Monthly Archives: April 2013

Buying a Home is Cheaper Then Renting…

Most renters feel that they cannot buy a house because the payments would be too high. They feel that, even
though rent every month seems like a waste of money, they cannot afford to buy a house, despite the fact that
they would love to own.

This may have been true in the 70’s or 80’s, when interest rates were higher, but with interest rates still on the
low end of their history, renters can actually buy and pay the same as they would if they were renting. The trick is
finding a suitable property whose price is affordable.

Following the end to the housing boom of the early 2000s, home prices are currently far more affordable than
they have been in quite a while. It is the perfect time to buy, but renters still need to see that they won’t be
paying more to own.

Imagine a renter who has a two bedroom, two bathroom apartment and rents it for $1,300 a month. This renter
thinks it is only a dream to buy a house and still pay the same. Provided one is not located within the city limits in
most cities in California and Nevada, a suitable property at a reasonable cost is actually quite realistic.

There are six parts, or variables that make up a mortgage payment: Initial loan amount, interest rate, term,
mortgage insurance, homeowner’s insurance and property taxes.

First, there is the loan amount. Believe it or not, a house costing as much as $160,000 using an FHA loan is
possible for our comparison. This would create a loan amount of approximately $157,000.
Next, there is the interest rate. Currently, 30 year fixed interest rates are in the low four percent (4%) range. But
we will use five percent (5.00%) for our comparison to compensate for a low credit score and/or the inability to
pay closing costs.
Next, there is the term. Currently a 30 year repayment schedule is the maximum most lenders will allow.
A $157,000 loan at five percent (5.00%) over 30 years would make a principle and interest payment of
approximately $839 a month.

Then, there is mortgage insurance. Mortgage insurance on an FHA loan of $157,000 would be approximately
$163 a month.
Then, homeowner’s insurance. Safely, a figure of approximately $75 a month would cover a house with
$160,000 of value.
Lastly, there are the property taxes. Using 2.25% of the purchase price annually, monthly property taxes would
be about $294 a month.

Taking $839 a month and adding $163 (mortgage insurance), $75 (homeowner’s insurance) and $294 (property
taxes) gives us a final PITI (principle, interest, taxes and insurance) of $1,371 a month.

Through this illustration, one can easily see that purchasing a similar property to the one being rented is entirely
possible, while keeping the payment the same.

So renters, strike while the iron is hot. It’s a buyer’s market as home prices are low and sellers are motivated to
sell and rates are great. Buy your home before it’s too late.

Best secrets for selling your home.

Selling Secret #6: Pricing it right

Find out what your home is worth, then reduce 15 to 20 percent from the price. You’ll be stampeded by buyers with multiple bids  even in the worst markets and they’ll bid up the price over what it’s worth. It takes real courage and most sellers just don’t want to risk it, but it’s the single best strategy to sell a home in today’s market.

Selling Secret #5: Light it up

Maximize the light in your home. After location, good light is the one thing that every buyer cites that they want in a home. Take down the drapes, clean the windows, change the lampshades, increase the wattage of your light bulbs and cut the bushes outside to let in sunshine. Do what you have to do make your house bright and cheery – it will make it more sell able.

Selling Secret #4: Play the agent field

A secret sale killer is hiring the wrong broker. Make sure you have a broker who is totally informed. They must constantly monitor the multiple listing service (MLS), know what properties are going on the market and know the comps in your neighborhood. Find a broker who embraces technology – a tech-savvy one has many tools to get your house sold.

Selling Secret #3: The kitchen comes first

You’re not actually selling your house, you’re selling your kitchen that’s how important it is. The benefits of remodeling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace counter tops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen.

Selling Secret #2: Always be ready to show

Your house needs to be “show-ready” at all times – you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold.

Selling Secret #1: The first impression is the last impression

No matter how good the interior of your home looks, buyers have already judged your home before they walk through the door. You never have a second chance to make a first impression. It’s important to make people feel warm, welcome and safe as they approach the house. Spruce up your home’s exterior with inexpensive shrubs and brightly colored flowers. You can typically get a 100-percent return on the money you put into your home’s curb appeal. Entryways are also important. You use it as a utility space for your coat and keys. But, when you’re selling, make it welcoming by putting in a small bench, a vase of fresh-cut flowers or even some cookies.