Renters That Can Buy

Tips on how to buy, sell, or rent a house or apartment.

Here are some insider tips and non-boring advice on how to buy, sell, or rent a house or apartment.   

Tax/Financial Benefits: Home buyers can take potentially advantage of a whole slew of tax benefits, such as:  

- Mortgage Interest Deductions 

As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment. In some cases, you may also deduct homeowners association fees and property taxes.

- Property Tax Deductions  

Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. In California, Prop 13 limits property tax increases to 2 percent per year or the rate of inflation, whichever is less.

 - Capital Gain Exclusion 

If you've lived in your house for two of the past five years, you can exclude up to $250,000 for an individual or up to $500,000 for a married couple of profit from capital gains.

- Preferential Tax Treatment 

If you receive more profit from the sale of your home than the allowable exclusion, that profit will be considered a capital asset as long as you owned your home for more than one year.

 

 - Building Equity 

Over time, you may be able to use the equity you build to fund home improvements, or pay off other, higher interest debts, such as credit card debts or student loans.

CONDO for sale in Henderson, Nevada:

Young Optimism: Young Renters and The American Dream

 

 

Making the transition from renting to buying.

Here are a few points to consider as you weigh the pros and cons of home ownership.

No doubt you've thought of how nice it would be not to write a rent check every month, but have you done the math? Nothing can make you feel more secure than owning your own house, unless buying a home will create financial problems of its own. Here's a discussion of the most important financial costs associated with home buying to stack up against your monthly rent check.

Instead of the standard deduction on your income tax return, most homeowners itemize their deductions, allowing them to deduct the following (and save on taxes): home mortgage interest, property real estate taxes, state income taxes, gifts to charity, medical and dental expenses over 7.5% of your income, personal property taxes, and most moving expenses.

Figure your monthly payments if you were to buy. Compare your monthly rent to a calculation of the following: purchase price and down payment of your home, your annual income (and debt!), property tax rate, home insurance rate, interest rate and length of loan. For best results, contact a home-buying specialist.

Other costs

Expect other costs to homeowning. Along with your monthly mortgage and down payment, there's property tax and homeowners insurance premiums, and fees known as "closing costs." These include everything from a credit check to "points"- interest paid up-front in return for a lower interest rate. Others: title insurance fee, survey charge, attorney/escrow fees, and loan origination. So do your research!

Long-term equity

No discussion of home ownership is complete without considering the long-term benefits of owning. What your house will be worth when you sell depends on the state of your mortgage and the housing market, in particular. Consult with real estate professionals, read up, and do your math to get a realistic sense of your future home value.

Lifestyle and mobility

Mobility is part of renting. Freedom to take the next job or move for a relationship is easy to come by when you rent a home. And when you do move, there's often more choice of specific location, and price, when you seek rental housing. Want an apartment near a park in western Philadelphia? You may find an easier time looking to rent than buy.

Many renters say they love knowing they're not tied down - and don't have to assume financial responsibility for their living space. This is of course a big difference from home ownership: who does the work.

Who does the work

While you don't receive the joys of making a place truly "your own," you do have limited costs in renting. Landlords are responsible for general upkeep and safety, allowing you to focus on the fine points. Homeowning, in contrast, puts you in the driver's seat. You shoulder the expenses and reap the rewards of home improvement - both great and small. Think about whether you want to put in additional time and money.

Choices, choices

Whether you decide to take the step of home ownership is a personal choice with its own ups and downs. Hopefully we've helped dust off the magic ball a bit; what you see in your future is up to you!

How to make a successful offer on a home!

You've found a home that you like and are ready to make a home offer on it.

Before you put your offer in writing, make sure you understand what information you should, and should not, include in the home offer.
This article will help you.

The first thing you should do is forget about the myths you've heard about making a home offer. Many people buyers believe that once they've put in an offer on a home, that they still have the liberty to shop around.

While this is true, to some extent, it's in your best interest not to make any additional offers while you still have one on the table.

