So you are thinking of buying a fixer upper, fixing it and reselling it. The key is in planning, good estimating. The oft heard phrase "Buyer Beware" is never more appropriate than when considering the purchase of a fixer-upper. You must know exactly what you*re getting into before buying.
It*s commonly believed that fixer-upper properties represent easy money that is ripe for the taking - that you can buy it, do a little work on it in your spare time, then flip it (sell it) and make lots of money. This isn't the case most of the time. Although, with proper planning and thought, money can be made by buying *fixer uppers*. And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be a great option. By buying a fixer upper you get sweat equity. You will gain equity in the home by bringing it up to normal standards. The key is to buy a home below market price and to be able to put less money into it than a comparable good home. If you can buy a ready to move in home (in top shape) for $200,000 and you want to buy a fixer upper for $150,000. Then you should not have to spend more than $25,000 to fix it up to make it a deal. It*s also less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should qualify for the IRS exemption of no capital gains. The most important thing to know before making a decision on such a purchase is what needs to be fixed. Do a spreadsheet. Jot down all the costs. Give yourself a cushion for unseen expenses. Any time you are spending money on improving a home with the notion of selling it later, strive to spend your money on things that buyers can easily see. Things like new paint and removing trash from the property cost little but have instant impact on curb appeal. Simple landscaping is the best. Landscaping does not bring a large return. Houses that have only cosmetic problems like peeling paint, an overgrown yard, shag or worn carpet or lots of wallpaper are the best bet. Fixing and cleaning cosmetic issues is fairly easy and inexpensive. It virtually always gives a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return. Don*t be afraid of buying a fixer-upper in need of this kind of repair. Again the key is don*t go over the top. Do a good job, a nice job. But if it is a $100,000 house you don*t want to put in Granite counter tops and a jetted tub. Properties with structural damage, or a floor plan that requires major work to remedy, may not be "fixed up" at a profit. If you do not have construction experience or done a fixer upper before. Have an inspection for hidden damage performed by a home inspector, a friend that has experience, or construction professional before buying a fixer-upper. Michigan purchase agreements have inspections clauses in them; make sure you use that clause when doing a fixer upper. Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection (that were unseen). Often, sellers will be willing to lower the sales price to sell the home "as is" instead of paying for the repairs. Give the seller three choices, fix it themselves, hire a contractor to fix it, or reduce the sales price so you can fix it. Be careful that you don*t over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer. Remember when buying a fixer upper to put in the cost of paying a realtor to re sell it. Many people forget this. They have figured a $6,000 profit but forgot about the selling commission.
What about the cost of the mortgage and interest? If you aren*t living in the home, the mortgage payment is a cost! If it is going to take 4 months to fix it up then figure the payment as an expense. A $1500 payment adds up. In four months it is $6000 of profit eaten up. What happens if the house doesn*t sell right away? What happens if you have to sit on the house for 10 months? At $1500 a month then $15,000 of your profit is gone.If you are not going to live in the home there is one last thing item to remember is that if it is a second home, or investment property (in Michigan) you do not get the homestead exemption. Your taxes are going to be much higher. Approximately 40% higher. You have to figure that in as a cost also.
Good luck and happy house hunting.
For more tips on buying and selling Michigan homes or any home go to www.russravary.com
Search Michigan Real estate
Friday, July 20, 2007
Sunday, July 8, 2007
Appraisal Myths and facts
Myth: An appraisal determines your sales price. Did you know that one appraiser can appraise a Wayne county home and come up with one price and another different appraiser can appraise the same Wayne county home and come up with a totally different price. A third one can come up with a third price. They may never come up with the same price with they all appraise one Michigan house for sale. The appraisal process is very subjective. That is why it is better not to pay for an appraisal and use a CMA, comparative market analysis.
