Richard Dumont's Blog
A home is one of the biggest purchases that an individual can make in his or her lifetime. It also may prove to be expensive, particularly for those who fail to plan ahead for the property buying journey.
There is no need to break your budget to acquire your dream residence. In fact, there are many quick, easy ways to guarantee you can keep you finances in check and avoid the risk of spending too much to purchase your ideal house.
Now, let's take a look at three tips to ensure you can buy a quality house at a budget-friendly price.
1. Get Pre-Approved for a Mortgage
You want to buy a home, but you still have no idea how much you can spend on a residence. Thankfully, if you get pre-approved for a mortgage, you can enter the real estate market with a budget in hand. As a result, you will know exactly how much you can spend on a house and can plan accordingly.
Banks and credit unions employ friendly, knowledgeable mortgage specialists who are happy to meet with you. These mortgage specialists can review your income, credit score and other relevant financial data. Then, they can provide you with mortgage options based on your finances.
2. Narrow Your Home Search
Although most people want to buy a mansion, it is important to establish realistic homebuying expectations. Because if you narrow your home search to properties that fall within your price range, you can speed up the property buying journey. Perhaps most important, you can shop around to find a terrific home that corresponds to your budget.
Don't forget to consider homes in a variety of cities and towns too. In some instances, it may prove to be more cost-effective to purchase a house in a small town than a residence in a big city.
3. Evaluate Your Short- and Long-Term Plans
Think about your short- and long-term plans, and you may be better equipped than ever before to map out your home finances for the foreseeable future.
For instance, if you plan to raise a family in the years to come, you may want to consider the costs associated with childcare and other child expenses. This will allow you to budget properly as you search for your dream home.
On the other hand, if you recently accepted a work promotion, your income soon may rise. In this situation, you may be able to increase your homebuying budget due to the fact that extra income will be coming your way.
Lastly, as you get ready to search for a house, you may want to hire a real estate agent. In addition to helping you find a home that matches your budget, a real estate agent will offer expert guidance throughout the property buying journey. He or she will help you prepare for a home inspection, closing and other important steps during the homebuying process. By doing so, a real estate agent will help you seamlessly navigate the homebuying journey and achieve the optimal results.
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If you intend to find your dream house, it helps to establish a homebuying strategy. That way, you can enter the real estate market with a plan in place to accomplish your desired goals.
Now, let's take a look at three tips to help you craft an effective homebuying strategy.
1. Create Homebuying Criteria
If you know where you want to reside, you can narrow your house search. As a result, you may be better equipped than other buyers to accelerate the homebuying journey.
Creating a list of home must-haves and wants usually is a great starting point for homebuyers. This list typically forces homebuyers to think about what separates an ordinary residence from a dream house. And once a homebuyer crafts a list of home must-haves and wants, this buyer can search for residences that meet his or her expectations.
2. Budget for a Home
In most instances, homebuyers lack the necessary financing to buy a house. Luckily, lenders are available that can help a homebuyer assess mortgage options and get pre-approved for home financing.
Budgeting for a home is a major part of the homebuying process. Because if you know exactly how much you can spend on a residence, you could speed up your house search.
To get pre-approved for a mortgage, you should meet with a variety of banks and credit unions. Then, when you find the right mortgage, you can enter the real estate market with a budget at your disposal.
3. Hire a Real Estate Agent
There is no requirement to hire a real estate agent before you pursue your dream house. Yet the advantages of hiring a real estate agent can be significant, and perhaps it is easy to understand why.
For homebuyers, a real estate agent takes the guesswork out of finding the right house at the right price. A real estate agent also collaborates with a homebuyer and will go above and beyond the call of duty to ensure a buyer can achieve the optimal results.
If you want to purchase a house as quickly as possible, it may be a good idea to hire a real estate agent sooner rather than later. Oftentimes, a real estate agent will meet with you and learn about your homebuying aspirations. He or she next will work with you to craft a homebuying strategy and launch a successful house search.
Furthermore, a real estate agent is a housing market expert who will help you overcome any potential homebuying hurdles. A real estate agent understands the challenges associated with purchasing a house and will help you identify and address such issues before they escalate. And if you ever have concerns or questions as you search for your ideal residence, a real estate agent will respond to them.
