It’s no secret that buying or selling a home can be challenging, no matter if you’re a first-time buyer or a long-time homeowner. Here are some tips to help pave the way toward a successful outcome.
From Renting to Owning
For those who want to make the jump to homeownership, it’s important to weigh the pros and cons of buying versus renting. The first thing to consider after you know you can afford it is how long you plan on living in the home. If it’s less than four to five years, you’re better off renting because most likely you won’t be able to make back the money you’ve invested.
Understanding the true cost of ownership is also critical. Too often, consumers don’t pencil in all their homeowner expenses until after they’ve signed on the dotted line. Yes, there’s the monthly payment of principle and interest, but other costs include property taxes, home repairs and maintenance, homeowner or condo association fees and potentially higher energy bills, particularly when buying an older home.
And if buyers put less than 20% for a down payment, they’ll have to pay Private Mortgage Insurance (PMI), which is designed to protect the lender in the event they default on the loan. All these items can dramatically affect your monthly outlay.
Good News for First-time Buyers
So far, 2015 is shaping up to be a better lending environment for first-time homebuyers. “Interest rates remain extremely competitive and down payment requirements are lower, making it easier for people to get into the market,” says Fred Ferrell, Vice President of Real Estate Lending with SchoolsFirst FCU. “And even though down payment requirements are lower than they’ve been in recent years, many people still aren’t ready to buy because they haven’t saved enough.”
To help would-be buyers over this hurdle, many financial institutions are offering solutions to help consumers save specifically for this important goal. “At SchoolsFirst FCU, we offer a Home Advantage Program designed to assist our Members with the entire home-buying process, from preapproval to closing,” says Ferrell. “A new feature we’ve added is My Home Savings, a share savings account that offers higher dividend rates. It’s a great incentive to save.”
When you’re home shopping, let the experts help you. “Buying a home is one of the biggest financial decisions you can make,” says Ferrell. “It’s important to find one that fits your lifestyle and budget and a realtor can really help you hone in on finding the right one. They’ll also help you consider its resale appeal, which should always be taken into account.”
The Right Time to Sell
For sellers, timing is everything when it comes to putting a house on the market. Buyers generally start actively looking in March and sales generally remain strong through July, because families want to get moved in before the school year starts. That means that your home has to be curb-appeal ready before
March 1. Once late summer hits, you’ll be faced with fewer buyers, which means playing the waiting game, and possibly reducing your sales price.
Many realtors today offer home staging services, which can help sellers get rid of clutter and make the home as inviting as possible. “The whole idea is to help potential buyers envision themselves in their new home, not yours,” says Ferrell. Aside from staging, you’ll need to make sure your home is clean, functional and cosmetically appealing. “That means fixing all those things you may have put off; painting or replacing the carpet,” says Ferrell. “Again, let the experts guide you here. Your real estate agent can help you decide what to do, without busting your budget.”
Of course, you want to get top dollar for your home, but look to the experts again to guide you in pricing it competitively. “Your home’s price should be dictated by the market, not what you personally think it’s worth,” says Ferrell. “That means looking at what comparable houses are selling for in your neighborhood. Your Home Advantage agent can provide this information, as well as take you on a tour of homes, so you can see firsthand what your competition is.”
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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or BALANCE counselor who can help tailor a solution for you.
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