A home offer made on a piece of property is a legally binding contract. Should the buyer accept your offer, you are held to the offer.

There's another big reason why you shouldn't continue to shop around after you've made a home offer on a house. If you find a home you think you like more than the one you've made an offer on and the seller accepts your home offer, you are in an unfortunate situation. You will likely regret the decision to purchase the home for as long as you live in it.

Once you make a home offer, the seller can do one of several things: accept the offer, reject it, propose a counter offer, or fail to respond. If the seller does anything except accept the offer you still have the ability to continue home shopping.

When you're making an offer on a home there are several piece of information you need to include. The selling price is one of the most obvious. You don't have to offer the seller's asking price. You can go higher or lower as you so choose. Of course, the price you offer will depend on the amount you can afford to pay.

Your home offer should concessions that you wish for the seller to make. For example, if you want the seller to pay a portion of the closing costs, this information must be included in the offer.

You have the ability to stipulate that the home offer is contingent upon certain financing criteria. This keeps you from having to purchase the property if you do not receive favorable mortgage terms.

Don't leave out home inspection contingencies. Otherwise, you could end up purchasing a home that needs major work done to it. Your offer should include something to the effect of "subject to an acceptable whole house inspection report." Of course, if you are purchasing a fixer-upper, these contingencies might vary.

Don't make the assumption that everything you see in the house will be included when you make the final purchase. This includes appliances such as stoves and refrigerators. You must clearly define what is included in the sale.

Finally, you should include the amount of earnest money that you are depositing with the home offer.

Keep in mind that your offer can easily become the sales contract for your home if it is accepted by the seller. Make sure it includes everything you would want the sales contract to include.

Ten Steps to Home Ownership

#1 Getting Ready To Buy

Preparing to buy a home can be exciting and terrifying at the same time. Luckily, Bray Real Estate is ready to lead you in the right direction toward the home of your dreams. You first may want to ask yourself:

1. What are you looking for in a new home?
2. How much cash do you want to invest in your purchase?
3. Have you talked with a lender regarding qualifying and obtaining a mortgage?

You may want to make a list or brainstorm about the features and amenities that you find most appealing in a new home.

#2 Finding a Realtor

When choosing a Realtor, do not be afraid to meet with many different agents. They are, after all, competing for your business. This competition is what makes the real estate industry successful.Feel free to ask them the following questions:

1. How many years of experience do you have in this industry?
2. What is your selling experience in my community?
3. What professional certifications do you hold (Accredited Buyer Representative (ABR), Certified Residential Specialist – CRS, Graduate REALTOR® Institute (GRI))?
4. What services will you provide for me as my agent?
5. How will you represent me as a buyer?
6. Can you provide as much information as I need about homes in the area that fit into my price range?
7. What is the fee for your services?
8. Explain the paperwork that I need to sign
9. What is my contracted timeframe for using you as my agent?

Once you have chosen an agent, it is important to establish specific goals that you would like to meet. Communication with your agent is key!

#3 Starting the Loan Process

It is important as a buyer that you establish some kind of financing before you make any serious home offer. The "pre-approval" process allows lenders to take a look at your finances and credit history in order to make a general assumption about your loan amount.
The pre-approval process is when a lender looks at all of your finances and determines the amount of money you could afford for a mortgage.
In order to get pre-approved for a loan, you need to contact a lender. Your agent can help you help you find a lender that you feel comfortable with, and that offers programs best-suited to your needs.

#4 Starting Your Search

Now it is time to start the exciting search for homes!
You may want to narrow down your search by asking yourself the following questions:

1. Where do I want to live?
2. What is the neighborhood like?
3. What is the crime rate?
4. Would I be moving into a good school district?
5. Are there any zoning restrictions?
6. How far is this home from my job?
7. What is my price range?
8. How many bedrooms and bathrooms do I want?
9. What style of house am I attracted to?
10. What amenities do I desire (ex. pool, fenced-in yard, etc.)?
11. Does this home have potential to increase in value?
12. Is there room to expand if we need to in the future?