Enter the real estate market with a plan in hand – take advantage of the aforementioned tips, and you can create an effective strategy to streamline your search for your dream residence.
A Real Estate Investment Trust (REIT) is a specialty corporate entity that owns and operates real estate to generate a profit. Several types exist. An Equity REIT typically generates income by leasing and managing income-producing property. The type of property makes no difference -- commercial, multi-family residential, retail, office, industrial, or a mix of specialty developments, including medical facilities and retirement communities.
Shares are sold to individual investors, who then receive a steady income based on operating earnings. According to some estimates, at least 225 publicly-traded REITs exist in the United States, all traded on a national securities exchange and regulated by the SEC. Public, non-traded REITs also exist, and are SEC-regulated. Private real estate investment trusts are not registered and not publicly-traded, offered instead only to a select group of investors. Picking the right type for individual investment goals can involve extensive homework.
Internal Revenue Service regulations are strictly applied. They stipulate that an REIT must be a taxable corporation, and derive at least 75% of its income from real estate sales, rents or mortgage interest. The corporation must then return at least 90% of taxable income to shareholders on an annual basis. There are additional requirements, in addition to holding at least 75% of assets in real estate, U.S. Treasury bonds or cash.
An REIT can provide important liquidity to an investment portfolio, with a typically steady annual income stream, although there may be little capital appreciation. The yield from different types of REIT can vary substantially. Equity REITs own and manage real property, while Mortgage REITs deal in financing products and mortgage-backed securities; both can be affected by the market, interest rates, the economy and consumer confidence. In addition, dividends paid to investors are treated as regular income by the IRS.
As with any form of investing, it's important to investigate the pros and cons, not only of REITs in a general sense, but the performance over time of a specific investment trust. On the plus side are the ability to diversify an investment portfolio, and the relatively secure potential of a steady return and low risk in tandem with the transparency that comes from regulatory oversight.
On the minus side are the low potential for actual growth in value, the REIT's reinvestment and expansion potential which is capped at 10% annually, and the unknown effect of real estate market volatility over the term of the investment. High management and transaction fees can also affect the financial return.
Investing in an REIT, however, is a viable way to gain knowledge and establish a presence in real estate, especially in currently hot segments of the market. Especially for a beginner, REIT investment can represent a path to future growth and security, leading to additional real estate options over the long term.
The housing market has posted relatively good numbers over the past few years, even if the average percentages aren't exactly sensational. You may already know that we saw a decrease in growth in 2019, with housing prices rising at 3.3% compared to 2018's rise of 5%. Given the state of the economy and the trends of the past, we'll look at how 2020 is shaping up.
A Short Dip
Experts are predicting that home prices will rise 2.8% this year. So if you're getting ready to sell your home, hopefully you're seeing the cumulative effects of steadily rising prices. If your neighborhood hasn't followed the trends though or you've only recently purchased the property, there are a few more factors to take into account before putting your home on the market.
Listing & Offers
While the home prices may not be exploding, the creep is still being felt by buyers. In the average area, buyers could be dealing with a price increase of 11.1% in less than three years. This kind of influx could lead to fewer buyers, which ultimately leads to fewer offers. Prioritizing the listing and initial price of the home will have a major impact on the quality of your buyers.
Interest Rates in 2020
Rates have been dropping over the past year, going below 4% for most loans. With the average rates for a 30-year mortgage hovering around 3.7% (3.2% for a 15-year mortgage), this is good news for buyers (and sellers if they're planning to buy again too). However, if trade wars ramp up again, we could see the Federal Reserve move those rates back up, so sellers should keep an eye on the news.
The Story of Equity
As you can see, the news is still relatively good for home sellers in 2020, especially considering the relative state of debt in this country. Experts do not predict a decrease in equity for the new year, a sure sign that the economy is doing well enough to support rising home prices.
There's plenty of good news for the new year for home sellers, even if it's laced with the fear of a tumbling economy. Real estate professionals are seeing spikes nearly everywhere in the country, regardless of neighborhood. So even if you're not near the best amenities in your city or town, you may still be able to sell for the price you want. As the year progresses, keep an eye on your area, who's buying, and how prices are scaling.