Skip to main content

Six Tips for Planning for life with a home and mortgage.

Recently there was an article on InvestorGeeks about whether or not you should buy or rent. I am a proponent (for the most part for many people) that renting is the way to go. If you a renter and you have decided to embark on that quest to buy a home or condo, there are a few things that I would advise you to do and consider during the process that might save you tons of time and sanity (and that I wish I knew before I started!).

Before the Purchase:

1. Consider the type of Real Estate broker you are getting. If it is someone you know and trust, that is great. However, be aware that there are two types of brokers - a buyer's broker and a seller's broker. Even if you walk into a real estate office and get an agent on your own, they might not be acting completely on just your behalf. It is possible to have two 'sellers' agents that is - each one advocates for the seller, even though one works with you to close the deal. Consider this before you commit to an agent.

2. Take some time on your offer:
- Consider the advice of your home inspector carefully. Your home inspector will likely give you several things to consider (especially for an older property). Even if you like the price, consider asking for a few things in your negotiation. Negotiation is an art and if you don't ask for items (and be very specific in your offer), you will likely 'leave money on the table'.
- If you buy a condo, make sure that the condo agreement is up to date and you are certain of any portions of the new property which you may be responsible for. Be direct, and up front, and consider talking to the president of the condo association to get those items straight and to get a feel for the community you are moving in to.

3. Be prepared to walk away. Even if you feel like this is "the one", sometimes something about the deal just doesn't seem right. Until you make the offer, you have the power to walk away. Make sure that you think about the process a while and what it will be like, emotionally, logistically, and even financially to live in this new home. Consider expenses, driving more or less, visiting family, new furniture or fix-ups that might be needed.

After the Closing:

4. Resist the temptation to 'redo' everything right away because you 'cant stand it'. There are often reasons for the way things are in a home. If you live in a home for a while, you sometimes discover that the shortcomings are charming and don't need to be fixed. Or sometimes a room that might have seemed great at first with a new coat of a dark color paint is actually already dark enough. Funny observations about your new home will make you appreciate and enjoy it and ensure that changes you make are ones that you will be happy with in the long run.

5. Start an emergency fund or contribute more to the one you have now. If you don't have an emergency soon, you are lucky. Repairs on a home or condo (or assessments if you have a condo association) are a big expense that people forget about. Even stashing a small amount away in a savings account for these incidentals (although new water heaters/roofs/air conditioners that cost upwards of a couple thousand bucks don't seem incidental) can really help defray these unexpected costs.

6. We've all heard that the three factors that contribute to the value of a property are location, location, and location. Don't think that property tax is any different. Be prepared for the tax bill that is coming. Check out the tax rates in the area you are considering. And it realize that it will go up, oh yes, it will go up. Although that mortgage is nice and fixed (you DID get a fixed mortgage right), expect a small increase in your tax bill for your property each year, in addition to other town services that might now be an expense. Plan for these up front to avoid unexpected surprises or consider getting them included in your mortgage if you want to avoid the process of paying separate bills. Most advisors consider that you should be putting about 1% of your sale price away for home repairs each year.

Comments

Popular posts from this blog

Blogging WealthTrack: Christine Benz (Retire Early? Or not?)

 This morning I've watched an interesting video on Consuelo Mack: WealthTrack. Here, Consuelo's guest, a longtime contributor, Christine Benz, a personal finance expert from Morningstar joined Consuelo for a discussion on issues related to retirement, in particular in the current market environments. This conversation is even more interesting against the backdrop of The Great Resignation. I found Christine's advice to be particularly interesting on a couple of fronts. Her advice in dealing with talking about retirement in general, in particular for people who are in the process of thinking about retiring early gave me pause. She is considering the traditional advice of a 4 percent withdrawal rate to be dangerous and indeed, actually concerning. According to the recent research she cites, a 3% withdrawal rate is a better option. Even more than the four percent rule, I think that her comments on annuities are particularly interesting. While annuities have been given a bad nam

More Money Into Ibonds

 At this point, it seems like a well-known strategy for handling inflation: ibonds. While there was not much press about this, it is in fact something that I did late last year in order to capitalize on the fact that this interest rate was bound for up to 10000 dollars as part of my allotment for 2021. Then now that we're in the new year, I have moved another 10000 into the account. All of this can be done easily at http://treasurydirect.gov if you're willing to give up the fact that the money is locked up, that the interest rates to be paid will be somewhat lower than you could earn in the market, and you're able to ensure that you're not needing the money for the near future.  For me personally, I find that this is a great way to lock up about 25% of my emergency (safe) money instead of putting it into a High Yield Savings account. This interest rate changes every six months, but even if it is much lower, I think that we're going to be in much better shape than if

Credit Report Review

So, one of the things that I've started doing is trying to pull my credit reports at regular 4 month intervals so that I get a free one frequently to make sure that things are progressing as I'd like them to and also as a safeguard against identity theft. Of course, the part that I don't like is that these reports don't include a fico score - the key number when it comes to determining if you are going to be extended credit and at what interest rate. This time, I got the report from Equifax - I went to the end of the process and for 8 dollars more I could get my credit score. And the Equifax gave me a credit score of 742. This of course is not even close to the perfect score of 850 when it comes to fico score nirvana, but 742 is still a respectable fico score. Things to improve are basically lowering my balances on my credit cards and loans, which I already have a plan for. And also I noticed that the amount that I paid off on one of my loans is actually still being rep