to three years.

Borrowing from a 401(k) to Make a Down Payment

Make sure you understand the rules and risks before tapping your retirement savings to pay for a home.

It looks like I’m going to need to take money from my retirement savings to make a down payment on a house. Which is better to tap for a down payment -- a 401(k), a Roth IRA or a Borrowing from a 401(k) to Make a Down Payment.

Your best bet is to tap your 401(k). You can generally borrow up to half of your balance, up to a maximum of $50,000, from the account at any age and for any reason without tax or penalty. The interest you pay on the loan (generally the prime rate plus one or two percentage points) goes back into your account.

Loans from 401(k)s usually must be paid back in five years, but your employer may give you up to 15 years to repay a 401(k) loan if you are borrowing the money to buy a home. Your employer will usually start deducting the monthly loan payments from your paycheck right away.

There is one major drawback to borrowing from a 401(k): If you lose or leave your job, you generally have just 60 to 90 days to pay back the loan or it will be considered a distribution -- and subject to taxes, plus a 10% early-withdrawal penalty if you’re under age 55 when you leave your job.

Taking the money from a Roth for a down payment is your next-best choice. You can’t borrow from the account and return the money to it, as with a 401(k), but you can withdraw up to the amount of your contributions tax-free and penalty-free for any reason and at any age. If you withdraw earnings from a Roth before age 59½, you generally must pay taxes and a 10% penalty; after age 59½, you can withdraw earnings penalty- and tax-free (as long as you have had a Roth IRA for at least five years). But if you’re using the money to purchase your first home, you (and your spouse) can each withdraw up to $10,000 in earnings from your Roth IRAs without the 10% early-withdrawal penalty even if you’re under age 59½. You’ll also avoid a tax bill on that withdrawal if you’ve had a Roth IRA for at least a five-year period. If you don’t meet the five-year test, you’ll owe taxes on that $10,000, but not the 10% penalty.

First-home rules are least advantageous for traditional IRAs. You and your spouse can each take up to $10,000 from your traditional IRAs for a first-home purchase without the 10% early-withdrawal penalty, but the withdrawal is still taxable.

You don’t literally have to be a first-time homebuyer to qualify for the first-time-home buyer exceptions, but you can’t have owned a home in the previous two years. If you already own a home, you can still take the 401(k) loan or withdraw your contributions to a Roth IRA without penalties or taxes, but you won’t qualify for the $10,000 penalty-free IRA withdrawals.

For more information about IRA withdrawal rules, see IRS Publication 590, Individual Retirement Arrangements (NOTE: IRS rules change, please seek the latest rules fro your tax adviser and/or attorney)

Common First-Time Home Buyer Mistakes

1. They don’t ask enough questions of their lender and end up missing out on the best deal.
2. They don’t act quickly enough to make a decision and someone else buys the house.
3. They don’t find the right agent who’s willing to help them through the home buying process.
4. They don’t do enough to make their offer look appealing to a seller.
5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.

How Big of a Mortgage Can I Afford?

Not only does owning a home give you a haven for yourself and your family, it also makes great financial sense because of the tax benefits — which you can’t take advantage of when paying rent.

The following calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too. Based on your current rent, use this calculation to figure out how much mortgage you can afford.

Rent: _________________________

Multiplier: x 1.32

Mortgage payment: _________________________

Because of tax deductions, you can make a mortgage payment — including taxes and insurance — that is approximately one-third larger than your current rent payment and end up with the same amount of income.

For more help, use Fannie Mae’s online mortgage calculators. 

Top 10 Do’s and Don’ts When You’re Applying For a Loan. (Mortgage)

Fives do’s: 
1. Make loan and other debt payments on time, especially over the months leading up to the filing of your mortgage application. Every 30-, 60- or 90-day delinquency on a loan or credit card is going to reduce the credit score the lender ends up considering as part of the loan file. That score, in turn, will determine how good a loan you get — if you get one at all.
2. If something has to be missed, miss the credit card payment first, followed by the payment on any installment loan you might have and finally, the payment for an existing mortgage. That’s because credit scoring systems look at the performance of similar loans first when deciding what type of score to assign.
3. Consider paying off more debt and putting down a smaller amount at closing. The move leaves borrowers with larger mortgages, but it will allow them to replace non tax-deductible, high-interest rate debt with lower-rate mortgage debt that features deductible interest.
4. Get the mortgage first if multiple financial obligations are going to pop up in the near future. Numerous credit inquiries, such as new applications for credit cards, can hurt a borrower’s credit score, especially if they’re filed in the months prior to the home loan review process.
5. Increase the size of the down payment you’re able to make by saving as much as possible, as often as possible. Evaluate money market or other accounts that offer reasonable rates of return, automatic payroll deductions or other financial incentives to save.