Myth: An appraisal is a guarantee of what my house is worth. My lender used the appraisal three years ago and the house was worth more than you are saying it is worth now. If your appraiser said your Oakland county home was worth $300,000 two years ago it was because there were homes similar to your that were selling for that price. Unfortunately Michigan house prices have fallen in 2006 and 2007. So many Michigan houses for sale were over priced when they went on the market in 2007.
Fact: An appraisal is a tool that lenders use to find out if the value of the home is there to give a loan out. Appraisers are licensed by the state and take continuing education classes. In Michigan appraisers have over 2000 hours of schooling and internship under another appraiser. The lender does not ask for a guarantee of value they are looking for a professional opinion.
Fact: Sometimes appraisals are rejected by the bank. Banks have other appraisers that double check the appraisal. If that appraiser feels the value is not there then they give a different value and the original appraisal may not be used.
So when you are ready to price your Michigan Home whether it is a Livingston county home, a Wayne county, a Washtenaw county home, or Wayne county home call me(russ ravary) to get you a CMA of your home. That way you will have the necessary information to price your home. It will give you what is for sale locally, what homes that are similar in size, style, and condition have sold for recently. That will give you the information to make a sound decision.
To get more information on selling your home go to my website http://www.russravary.com/ or search Michigan homes for sale
Myth: An appraisal determines your sales price. Did you know that one appraiser can appraise a Wayne county home and come up with one price and another different appraiser can appraise the same Wayne county home and come up with a totally different price. A third one can come up with a third price. They may never come up with the same price with they all appraise one Michigan house for sale. The appraisal process is very subjective. That is why it is better not to pay for an appraisal and use a CMA, comparative market analysis.
Myth: An appraisal is a guarantee of what my house is worth. My lender used the appraisal three years ago and the house was worth more than you are saying it is worth now. If your appraiser said your Oakland county home was worth $300,000 two years ago it was because there were homes similar to your that were selling for that price. Unfortunately Michigan house prices have fallen in 2006 and 2007. So many Michigan houses for sale were over priced when they went on the market in 2007.
Fact: An appraisal is a tool that lenders use to find out if the value of the home is there to give a loan out. Appraisers are licensed by the state and take continuing education classes. In Michigan appraisers have over 2000 hours of schooling and internship under another appraiser. The lender does not ask for a guarantee of value they are looking for a professional opinion.
Fact: Sometimes appraisals are rejected by the bank. Banks have other appraisers that double check the appraisal. If that appraiser feels the value is not there then they give a different value and the original appraisal may not be used.
So when you are ready to price your Michigan Home whether it is a Livingston county home, a Wayne county, a Washtenaw county home, or Wayne county home call me(russ ravary) to get you a CMA of your home. That way you will have the necessary information to price your home. It will give you what is for sale locally, what homes that are similar in size, style, and condition have sold for recently. That will give you the information to make a sound decision.
To get more information on selling your home go to my website http://www.russravary.com/ or search Michigan homes for sale
Thursday, July 5, 2007
appraisals
When to order an appraisal
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
If you want more information on mortgages and the mortgage process go to my website www.russravary.com
You have completed the loan application, put in a purchase offer. When do you order an appraisal? You order an appraisal after the home inspection. You don't want to order and pay for an appraisal until the house passes inspection. If the house fails inspection you don't order the appraisal until you have a signed addendum stating the the seller will do the repairs, give you a lower price, or you accept the house as is. Then you order the appraisal
Appraisals are performed for the benefit of the lender. They are trying to justify the loan amount based on the appraised value. The appraiser will have a copy of the Purchase agreement. (contract). The typical cost of an appraisal is $275 - $350 and is normally paid to the lender upfront by the borrower. Appraisers charge more for rental properties, FHA appraisals, and multi family properties. Commercial appraisals start at $1500 and go up to $5000
An appraisal is subjective. One appraiser may come up with one value and another may come up with a totally different value. An appraisal is not what the house should sell for, it is a educated estimate of value using different value approachs.The most common way an appraisal is done is that the subject house ( the house being bought) is compared to 3-5 homes that are similar in style, size, and location that have sold in the last 6 months. So your appraisal is based on homes that have sold recently that are like yours and near yours!
