5 Ground Rules for Home Buying Success

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There are few purchases in life that carry the financial and psychological weight of buying a home. Whether you are buying your first home, moving up to your dream home, or downsizing your home and your life after the kids have gone, it is important to understand the ground rules for success in the world of buying a home.

Making the wrong decision in buying a home can have devastating and long lasting effects, while making a wise decision in home buying can greatly enhance the overall value of the investment. It is necessary to learn all you can about the world of home buying and mortgages before setting out to purchase the home of your dreams.

While there are plenty of web sites designed to help first time homeowners learn all they can, most financial experts say that there is no substitute for the good old one-on-one learning. Fortunately, most mortgage lenders, home inspectors and real estate agents will be able to provide this kind of one-on-one learning.

When buying a home it is often best to use a systematic approach as this is often the best way to be sure that all decisions are based on information and reason, not on impulse or emotion. Buying a home can be an emotional process, nevertheless it is imperative to keep your emotions under control and not let them cloud your judgment.

There are five basic ground rules when it comes to buying a home and shopping smart, and they are:

#1 – Get your financing before you get your home

There are few things in life as disappointing as losing out on the home of your dreams due to not being able to secure funding. While the desire to get out there are search for that great home is understandable, it is vital to line up the financing you will need before you start shopping for a home.

Getting the financing ahead of time has a number of important advantages, including knowing how much you can buy and gaining more respect from the listing agents. By knowing how much home you can afford before you shop you will avoid wasting your time looking at unaffordable properties, and the listing agent will be more than willing to show you the homes in your price range.

It is also important to take a good look at the various types of mortgage on the market before getting started in the home buying process. These days, mortgages come in far more choices than the typical 15 or 30 year. For that reason, potential home buyers need to understand how each type of mortgage works, and to gauge which mortgage is the best choice for their needs.

#2 – Look at the community, not just the home

It is a good idea to look at the entire community, instead of focusing on a single home. This can be a particularly important thing to consider for those moving to a new metropolitan area, as these buyers will be unfamiliar with the local climate and lifestyle. It is crucial to determine the areas of town that are most desirable, and to consider things like distance from work and local shopping opportunities.

We have all heard that location is the key consideration when it comes to real estate, and that is certainly the case. Buying a house in the wrong area can be a big mistake, and it is important to choose the location as well as the home. Potential buyers can learn a great deal about the nature of the various neighborhoods simply by driving around town, as well as by talking to other residents.

#3 – Be fair with your first offer

Trying to lowball a seller on the first offer can backfire, as can paying too much. It is important to carefully evaluate the local market, and to compare the asking price of the home with what similar houses in the neighborhood have sold for.

Comparing the sales of comparable homes, what are known as “comps” in the industry, is one of the best ways to determine what is fair, and to make sure that you neither overpay or underbid on the property.

#4 – Always get a home inspection

Always investigate the home for any possible defects before making an offer. Compared to the cost of the average home, the price of a quality home inspection is virtually negligible. Hence, get a good home inspection done before you buy.

To find the best home inspector, it is a good idea to seek out word of mouth referrals as many of the best home inspectors rely on word of mouth advertising.

#5 – Do not alienate the sellers of the home

Many real estate deals have fallen apart due to the personal animosity of the buyer and the seller. It is important to avoid alienating the seller of the home during the process, and to avoid nitpicking every little detail during the sale.

Keeping the good will of the seller will help the transaction go smoothly, and it will provide the best environment for seller and buyer alike.

 

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5 Major Reasons Why You Should Buy a Home Instead of Rent

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There are times when it is better for a person to rent, but most often home ownership has many more benefits and advantages. In Kendall County and surrounding counties – rent prices are incredibly high! My wife and I own a rental unit in Fox Hill in Yorkville and when we have listed it for rent, the response rates are overwhelming. This totally shows the demand for rental units are incredibly high.

How can buying be better?

1) More Stable Housing Costs
Rent payments can be unpredictable and typically rise each year, but most mortgage payments remain unchanged for the entire loan period. If the taxes go up, the increase is usually gradual. This stable housing cost especially important in times of inflation, when renters lose money and owners make money.