Five don’ts:
1. Don’t make any big purchases over the next couple of months. It makes less money available for the down payment and it might require you to get yet another loan.
2. Lenders consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from a relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money.
3. Don’t just get pre-qualified for a mortgage, get pre-approved. Home buyers must allow their lenders to pull credit reports, check debt-to-income ratios and perform other underwriting steps. But that puts a borrower much closer to obtaining a loan and locking in a rate and term.
4. Don’t forget what kind of money personality you have when getting a mortgage. By taking out a 30-year fixed rate loan rather than a 15-year mortgage and investing the money saved on monthly payments, you might earn a higher return on your money in the long run.
5. Don’t forget that homeownership brings with it many burdens. The cost of defaulting on a loan is much greater than the penalty of missing a rent payment.

First things to do after buying a new home!

You closed on your new property. The boxes are off of the moving truck, the furniture is in the right rooms and you are wondering what to do first. Here is a checklist of important tasks that are high priority.

1. Test the smoke and carbon monoxide detectors. Install new alarms or change the batteries if necessary.
2. Establish an escape plan and safe meeting place with your family in the event of a fire.
3. Make sure you know where the main water, gas and electrical shutoff valves are, in case of an emergency such as a burst pipe or gas leak.
4. Determine which outlets serve which circuits and then label the breakers.
5. Change the alarm system code, garage code, and any other password-sensitive devices.
6. Change all of the locks and make a few sets of spare keys.
7. Update your car insurance, driver’s license and voter registration to reflect your change of address.
8. Have all your mail and magazine subscriptions forwarded to your new address. Keep a close eye on your bank accounts and credit cards, because during a move you are especially susceptible to identity theft if mail is not delivered to your current address.
9. Unpack any and all medication that may be needed. Also, make sure you have a first aid kit readily available and a fire extinguisher in the kitchen pantry.
10. Add any child locks that are necessary, on toilets, kitchen appliances, medicine cabinets, and any doors that lead outside. Do not forget to place child safety gates and safety plugs in outlets if you have small children.

Why you should plan multiple visits to a home before buying!

For most of us, a home is usually the largest single investment of a lifetime. Such a large purchase warrants multiple visits before making a purchase and it is recommended that you stagger the times of these visits to get a comprehensive experience of the property. Here are some things to pay attention to when viewing a property.

 1. Wall-to-wall windows coupled with an open floor plan may seem picturesque midday. Schedule a visit at sunset to get an idea of how light floods through the home and think about how you would ensure privacy at night. It still may be an ideal choice but it is wise to get a realistic view and calculate the cost of window treatments.
2. Visit or drive by a prospective home at different times of the day. That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour. The same may be true for the morning commute but if you only visited the property midday, you would have no idea.
3. The adjacent school may seem like a nice perk, but during school hours, the daily playground noise and extra traffic may be more than you bargained for. If you are viewing the home in the summer, ask your REALTOR® or even neighbors about what you can expect.
4. It may be nice to be within walking distance to bars and restaurants, but consider the amount of pedestrian traffic. Will late night foot traffic lead to noise or disorderly conduct? Also, remember you can always visit the local police department to get crime statistics of an area.

8 Kitchen Trends to watch in 2013!

Kitchens are a popular spot that home shoppers judge in a home. So what are the trends in the kitchen for 2013? HomeThangs.com, a home improvement superstore, offers up some of the following kitchen design predictions for the New Year:

1. Modern style: Kitchens are getting more modern in style, boasting simplified lines and offering up big, open spaces perfect for entertaining.

2. Tucked-away appliances: Appliances designed to blend in with the rest of the kitchen, like with the same wood of the cabinets, are becoming more popular. Also, some appliances, like under counter or mini refrigerators or trash compactors, are being tucked away into a kitchen island.

3. Lots of lights: Great lighting in the kitchen is becoming more important, with lighting being layered with a mixture of task lighting and ambient lighting. Under-cabinet LED lights are becoming more commonplace.