STYLE By style I mean they compare ranches with ranches. They will not compare a ranch to a colonial. ( or 2 story)
SIZE, AGE By size I mean they compare square footage, number of bedrooms, bath rooms, age, garage, ammenities. Your home may be 1200 sq ft 2 bedroom,1.5 bath, built in 1999, with a 2 car garage. One of the ones that sold may be 1200 sq ft, 3 bedroom, 2 bath, built in 1952, with a 1 car garage. The appraiser has a general formula that he uses to give value to a 3 bedroom versus a 2 bedroom, A home built in 1999 is worth more than one built in 1952 so more value is given to the 1999 home. This gets very complex. What the lender is looking for from the appraiser is that he is not giving some ridiculous value to say the garage or the age. Remember very little value is given to updates. Bigger value would be given to an addition or a garage.
Location If it is in the city lenders like to see the comparable sold homes that the appraiser is using to be within a half a mile. Without crossing main roads or railroad tracks. This common sense, because if you cross a main road the houses can be totally different. The lender wants the appraiser to use the houses closest to the subject property. So if a similar house sold on the same street the appraiser is supposed to use it.That is how many times appraisals are different. Appraisers may be using different comparables (sold houses) and may be using a little different adjustments for the value of a three bedroom home versus a two bedroom home. It gets even more difficult when homes are not selling, or there are very few comparables close by. They sometimes have to go further away and futher back in time. Up to a year ago.
Appraisals are reviewed by the bank. Sometimes the bank has a review department in house or they pay another appraiser to review the appraisal. So there are checks and balances in the system.
What happens is your house does not appraise for the sales price ? Most houses do but every once in a great while one won't.Either the appraiser appraised it for less than the sales price or sometimes the bank rejects the value of the appraisal and will come back with a lower value of the house. What the means to you the buyer is that the sales price must be reduced or you have to bring more money to the table. For example you bought a home for $200,000 and you are borrowing 100%. The bank or the appraiser says it is only worth $190,000. The bank is only going to loan $190,000. You either have to go back to the seller and renegotiate the price or you have to come up with $10,000.
VA Appraisals: If you are getting either of these government mortgages, the appraiser will not only look at valuation but will also look at the condition. If defects are noted, they may require that they be fixed prior to closing. Since the borrower has such a low downpayment, Lenders want to make sure that Borrowers are not hit with any up-front maintenance expenses. The Seller is not obligated to make the repairs; consequently, they will have to be negotiated.
Appraisals are not a guarantee of value. Most lenders will have a disclaimer to that effect. Remember, the appraiser has a copy of your fully negotiated contract BEFORE establishing the appraisal value. It is more of a confirmation of value.
If you want more information on mortgages and the mortgage process go to my website www.russravary.com
Tuesday, June 19, 2007
Michigan foreclosures
A Buy in Bank Foreclosures?
Everybody watches late night TV and sees the infomercials on how people made millions buying bank foreclosures. Can you do it? It is possible but banks have closed many of the loopholes in the lending process.
Michigan foreclosures. Let me explain what happens in the foreclosure process in Michigan. A homeowner falls 3 or more payments behind on the mortgage. The bank then sends them a letter that they are going to start foreclosure proceedings against the homeowner. Sometimes the banks are very quick to get a letter out and start the foreclosure proceedings. Other times some banks take months to get the foreclosure process started.
Then it is usually turned over to a foreclosure attorney to handle. The house is then scheduled to be sold at “ sheriff sale”. The home is auctioned off. Unfortunately many people think you can steal the homes at the sale. There are deals there at the sale but you have to do the research on the homes and their value. But what usually happens is the bank will buy the home back. The reason they do this is because they have a mortgage on it. Let’s say the house is worth $120,000 and the homeowners owe $100,000 on a mortgage. The bank will buy it back up to the $100,000 to recover their costs and to get the other possible liens off the home. You could buy it for $101,000 or more and the bank would probably let you buy it.