Searching for a home is becoming easier than years ago. We now have the Internet as a powerful "home finding tool," as well as the MLS (Multiple Listing Service) and print advertising.

#5 Finding Your New Home

Beginning the search for your new home can be a great feeling. It is important that you directly communicate with your real estate agent about the desires you have for your new home.
You may want to first begin by making a list of the features and benefits that are most important in your pursuit of finding a home.
These could be:

1. Location
2. Affordability
3. Size
4. Style
5. Design
6. Amenities

Looking for a home in an area where you feel comfortable is key. If appropriate, instruct your real estate agent to look for homes in the specific areas you have designated.

#6 Making an Offer on a Home

Selecting a home should be relatively easy once a home falls somewhere in your criteria and the property is desirable for purchase.
You will want to inform your real estate agent what you like about the house and make a list of your likes and dislikes with the property. Though you will most likely have done this already in a general sense, it is important to do it again for specific homes you have in interest in.
In the negotiation process you may accept the seller's asking price and have your agent write up the contract or reject the seller's asking price and have your agent make a different offer.

#7 Financing

Doing your homework about loans will save you time and money. There are thousands of loans out there to choose from, but it is important to keep in mind several key factors that will help you along the way:

1. How much money should you put down?
2. How is your credit?
3. Is this your first home?

Receiving a loan requires completion of a loan application and specific financial documents including pay stubs, rental checks and/or tax returns. You can receive a loan from a number of different financial institutions, namely: commercial banks, credit unions, mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks and insurance companies.

#8 Insurance

Insuring your home is like making an investment in your future. You work hard to have a home; homeowners insurance protects you and your family from someone or something taking it all away.
There are many different forms of insurance:
Title Insurance - Protects you in the event that the title on your property has a lien, unpaid taxes, or other legalities that would make it invalid.
Homeowners' Insurance - Protects your home from fire, theft and other liable coverage.
Flood Insurance - Protects your home from flood damage.
Home Warranty - Offers buyers and sellers the peace of mind that should anything unexpected happen (due to normal, every day wear and tear) of the home's appliances, heating, air conditioning, plumbing, and electrical systems, it will be repaired (or replaced in some cases) for you without costly fees.

#9 Closing Procedures

The closing process is always changing. It is even referred to as "settlement" or "escrow" in different parts of the country. With increased technology, most closings are completely automated and both parties do not have to be present at the same time to sign.
Closings usually occurs about 30 days after a contract is signed by both parties. This mainly depends on the buyer's financing availability, successful home inspection completion, and various lender conditions (ex. title search, title insurance, termite inspections, surveys and appraisals).
The closing process is the transfer of the title of the property from the buyer to the seller. The buyer will receive the keys to the home or the deed to the land, while the seller receives payment for the property. The amount the seller receives is based upon the amount that is still owed on the mortgage, any outstanding fees or taxes, and any additional closing costs.
All legal papers are filed with the local record office.
Prior to closing, it is important as the seller to take a final walk through the property to make sure the property's condition as not changed. It is equally important for both the buyer and seller to make sure the paperwork they are signing reflects the agreement of the original sale.

#10 Settling In

You have unpacked your boxes, arranged your furniture, and feel complete with your moving task.
What's next?  Enjoy your new home!

Renting vs. Owning

Although some renters believe that renting is “maintenance free,” they are actually paying for maintenance in their rent – whether they need it or not.  Renting offers you no equity, no tax benefit, and no protection against regular rent increases.  If you’re paying rent, you’re really just paying someone else’s mortgage.  Let’s compare.*

 

* Approximate Payment/Cost Comparison based on estimated annual tax results.  Based on 2.5 tax bracket and on estimated first year interest and taxes.  Recommend consulting with tax expert.  Payment based on FHA 30-year fixed rate loan with 7% interest rate, sales price of $125,000 and a loan balance of $121,250.  Interest rate/rental rates, prices, terms, and availability subject to change without notice.  See a qualified tax consultant for more details.