4. Super sized kitchen islands: “2013 kitchen design trends are moving away from dining rooms and toward eating, drinking, and interacting in the kitchen itself, and a large kitchen island complete with bar stools is the perfect way to make this happen,” according to HomeThangs.com. this helps to create “a nice open-air feeling – especially if one can be used to bridge kitchen and living areas, another major 2013 kitchen design trend.”

5. Neutral color schemes: The use of neutral colors in the kitchen is on the rise, particularly in shades of grays and greens and a variety of wood tones. Bright colors are being reserved for only small accents in the kitchen.

6. Fancy appliances: Professional gas ranges and induction cook tops are popular kitchen appliances for making a more gourmet kitchen.

7. Decorative range hoods: Trends are moving away from a conventional stainless steel trapezoid-shaped hood to more decorative range hoods. These hoods may have built-in LED lights and are even serving almost like a decorative chandelier for a kitchen island.

8. Glass back splashes: High gloss is “in” for cabinets, appliances, and back splashes. A single-sheet, back-painted glass black splash is growing in popularity, which are also known for being easy to clean. These glass back splashes are also reflective, adding a polished decorative touch to kitchens. Glass mosaic tile sheets are also increasing in popularity.

First things to do after buying a new home!

You closed on your new property. The boxes are off of the moving truck, the furniture is in the right rooms and you are wondering what to do first. Here is a checklist of important tasks that are high priority.
1. Test the smoke and carbon monoxide detectors. Install new alarms or change the batteries if necessary.
2. Establish an escape plan and safe meeting place with your family in the event of a fire.
3. Make sure you know where the main water, gas and electrical shutoff valves are, in case of an emergency such as a burst pipe or gas leak.
4. Determine which outlets serve which circuits and then label the breakers.
5. Change the alarm system code, garage code, and any other password-sensitive devices.
6. Change all of the locks and make a few sets of spare keys.
7. Update your car insurance, driver’s license and voter registration to reflect your change of address.
8. Have all your mail and magazine subscriptions forwarded to your new address. Keep a close eye on your bank accounts and credit cards, because during a move you are especially susceptible to identity theft if mail is not delivered to your current address.
9. Unpack any and all medication that may be needed. Also, make sure you have a first aid kit readily available and a fire extinguisher in the kitchen pantry.
10. Add any child locks that are necessary, on toilets, kitchen appliances, medicine cabinets, and any doors that lead outside. Do not forget to place child safety gates and safety plugs in outlets if you have small children.

Ways to save for a new home

A home is often the biggest investment most people will make in a lifetime. Saving for a down payment can be a lengthy and disciplined process. Taking advantage of federal tax incentives and low interest rates are great ways to reach your goal of owning a home. Here are some small ways that can really add up to big savings.

1. Make coffee at home instead of buying a daily brew. Prices on lattes, coffee and espresso have gone through the roof.

2. Eat at home instead of going out. When you dine out, consider lunch instead of dinner and avoid purchasing alcohol at meals.

3. Consider taking on a roommate or smaller apartment to cut down on rent.

4. Eliminate extras like premium cable, expensive DVD rental plans, and excessive cell phone plans.

5. Use coupons at the grocery store and look for sale items. Shop for groceries and household cleaners at retailers that offer major discounts on items sold in bulk.

6. Cancel your overpriced gym membership fee and work out on your own.

7. Program your thermostat so heat is lowered at night or during the day when occupants are not home. Turn off the lights when you leave a room and use fans instead of air conditioning to keep your electricity bill low.

8. Carpool to work, buy low octane fuel and avoid taking costly taxis.

9. Purchase generic medications and toiletries instead of brand names, often,the same active ingredients are used and the items are a lot less expensive.

10. Pack a sandwich and bring it to work. Work lunches and office take out can be a drain on your budget.

Open house etiquette for buyers

The purpose of prospective buyers viewing a home is to learn as much as possible about the property. Focus on the residence itself, not the current owner's furniture, decor, or items that do not pertain to the sale of the property. Follow these simple tips when walking through a home.

Be prepared to leave your shoes at the door. This is a frequent request of homeowners, especially when carpet and inclement weather is involved. Dress accordingly and acquiesce to any requests.

At an open house there may be a sign-in sheet. Sign in and let the Sales Professional know if you are already working with an agent.

Ask before taking any pictures or video, remember, this is someone's home and they are entitled to privacy.

Feel free to walk through a home, but please refrain from touching or moving any personal property.

Inspect linen closets, walk-in closets, laundry rooms and built-in cabinetry, but don't snoop. Measure cabinets, check for squeaky hinges, but avoid prying through personal effects.