If the mortgage was $90,000 then the bank would bid up to $90,000 to keep their interest in the property. So up to this point the only way you can get a deal on the property is to out bid other buyers on a home.
Now the bank owns the home. The original owners may still be living in the home. They have up to 6 months to pay the bank the full amount to keep the home. This seldom happens.
The bank usually waits for the six month redemption period to lapse. They then contact 3 different real estate agents. The bank will ask the realtor to give them a price that the house should sell for. The bank is asking the realtor for a price, that price usually is fair market value in the eyes of the realtor. So that foreclosed home is no deal. It is around fair market value. The bank then hires a realtor to change locks, winterize the home, clean carpets, and if necessary get the home in saleable condition.
So the bottom line is that the bank is trying to recover what they are owed on the house or get fair market value. So most homes that are foreclosed are not great deals. Though there are some fixer uppers that may be deals. Ask your real estate agents to look for them. There also are HUD foreclosures that go through a little different process. There may be deals in them. I will be talking about them in another section.
The key to buying homes cheaply is to know values of the neighborhood and city and look for fixer uppers or homes below market value. Search Michigan Homes.
If you need a realtor to help you look go to my website www.russravary.com
Happy house hunting
Russ Ravary
Everybody watches late night TV and sees the infomercials on how people made millions buying bank foreclosures. Can you do it? It is possible but banks have closed many of the loopholes in the lending process.
Michigan foreclosures. Let me explain what happens in the foreclosure process in Michigan. A homeowner falls 3 or more payments behind on the mortgage. The bank then sends them a letter that they are going to start foreclosure proceedings against the homeowner. Sometimes the banks are very quick to get a letter out and start the foreclosure proceedings. Other times some banks take months to get the foreclosure process started.
Then it is usually turned over to a foreclosure attorney to handle. The house is then scheduled to be sold at “ sheriff sale”. The home is auctioned off. Unfortunately many people think you can steal the homes at the sale. There are deals there at the sale but you have to do the research on the homes and their value. But what usually happens is the bank will buy the home back. The reason they do this is because they have a mortgage on it. Let’s say the house is worth $120,000 and the homeowners owe $100,000 on a mortgage. The bank will buy it back up to the $100,000 to recover their costs and to get the other possible liens off the home. You could buy it for $101,000 or more and the bank would probably let you buy it.
If the mortgage was $90,000 then the bank would bid up to $90,000 to keep their interest in the property. So up to this point the only way you can get a deal on the property is to out bid other buyers on a home.
Now the bank owns the home. The original owners may still be living in the home. They have up to 6 months to pay the bank the full amount to keep the home. This seldom happens.
The bank usually waits for the six month redemption period to lapse. They then contact 3 different real estate agents. The bank will ask the realtor to give them a price that the house should sell for. The bank is asking the realtor for a price, that price usually is fair market value in the eyes of the realtor. So that foreclosed home is no deal. It is around fair market value. The bank then hires a realtor to change locks, winterize the home, clean carpets, and if necessary get the home in saleable condition.
So the bottom line is that the bank is trying to recover what they are owed on the house or get fair market value. So most homes that are foreclosed are not great deals. Though there are some fixer uppers that may be deals. Ask your real estate agents to look for them. There also are HUD foreclosures that go through a little different process. There may be deals in them. I will be talking about them in another section.
The key to buying homes cheaply is to know values of the neighborhood and city and look for fixer uppers or homes below market value. Search Michigan Homes.
If you need a realtor to help you look go to my website www.russravary.com
Happy house hunting
Russ Ravary
Thursday, May 31, 2007
Pros and cons of home ownership
PRO
A Place to Call Your Own Perhaps you are ready to settle down in your community and want to have the feeling of permanence and involvement that comes with owning your own home. Maybe you need more space for your family. Or maybe you want more freedom than you currently have as a renter to change your home to suit your individual taste and needs.
