I received a PM from someone wanting to know about buying a house.
This is strickly based on my experience, please see the help of a professional lawyers, real estate agent, bank in your state.
Pros and Cons to each options, which is based strickly on your preferences and abilities.
Before buying a house:
Get your credit in order - This will effect the type of loan you quality for. So get your credit report from each of the 3 agencies, Equifax, Transunion, Experian
Pay off your car - this effect your Debt-to-Income ratio and the bank uses this to determine how much you can afford.
Save up as much money as possible. It cost money to buy a house!
It's best if you can put 20% down on the house, but don't forget that there are additional fees.
If you pay less than 20% you will have to pay PMI (Private Mortgage Insurers). Try to avoid paying this!
You can wait and save more money or you can take out 2 loans 80% / 20% split. Speak to your broker about it.
You have to pay the Lawyer, Lender, etc, but... You NEVER have to pay the real estate agent! The Seller pays that.
Keep in mind that if you are looking at sites online such as Realtor.com, you will always pay more then what they suggest.
• You have to pay Property Tax (which is a tax break at the end of the year but you have to pay it)
• You have to pay for House Insurance
• You have to pay for water (both using it and for the amount that goes down the drain)
• Utilities, of course
• Maintence is on you (which can be a pro or a con depending on how handy you are.
Pros of a buying a Single Family House:
• it's yours to do whatever you want to do
• Any Property Tax / Interest is tax deductible
• After 30 years, it's yours
• Houses generally appreciate over time.
CONS
• You have to do all of the maintenace on your own or pay someone to do it
• Mortgage payments are unevenly divided in the favor of the bank. For each payment, the bank takes their interest first.
• Even if you secure a 30 fixed mortgage, your property tax can still increase, thereby increasing your mortgage payment
• Please get a will / living will because it can be a huge burnen to your family if they have to pay taxes on it when you are gone (Inheritance / Estate Tax)
Tip:
• Rule of thumb: Buy the worst house in the best neighborhood!
• Get the house inspected! (you have to pay for that each time) but if they find anything you can make a more informed decision.
Trick
• It's great if you know how to put in your own sweat equity. Home improvements can be expensive. Always hire a professional for electrical / gas / or heavy plumbing work
Pros / Cons of a Multi Family House:
*N.B
• You are suppose to recieve everyone's security deposist from the seller or they much reduce that from the price of the house
• The house should be "broom" clean when you move it or you can put some money in escrow until the previous owners have resolved any issues.
Pros:
• Additional income can help reduce your monthly expenses
• You can write off any maintence costs
• Once it's all paid off, it's all gravy!
Cons:
• You have keep the apartment up to standards set by law (furnance, ceiling, etc.)
• You have to screen your tenents very well. And depending on which state you live it, it's not always easy to get rid of them. It cost money to server evictions!
• Dealing with tenants can be a serious pain!
Tips / Tricks:
• Don't rent to anyone you are not willing to sue!
• Maintan a presence on the property or the tenents will start to think that they own the place.
• Do not approve any tenant making their own rennovations. You can be held liable if they get injured.
• I have not found credit check to be much help, however get their full name & SSN and go down to the court house and find out if they have been evicted. Check out this book on Landording:
http://www.amazon.com/Landlording-Handymanual-Scrupulous-Landladies-Themselve...
• When you show the apartment to the tenant, start a conversation and find out how many people will be moving in? Do they have pets? Why are they moving? Do they smoke?
• Go to BankRate.com for free calculators.
I hope this helps! Sorry I had to speak so quickly but as you can see it's a lot to cover.
If you have any specific questions about this, please feel fre to PM me. Thanks and I'll see you soon!
Loading...
3:37
Auctions: How to Buy a House at Auctionby TemeculaRealtor6,311 views
Link to this comment:
All Comments (11)