Don't speak negatively about the property. Keep in mind that neighbors, friends, and even the homeowner may be present at an open house.

If you bring children, do not leave them unattended. Supervision ensures their safety and prevents any unintended damage to the property

Ask permission from the agent for use of the restroom

All questions should focus on the property, not the homeowners. Don't get distracted by family pictures or diplomas, remember the purpose of your visit is to learn more about the property itself. 

5 Things to Know About Homeowner’s Insurance

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately. 

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately. 

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000. 

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value. 

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

Should I buy or Rent?

A big question that may cross a person in his lifetime is whether to continue renting or finally settle down and buy a home. While owning a home is considered as a good idea, there are also advantages of renting a home. Additionally, there are disadvantages of both the above mentioned propositions. Given below are the pros and cons of renting as well as buying a house. Weigh the benefits and drawbacks of both and take a decision that best fits in your situation.

Buying a House
The following are the merits and demerits of Buying a house.

Pros
There are many factors that make buying a home a good move.
 ■The foremost benefit of buying a house is that it is a valuable investment. Although, down payment of money can be burdensome at times, it is still worthwhile as it increases your asset. And, if the economic scenario is good, your property value shall appreciate over a period of time.
 ■Buying a house provides a sense of stability and security.
 ■You can’t ignore the bliss of the freedom to design and renovate that you can enjoy as an owner of the house. You can live the way you like without having to bother about the visits of landlord.
 ■You can enjoy tax benefits as real estate tax and mortgage interest can be a tax deduction.

Cons
In spite of aforementioned privileges, being an owner of a house has its own demerits as well.
 ■Maintenance is the major issue as the upkeep of your house including the yard is your sole responsibility. In addition to physical efforts, you need to allocate funds for your house’s maintenance too.
 ■Cost involved in buying a home is another main problem. If you are looking for a mortgage, you should need good credit, down payments, stable income and employment. Besides, long term mortgage could lock you into one investment for more than 30 years.
 ■Relocating to another place is not easy as you find yourself rooted because of being a property owner.

Renting a House
The following are the merits and demerits of renting a house.

Pros
 ■The best part of renting a house is that you don’t have to bother about the cost and effort of property maintenance. This is one of the popular reasons why people prefer renting a house rather than buying. You need not worry about any issues as long as you pay your rent promptly.
 ■There is less pressure on your budget. Owning a house involves more than just the cost of the house. It includes taxes, expenses involved in upkeep of the house, etc. Therefore, renting a house is more practical as it requires small investment.
 ■Relocation is easier for those living in a rented accommodation. If you don’t like a locality, or want to move to another city you can change your house whenever you like.

Cons

Renting a house also has some disadvantages.
 ■There is little stability as any time the owner of your property can increase the rent or even send you a notice to vacate the house.
 ■You can’t restructure your house as per your wish. Even if you are allowed to make improvements to your home like landscaping, it will improve the value of the home and will benefit the house owner or just passed on to the next renter.
 ■The big disadvantage of renting a house is loss of value. Every month you pay rent but don’t get any asset out of it however, when you pay mortgage payment, you get to own a house after a few years.

Conclusion: Buying or renting a house depends upon a personal outlook and the financial status of every individual. If you are a person who is having the lifestyle that requires constant relocation, or want to have uncommitted lifestyle, renting a house might be the best option for you whereas buying a house is a smarter choice if you plan to stay in that house more than 10 years and have a cash to invest.

8 Tips to Guide for Your Home Search

1. Research before you look. Decide what features you most want to have in a home, what neighborhoods you prefer, and how much you’d be willing to spend each month for housing.

2. Be realistic. It’s OK to be picky, but don’t be unrealistic with your expectations. There’s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender and get prequalified for a mortgage. This will save you the heartache later of falling in love with a house you can’t afford.

4. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.

5. Decide your moving timeline. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area? All of these factors will help you determine when you should move.

6. Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you.

7. Insist on a home inspection. If possible, get a warranty from the seller to cover defects for one year.

8. Get help from me.  Hire me  a real estate professional who specializes in buyer representation. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. Buyer’s reps are usually paid out of the seller’s commission payment.

Reason to Own Your Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.

Tips for buying in a tight market

Increase your chances of getting your dream house in a competitive housing market, and lower your chances of losing out to another buyer.

1. Get Pre qualified for a mortgage. You’ll be able to make a firm commitment to buy and your offer will be more desirable to the seller.