CON
Financial trouble from illness or loss of a job: When you own a home and fail to keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you've built. A renter, on the other hand, can downsize to a cheaper apartment to cut expenses
PRO
Another interesting thing is when you own a home, your credit rating goes up a lot as well, thus you are able to get better loans at a lower interest rate.
CON
Your home loan needs to be paid on time and so is your home insurance. Therefore, it can take a toll on your financial commitments. So be sure to plan your home loan payments properly. Though there are various tax rebates and deductibles when owning a home, you still need to pay property tax each year.
PRO
Scheduled Savings When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. On the other hand, renters continually pay rent to a landlord for as long as they rent without the opportunity to build up equity.
CON
You are also liable for any damage that is caused to your neighbor´s property if the cause comes from you or your property. An example would be a fire breaking out from your home and spreading to your neighbor´s homes damaging their properties. In this instance, you are liable to pay for the damages caused.
PRO
Retirement Savings: Long-term home ownership can provide beneficial retirement security through the growth of equity.
CON
There are no guarantees: Even if you work hard at maintaining your home, property values can drop, depending on the neighborhood in which you live. This is why it's important to choose a house and neighborhood that have strengthening value in the real estate market.
PRO
Stable Housing Costs While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever "cheaper" dollars.
CON
Repair and Maintenance. Don't forget that responsibilities such as mowing the lawn and taking care of needed repairs come along with home ownership. Actually, the promise of getting the advantages of home ownership without the accompanying repair and maintenance responsibilities is a major factor in the popularity of condominiums. As an owner, you must pay for any unexpected costs such as a new roof or heating system. This is why a family budget and a savings strategy are important
PRO
Tax Benefits Homeowners are eligible for significant tax advantages that are not available to renters. Most important, the interest paid on your home mortgage usually is tax deductible and therefore can save you a substantial amount each year in federal income taxes. There may be tax deductions for improvements you do to the home. Check with your CPA or tax preparer as tax deductions change often.
CON
High Costs Usually you can expect to pay more for housing as a homeowner than you did as a renter, especially for the first few years. Even if your mortgage payments are less than your previous rent payments, as a homeowner you must also pay property taxes, homeowners insurance, all utilities, and upkeep expenses.
PRO
Increased Value Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.
CON
There are some disadvantages to owning a home. For example, you are liable for any accidents and injuries on your property. Getting a home insurance policy covering such cases can offset this. However, there is a cost involved.
PRO
Once an owner, always an owner: A first home often leads to a better second home. Owning and properly maintaining the property also offers a sense of accomplishment.
PRO
A home is yours forever. As long as you can afford the mortgage and taxes, you don't ever have to move. There's no landlord to terminate your lease, raise your rent or deny you permission to make changes to the property.
My bottom-line advice: Buying a home I believe is a good investment because it is yours. It forces you to save and build for your future. Sure you could rent cheaper but you live by somebody Else's rules. So when you buy don't over-invest in your home, either when you buy it or when you make subsequent improvements. Buy only as much house as you need. Plan to stay a long time. Don't view your home as your primary retirement savings. You home will bring you many memories, long term stability, and a sense of pride. Whether you own a home in Livingston County, Wayne County, Washtenaw County, Oakland County, or Macomb County it is a start towards your future. Search for Livonia houses for sale, Novi houses for sale or any Michigan homes for sale.
For more mortgage and real estate information go to my website www.russravary.com
I also have a great Michigan things to do section for lots of fun things to do in Michigan.
May life treat you and your family well this weekend.
Russ Ravary
A Place to Call Your Own Perhaps you are ready to settle down in your community and want to have the feeling of permanence and involvement that comes with owning your own home. Maybe you need more space for your family. Or maybe you want more freedom than you currently have as a renter to change your home to suit your individual taste and needs.