2) Tax Savings
Homeonwers can be eligible for signifigant tax savings because you can deduct mortgage interest and property taxes from your federal income tax, as well as many states’ income taxes. This can be a considerable amount of money at first, because the first few years of mortgage payments is made up mostly of interest and taxes.

3) Debt Consolidation
If you need to, you can refinance a mortgage loan to consolidate other debts (an opportunity you don’t have if you are renting.) And the interest on this is also tax deductable.

4) Equity
Instead of payments disapearing into someone elses pocket, home owners are building equity in their own home. This is often one of a person’s biggest investment assests. Each year that you own the home you pay more toward the principal, which is money you will get back when the home sells. It is like having a schelduled savings account that grows faster the longer you have it. If the property appreciates, and generally it does, it is like money in your pocket. And you are the one who gets to take advanatge of that, not the landlord. You can then use this equity to plan for future goals like your child’s education or your retirement.

5) It is Yours!
When you own a home you are in control. You the freedom to decorate it and landscape it any way you wish. You can have a pet or two. No one can pop in and inspect your home and threaten to evict you.

Buying a home is an important decision. It is often the largest purchase a person makes in his or her life. Home ownership also comes with some increased responsibilities, and isn’t for everyone. There are some disadvantages to homeownership that you should take into account.

1) Increased Expenses
Your monthly expenses may increase, depending on your situation. Even if the monthly payments are the same, home owners still have to pay property taxes, all the utilities, and all the maintenance and upkeep costs for the home. Often you need to supply appliances that were furnished with a rental.

2) Decreased Freedom of Mobility
Homeowners can’t move as easily as a renter who just has to give notice to the landlord. Selling a house can be a complex and time consuming process.

3) Risk of Depreciation
In some areas with overinflated prices, there may be a risk that the house will depreciate instead of increase in value, if the prices go down. In our area, this really isn’t typically the case. If you then sell the house, you may not get enough money from the home to pay back your mortgage, and you will still owe the mortgage company money.

4) Possibility of Foreclosure
If for some reason you are unable to make your payments, you risk having the lender forclose on your propety. This can result in the loss of your home, any equity you have earned, and the loss of your good credit rating.

When considering home ownership, you need to weight the advantages and disadvantages for yourself. If you are like most people, you will find that homeownership is worth the risks and disadvantages.

The 3 Main Reasons Adam Thinks it’s the Time to Sell in 2016!

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Hello World! Have you tossed around the idea to possibly sell your house in 2016? Are you scratching your head wondering if the time is right? Here are five considerations I think you should know:

  1. Timing! By shear nature spring is a very popular time to list your home for sale. Buyers are emerging more and more as the weather warms up and green begins to reappear! Happy days abound! Some buyers are also timing out their move with the end of the school year. Take advantage of this influx of buyers!
  2. Inventory! Boy, inventory sure does stink I our area right now! I literally have about a dozen buyers ready to write an offer if a house comes on the market to meet their needs. These are serious and preapproved folks that are just waiting for the next “new listing” to appear in their inbox!
  3. Prices! Sales prices continue to rise! The days when foreclosures and diluted values are totally slipping away. Do you know what your house is worth? Do you have any idea what the check would be if you were to list and sell your house? I can help you with those estimates. To simplify, here is the typica process if you were to reach out to me to inquire about listing your house. I would gather some basic information (size of house, year built, location, amenities, etc.). I would also obtain an estimate from you on how much you owe. I would then get to work on my “homework”! This means reviewing comparables, crunching numbers and preparing a report just for you. I would bring that with me during the final step – a meeting in person to check out your home.

One thing you will find is that I am not a salesy type of person. I can’t stand being pressured or nagged when I am trying to decide or purchase something myself. Heck, I have even met with people who have inquired about selling and told them that selling buy owner or waiting might be better due to the number crunches!

At the end of the day, your home is one of your biggest expenses and assets – any decision made about your home should never be taken lightly!

If you would like to briefly chat about your current home or one you are considering purchasing, please reach out to me via phone/text at 630-234-4472 or email adam@adambaxa.com.

Talk to you soon! Adam