2. Stay in close contact with your real estate agent to find out about the newest listings. Be ready to see a house as soon as it goes on the market — if it’s a great home, it will go fast.

3. Scout out new listings yourself. Look at Web sites such as REALTOR.com, browse your local newspaper’s real estate section, and drive through the neighborhood to spot For Sale signs. If you see a home you like, write down the address and the name of the listing agent. Your real estate agent will schedule a showing.

4. Be ready to make a decision. Spend a lot of time in advance deciding what you must have in a home so you won’t be unsure when you have the chance to make an offer.

5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t go too low to get a deal. In a tight market, you’ll lose out.

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period. 

7. Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy it. And even though

What a Home Inspection Should Cover

Home inspections will vary depending on the type of property you are purchasing. A large historic home, for example, will require a more specialized inspection than a small condominium. However, the following are the basic elements that a home inspector will check. You can also use this list to help you evaluate properties you might purchase.

For more information, try the virtual home inspection at www.ASHI.org, the Web site of the American Society of Home Inspectors.

Structure: A home’s skeleton impacts how the property stands up to weather, gravity, and the earth. Structural components, including the foundation and the framing, should be inspected.

Exterior: The inspector should look at sidewalks, driveways, steps, windows, and doors. A home’s siding, trim, and surface drainage also are part of an exterior inspection.

·  Doors and windows
·  Siding (brick, stone, stucco, vinyl, wood, etc.)
·  Driveways/sidewalks
·  Attached porches, decks, and balconies

Roofing: A well-maintained roof protects you from rain, snow, and other forces of nature. Take note of the roof’s age, conditions of flashing, roof draining systems (pooling water), buckled shingles, loose gutters and downspouts, skylight, and chimneys.

Plumbing: Thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate problems.

Electrical: Safe electrical wiring is essential. Look for the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.

Heating: The home’s heating system, vent system, flues, and chimneys should be inspected. Look for age of water heater, whether the size is adequate for the house, speed of recovery, and energy rating.

Air Conditioning: Your inspector should describe your home cooling system, its energy source, and inspect the central and through-wall cooling equipment. Consider the age and energy rating of the system.

Interiors: An inspection of the inside of the home can reveal plumbing leaks, insect damage, rot, construction defects, and other issues. An inspector should take a close look at:
·  Walls, ceilings and floors
·  Steps, stairways, and railings
·  Counter tops and cabinets
·  Garage doors and garage door systems

Ventilation/insulation: To prevent energy loss, check for adequate insulation and ventilation in the attic and in unfinished areas such as crawlspaces. Also look for proper, secured insulation in walls. Insulation should be appropriate for the climate. Excess moisture in the home can lead to mold and water damage.

10 Questions to Ask Your Lender

1. What are the most popular mortgages you offer? Why are they so popular?

2. Which type of mortgage plan do you think would be best for me? Why?

3. Are your rates, terms, fees, and closing costs negotiable?

4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you’ve acquired a certain amount of equity by paying down the loan.)

5. Who will service the loan — your bank or another company?

6. What escrow requirements do you have?

7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?

8. How long will the loan approval process take?

9. How long will it take to close the loan?

10. Are there any charges or penalties for prepaying the loan?

8 Tips to Guide for Your Home Search

1. Research before you look. Decide what features you most want to have in a home, what neighborhoods you prefer, and how much you’d be willing to spend each month for housing.

2. Be realistic. It’s OK to be picky, but don’t be unrealistic with your expectations. There’s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender and get prequalified for a mortgage. This will save you the heartache later of falling in love with a house you can’t afford.

4. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.

5. Decide your moving timeline. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area? All of these factors will help you determine when you should move.

6. Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you.

7. Insist on a home inspection. If possible, get a warranty from the seller to cover defects for one year.

8. Get help from me.  Hire me  a real estate professional who specializes in buyer representation. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. Buyer’s reps are usually paid out of the seller’s commission payment.

Home ownership Vs. Rental cost

To a family that is renting, it comes as no surprise to hear that rental rates are going up. With these rates continuing to rise, buying a home looks better and more practical than ever.
Not only does purchasing a home provide a more secure future for you, but the advantages of home ownership are numerous: build-up of equity; a tax shelter; remodel and redecorate as you see fit. But most important of all, it provides you with a buffer against inflation and rising rental rates.
Every situation is unique. It would be my pleasure to provide you with a personalized analysis of home ownership costs vs. your present rental costs. This analysis is provided free of charge with no further obligation required on your part.