CON
Financial trouble from illness or loss of a job: When you own a home and fail to keep up with your mortgage payments, the mortgage lender could call the loan, which means payment in full or foreclose on the mortgage. This could result in the loss of your home as well as the equity you've built. A renter, on the other hand, can downsize to a cheaper apartment to cut expenses
PRO
Another interesting thing is when you own a home, your credit rating goes up a lot as well, thus you are able to get better loans at a lower interest rate.
CON
Your home loan needs to be paid on time and so is your home insurance. Therefore, it can take a toll on your financial commitments. So be sure to plan your home loan payments properly. Though there are various tax rebates and deductibles when owning a home, you still need to pay property tax each year.
PRO
Scheduled Savings When you are a homeowner, your monthly mortgage payments serve as a type of savings plan. Over time you will accumulate what lenders call "equity," an ownership interest in your house that you may be able to borrow against or convert to cash by selling the house. On the other hand, renters continually pay rent to a landlord for as long as they rent without the opportunity to build up equity.
CON
You are also liable for any damage that is caused to your neighbor´s property if the cause comes from you or your property. An example would be a fire breaking out from your home and spreading to your neighbor´s homes damaging their properties. In this instance, you are liable to pay for the damages caused.
PRO
Retirement Savings: Long-term home ownership can provide beneficial retirement security through the growth of equity.
CON
There are no guarantees: Even if you work hard at maintaining your home, property values can drop, depending on the neighborhood in which you live. This is why it's important to choose a house and neighborhood that have strengthening value in the real estate market.
PRO
Stable Housing Costs While rents typically increase year after year, the principal and interest portion of most mortgage payments remains unchanged for the entire repayment period. Because of the effect of inflation, you pay the same amount with ever "cheaper" dollars.
CON
Repair and Maintenance. Don't forget that responsibilities such as mowing the lawn and taking care of needed repairs come along with home ownership. Actually, the promise of getting the advantages of home ownership without the accompanying repair and maintenance responsibilities is a major factor in the popularity of condominiums. As an owner, you must pay for any unexpected costs such as a new roof or heating system. This is why a family budget and a savings strategy are important
PRO
Tax Benefits Homeowners are eligible for significant tax advantages that are not available to renters. Most important, the interest paid on your home mortgage usually is tax deductible and therefore can save you a substantial amount each year in federal income taxes. There may be tax deductions for improvements you do to the home. Check with your CPA or tax preparer as tax deductions change often.
CON
High Costs Usually you can expect to pay more for housing as a homeowner than you did as a renter, especially for the first few years. Even if your mortgage payments are less than your previous rent payments, as a homeowner you must also pay property taxes, homeowners insurance, all utilities, and upkeep expenses.
PRO
Increased Value Houses typically increase in value over time. It's not unusual for a house that sold fifteen years ago to be valued at much more than its selling price today. This increased value is as good as money in the bank to the homeowner.
CON
There are some disadvantages to owning a home. For example, you are liable for any accidents and injuries on your property. Getting a home insurance policy covering such cases can offset this. However, there is a cost involved.
PRO
Once an owner, always an owner: A first home often leads to a better second home. Owning and properly maintaining the property also offers a sense of accomplishment.
PRO
A home is yours forever. As long as you can afford the mortgage and taxes, you don't ever have to move. There's no landlord to terminate your lease, raise your rent or deny you permission to make changes to the property.
My bottom-line advice: Buying a home I believe is a good investment because it is yours. It forces you to save and build for your future. Sure you could rent cheaper but you live by somebody Else's rules. So when you buy don't over-invest in your home, either when you buy it or when you make subsequent improvements. Buy only as much house as you need. Plan to stay a long time. Don't view your home as your primary retirement savings. You home will bring you many memories, long term stability, and a sense of pride. Whether you own a home in Livingston County, Wayne County, Washtenaw County, Oakland County, or Macomb County it is a start towards your future. Search for Livonia houses for sale, Novi houses for sale or any Michigan homes for sale.
