Our Real Estate Blog
If you have been dreaming of owning a vacation home now may be the time to buy. Home prices and mortgage rates continue to fall and there are some great deals for buyers looking for a second home. Here are five things you need to know before taking the leap. 1. Prices are at all-time lows In many second-home hot spots, prices are still close to their five-year lows. When the real-estate bubble burst, some of the hardest-hit markets were vacation destinations. Many vacation home areas experienced overgrowth and may now be suffering from foreclosures. 2. Think ROI Consider the possible return on your investment. Whether or not you decide to rent the home out, you will want to consider buying a place that has good rent potential. That's because a home's rent ability can affect its resale value. Before you bid on a house, make sure the homeowners association or township allows short-term rentals. 3. Don't count on rental income If you are planning on counting on rental income to cover the costs beware. According to HomeAway.com, a typical second home property rents out just 17 weeks a year. Make sure to account for the weeks the home won't rent. Plus, you'll need to pay for cleaning, maintenance, insurance, and maybe management fees. Make sure to plan on the maintenance costs of the property being at least 15% of the income. 4. Your mortgage rate depends on how you use the home How you use the home depends on the mortgage rate you will receive. If you plan to use the property primarily as a second home and you'll pay about the same mortgage rate as you would on a primary residence. If your plans are to use the home for rental income and need that income to qualify for the loan, you'll need to have as much as 25% for the down payment and pay up to one percentage point more in interest. 5. Take advantage of tax benefits Talk to your tax guy before you buy. If you rent the home out for two weeks or less you won't have to report a cent of income to the IRS. The good news here, you can still deduct property taxes and mortgage interest. On the flipside, if you stay there for less than two weeks or 10% of rental days, you can deduct operating costs in addition to interest and property tax. But where should you buy? According to CNBC here are the top places to buy a second home. If you are thinking about buying a second home I can help you find a professional agent in that area.
Mortgage rates are at historic lows and there is no better time to buy a home. Do you qualify for those low advertised rates? Will you be able to secure a mortgage? Studies show that 6 in 10 people do qualify for mortgage loans. For those that can't qualify here are ten reasons why a would-be borrower might face rejection: 1. A low credit score will keep you from getting a mortgage. Typically, a score less than 620 is unacceptable by most lender standards. 2. A maxed out credit card threshold will stop a mortgage in its tracks. If your balance more than 30 percent of the allowable credit lenders will take pause. 3. Multiple credit inquiries may drop your credit score. Limit your credit inquiries to mortgage-only credit pulls within a 30-day period. 4. Did you Co-sign a loan with someone? If so, plan to provide 12 months of canceled checks showing they make the payments to the creditor. 5. Other housing liability payments or a consumer loan for a vehicle may prevent your loan approval. Lenders are looking for you to have double the income to offset each dollar of debt you carry. 6. If you are self-employed you may not be showing income under a Schedule C. This reduces your borrowing power. 7. Claiming many unreimbursed business expenses and losses on your taxes may help you pay less taxes but it also can reduce your borrowing power. 8. If you change jobs often this could also hurt your chances at a mortgage. If you occupational status has changed in the past two years it can hurt you. 9. If you are planning on using cash for your purchase think again. All monies must come from some kind of a bank account. 10. Don't plan on transferring money from different accounts during the loan process. Be prepared to show full bank statements and a chain of deposits etc. Your mortgage professional should be able to look at your credit, debt, income and assets and make a determination of whether you qualify for a mortgage.
What is your dream home? It is a water-front home, a cabin in the woods, a city apartment or a home on a cul de sac in a suburb? The phrase “dream home” means a lot of different things to a lot of different people. Here are some things to consider when looking for your dream home: Square Footage Consider how much room you need in your home. Do you need a media room or a finished basement? Three decades ago the average home size was 1,645 square feet. Now the average home size has gone up to 2,195. Recent trends have shown house sizes again decreasing as buyers evaluate what they truly need. Floorplan Think about how you will use your home, will you be entertaining? Do you like your home with rooms that are intimate and have a traditional feel? Or do you prefer an open floor plan? The way you use your home will dictate the type of floor plan you ultimately choose. Extras What kind of extras are you looking for in a home? Do you want granite counter tops, high-end appliances, or other extras? That will also affect price. Decide what you want and make sure it fits your budget. Landscaping The bigger the better may not be the case when it comes to a lawn. A big lawn means lots of landscaping. If you are willing to perform the necessary upkeep you may opt for a large yard; if not, your dream home may be a home with a smaller yard or even a condo. Location Choosing a neighborhood is important when picking your dream home. If you have a family or are planning one in the future you most likely will want to look at school systems. Other considerations are commute time to work, location to stores, highways, the ability to walk to venues and public transportation.
The story is always the same, buying a home is always a good investment. It doesn't matter the study, the year, the market, the results are always the same. Owning a home is a good investment. Homeownership provides both economic and psychological benefits. A survey released earlier this year by the magazine Better Homes and Gardens found that eight in 10 respondents said homeownership is still a good investment and believe owning a home is a smart financial move and a source of pride. Here are some results of the 2,500 people surveyed online:
- 86% of home owners still feel owning a home is a good investment.
- 85% feel “owning a home is one of their proudest accomplishments.”
- 69% of Americans who don’t currently own a home agree with the statement, “No matter what happens in the U.S. housing market, owning a home is still an important goal in my life.”
- 68% of Americans plan to spend money on their homes in the next six months, with roughly half (49%) expecting to pay up to $1,000.