For more mortgage and real estate information go to my website www.russravary.com
I also have a great Michigan things to do section for lots of fun things to do in Michigan.
May life treat you and your family well this weekend.
Russ Ravary
Saturday, May 26, 2007
First time home buyer
Buying your first home can be scary, but if you follow these tips, you will do just fine! Many young people do not realize that they can afford a home, they can get approved for a mortgage. Sometimes you need little or no money to buy a home. There are Government programs for first time homebuyers (FHA) and there are 100%, no money down programs.
The key is to plan ahead. You may need to repair your credit, save for a down payment, get more time on a job, save for closing costs. You need to know what you have to do to get started. You may be one of the "great buyers" and have everything you need to get started right now and not know it!Many times you do not need money. We can ask the seller to pay your closing costs. There are many programs that offer low rates and no money. 100% financing may be the way to go for you. But taking the first step and seeing what you need to do now is important. It will make the home buying process so easy. Call me to set up an appointment to go over your credit report, and credit scores.
You may have imperfect credit, have to much debt, or improve your credit scores. The key is to get started. Even though you may have bruised credit, or too much credit I have helped many people improve their credit. They then we able to buy homes.
Create Your "Wishlist"Make your wish list. Focus on the features you want in a home: 2 bedrooms or 3? 1 bath or 2? Garage or no garage? Knowing what you're looking for will help you focus your search. And it will help your local Wayne County real estate broker, too.
Search Michigan houses for sale. Think about where and why you want to buy in an area. How far to work? School? Family?Drive by, and look at many Wayne County homes (again we handle Oakland County houses for sale, Washtenaw county houses for sale, Livingston County houses for sales, as well as Wayne county houses for sale. We just use Wayne county as an example in this report). See as many possible to get a better feel for ones available in your price range. Visit my site often and search for homes. Keep track of what you like and dislike about each home that you visit by printing and using our Home Visits Worksheet.
Also consider the market value of the home, any special circumstances surrounding the sale of the home, how much you can afford to pay for the home, and the condition of the home when determining whether the home is right for you.
When you find a Wayne County home in your price range and you want to buy it, visit the Wayne County neighborhood at various times to get a more complete understanding of its activity. Talk with your prospective neighbors about what it's like to live in the area. Take a day and commute to your job from the area. And look at the home more critically -- you may discover flaws you hadn't noticed during your first visit.
Another aspect to consider is the financing you will use to purchase the home. For example, the seller may help pay closing costs such as transfer taxes or points on a mortgage. If this is the case, you may be more willing to accept the seller's asking price. Your local Wayne County real estate sales professional (Russ Ravary) can offer some assistance regarding how much you should offer, but the final decision is yours.
The key is to plan ahead. You may need to repair your credit, save for a down payment, get more time on a job, save for closing costs. You need to know what you have to do to get started. You may be one of the "great buyers" and have everything you need to get started right now and not know it!Many times you do not need money. We can ask the seller to pay your closing costs. There are many programs that offer low rates and no money. 100% financing may be the way to go for you. But taking the first step and seeing what you need to do now is important. It will make the home buying process so easy. Call me to set up an appointment to go over your credit report, and credit scores.
You may have imperfect credit, have to much debt, or improve your credit scores. The key is to get started. Even though you may have bruised credit, or too much credit I have helped many people improve their credit. They then we able to buy homes.
Create Your "Wishlist"Make your wish list. Focus on the features you want in a home: 2 bedrooms or 3? 1 bath or 2? Garage or no garage? Knowing what you're looking for will help you focus your search. And it will help your local Wayne County real estate broker, too.
Search Michigan houses for sale. Think about where and why you want to buy in an area. How far to work? School? Family?Drive by, and look at many Wayne County homes (again we handle Oakland County houses for sale, Washtenaw county houses for sale, Livingston County houses for sales, as well as Wayne county houses for sale. We just use Wayne county as an example in this report). See as many possible to get a better feel for ones available in your price range. Visit my site often and search for homes. Keep track of what you like and dislike about each home that you visit by printing and using our Home Visits Worksheet.
Also consider the market value of the home, any special circumstances surrounding the sale of the home, how much you can afford to pay for the home, and the condition of the home when determining whether the home is right for you.
When you find a Wayne County home in your price range and you want to buy it, visit the Wayne County neighborhood at various times to get a more complete understanding of its activity. Talk with your prospective neighbors about what it's like to live in the area. Take a day and commute to your job from the area. And look at the home more critically -- you may discover flaws you hadn't noticed during your first visit.
Another aspect to consider is the financing you will use to purchase the home. For example, the seller may help pay closing costs such as transfer taxes or points on a mortgage. If this is the case, you may be more willing to accept the seller's asking price. Your local Wayne County real estate sales professional (Russ Ravary) can offer some assistance regarding how much you should offer, but the final decision is yours.
Monday, May 21, 2007
Mortgage fraud
Today was another tough day in the mortgage world. I had a loan approved at a major lender for a 100% loan on Friday. Today PMI insurers made a change in their guidelines. They will no longer insure 100% loans when the borrowers credit score is less than 575. Unfortunately my borrowers credit score is less than 575 and now they will only loan him 95% instead of the 100% they would on Friday.
It is just another sign of how much the banks are tightening up the credit guidelines.
On another front I had a real estate agent arguing with an appraiser. They had a purchase agreement for $250,000. The appraiser could not find a comp that would support a price of over $235,000. The real estate agent was upset with that answer. When my appraiser asked her what comps she used to set a price on the house, this is what she said. Well I sold a house in that sub over a year ago for $250,000. Do you think she might have been a little smarter and realized that the housing prices in Metro Detroit are falling. (and across the country) She didn't want to tell her seller's that the house was no longer worth the $250,000 they paid for it let alone the $50,000 they put into it. The agent wanted to know if my clients had $15,000 to come to the table with. What did she think that we were stupid. Why would we buy a home that would not comp out. She wanted to use comps from over a mile away and disregard the close ones. That agent wanted my appraiser to commit appraisal fraud or mortgage fraud so she could make a commission. Shame on her!!!!
Don't let an agent do that to you. If an appraiser tells your mortgage guy that the house won't comp out to the purchase price. Either the sales price has to come down or you need to move on and find another home. The buyer's agent was smart enough to do just that. And you can too. There is absolutely no reason to overpay for a home in this market.
For more mortgage information go to http://www.russravary.com
May you work with an honest agent that looks out for your interest.
Russ Ravary
It is just another sign of how much the banks are tightening up the credit guidelines.
On another front I had a real estate agent arguing with an appraiser. They had a purchase agreement for $250,000. The appraiser could not find a comp that would support a price of over $235,000. The real estate agent was upset with that answer. When my appraiser asked her what comps she used to set a price on the house, this is what she said. Well I sold a house in that sub over a year ago for $250,000. Do you think she might have been a little smarter and realized that the housing prices in Metro Detroit are falling. (and across the country) She didn't want to tell her seller's that the house was no longer worth the $250,000 they paid for it let alone the $50,000 they put into it. The agent wanted to know if my clients had $15,000 to come to the table with. What did she think that we were stupid. Why would we buy a home that would not comp out. She wanted to use comps from over a mile away and disregard the close ones. That agent wanted my appraiser to commit appraisal fraud or mortgage fraud so she could make a commission. Shame on her!!!!
Don't let an agent do that to you. If an appraiser tells your mortgage guy that the house won't comp out to the purchase price. Either the sales price has to come down or you need to move on and find another home. The buyer's agent was smart enough to do just that. And you can too. There is absolutely no reason to overpay for a home in this market.
For more mortgage information go to http://www.russravary.com
May you work with an honest agent that looks out for your interest.
Russ Ravary
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