Investors have a lot of options when it comes to real estate. Some are hands on — such as flipping a house — while others are more passive investments.
Before delving into real estate investing, it’s important to know the available options to find what best suits your financial goals. Here’s a look at seven types of real estate investing.
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Isn’t it annoying to discover expired and dirty canned food hidden deep in your pantry shelf? The worst part is that you likely weren’t looking for it in the first place, right?
Even though canned foods are pantry essentials, organizing and keeping track of each one can be overwhelming.
If you’re struggling with following the “out with the old, in with the new” rule of pantry management, a rotating can storage system could be the solution.
Check out these helpful DIY canned food storage system solutions to the First-In-First-Out (FIFO) dispenser dilemma.
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With age, people can have difficulty accomplishing ordinary tasks around the house. Aside from quality time with you, helping with tasks that have become challenging is one of the best gifts you can give.
Here are some ways you can help your parents around the house.:
Fix broken pipes, leaky toilets, malfunctioning faucets, and other maintenance issues.
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If you’re thinking about buying your first home, there are a lot of things to consider before the fun part – home shopping – can begin.
For example, not only should you have your deposit and closing cost money saved, but understanding what you can comfortably afford – not what the bank says you can afford – is key.
Read through the following tips to make sure you’ve considered everything before you make that call.
To save for a home, consider the following costs:
The down payment requirement will vary based on the lender and the type of loan you choose. Conventional loans for first-time buyers with excellent credit sometimes require only 3% down.
However, even a small down payment is challenging to save. As an example, a 3% down payment on $300,000 is $9,000.
Using a down payment calculator, decide how much you would like to spend, and set up an automatic transfer from checking accounts to savings.
Fees and expenses that you pay to complete your mortgage often range between 2% and 5% of the value of your mortgage.
Also, a seller might cover a portion of your closing costs, and you could save on some expenses, including your home inspection, by shopping around for the best rates.
Save some extra cash. After you’ve bought your home, you’ll need it for things like immediate home repairs, upgrades, and furnishings.
The less debt you have, the better, both for the purchase of your home and for your ownership of it.
For example, the better your debt to income ratio, the better the terms and/or amount of financing your lender may be willing to offer.
In addition, the less debt you have, the easier it will be to make those monthly mortgage payments.
Before you call a mortgage broker, establish a budget to help you know how much you’re willing to spend each month on a mortgage.
Burn that number into your memory, because if you exceed the number – even if the bank says it will be easy for you – you’ll soon regret it, and that monthly debt repayment will feel like a ball and chain around your neck.
There are way too many calculators out there on the internet that can help you determine how much you can afford – take advantage of them.
Once you know how much you want to pay each month, decide how much you can comfortably spend on a house.
Use an affordability calculator to help you zero in on a price range. These calculators consider factors such as income, debt, down payment, credit score, and the property you intend to buy.
There are a variety of mortgages available, each requiring a different down payment and eligibility. As a quick overview:
When it comes to the mortgage term, you also have options. Many home buyers choose a 30-year fixed-rate mortgage, which is paid off in 30 years and has a fixed interest rate. In general, 15-year loans have lower interest rates than 30-year mortgages, but they charge higher monthly payments.
Some states, as well as some cities and counties, offer programs to assist new home buyers, often in the form of down payment assistance, closing cost assistance, and low-interest-rate mortgages. There are also some programs that offer tax credits to first-time homebuyers.
If you are considering a similar type of mortgage from multiple lenders, request loan estimates, including interest rates and origination fees, to compare the costs.
Borrowers may also be able to purchase discount points, which are fees they pay upfront to lower their interest rate. When you have the cash on hand and plan to stay in the home for a long time, buying points makes sense.
Use a discount points calculator to make your decision.
If needed, build a stronger credit score
It is your credit score that will determine whether you qualify for a mortgage and the interest rate you will receive. You can strengthen your credit score by taking these steps:
It’s a good idea to get pre-approved before you shop for a home.
During this process, your finances and credit report are reviewed. In the event your credit file contains any errors, you will have to address them.
While it’s still possible to get a mortgage with less than perfect credit, you want to know all of your options beforehand.
Depending on your income and anticipated home expenses, your pre-approval amount is equal to the most you may be able to borrow.
In addition to closing costs and renovation costs, you’ll also need money for emergency expenses and running your new home.
You should not take on payments that you cannot manage.
Make a list of the “must-haves” for your home. Secondly, write down your “nice-to-haves”. The list should include factors such as the size, style, age, and of course, price of the home.
Think about your life and what you find comfortable. Some people must have a large kitchen and a place to entertain, while others eat out occasionally and rarely cook.
That’s why your “must-have” list is so important. The first thing to consider is the neighbourhood. The neighbourhood will be your home for many years to come.
Even if it is a “developing” area, it may not be developed until many years after you move in. Would you be able to live with that?
Most likely, you are better off purchasing a less expensive house in a better neighbourhood. While you live there, you can always improve it, but you can’t change the neighborhood.
Second, you need to be realistic about your expectations. As a first-time homebuyer, everything will not be perfect. The layout and structure should be pleasing to the eye.
Unless you have experience with extensive renovations, don’t consider properties that require extensive renovations. Hiring contractors is time-consuming and probably more expensive than your estimate.
Paint, light fixture changes, and perhaps laying a laminate floor are typical tasks for first-time homeowners. Beyond that, you are probably asking for trouble.
Bottom line, if you focus on the home’s functionality rather than its frills, you will be more likely to find your first home that will meet your needs and allow you to imprint your own style over time.
You might be offered a loan amount that is larger than what is comfortably affordable, or you might feel pressure to spend outside your comfort zone to beat out another buyer’s offer. Rather than putting yourself under financial stress in the future, set a price range based on your budget, and stick to it.
Look for properties that fall below your price limit, which will give you some breathing room when bidding in a competitive market.
Make sure you hire a competent, reputable real estate agent
Briefly and honestly describe your expectations. Do not hesitate to ask friends or family for a referral if you do not have a realtor and be sure that they know the areas you intend to purchase in.
Good real estate agents search the market for the right home to suit your needs and assist you with the negotiation and closing process.
Interview several agents, and request references. Ask agent prospects how they plan to help you find a home and whether they have experience helping first-time homebuyers.
It may be possible to save money if you ask the seller to cover the cost of repairs in advance or lower the price to cover the cost of repairs you will need to make later. A seller may also agree to pay part of your closing costs. Nevertheless, keep in mind that lenders may limit the amount of closing costs the seller can pay.
Negotiating power depends on the local market. If there are more buyers than homes available for sale, negotiating is harder. You should work with your real estate agent to understand the local market and devise a strategy.
The home inspection evaluates the structure as well as the mechanical systems.
A professional inspector will look for potential problems and help you make an informed decision about purchasing the property.
Finally, while it can be hard, don’t let your enthusiasm for owning your own home overwhelm your common sense.
If something sounds too good to be true, it is.
Stick to your guns when it comes to your budget and only buy a home that you can easily afford.
After all, you want to be able to still enjoy your life while you own your home, without it becoming an anchor that weighs you down.
For more first home buyer tips, check these out:
4 Things to Consider Before Purchasing Home Insurance
As most homeowners will tell you, cooling an entire residence during the summer months can be financially strenuous. The hotter the weather, the more you can expect to pay in utility costs. This is particularly true for households that run their AC around the clock – which can not only prove expensive, but also detrimental to the environment. Fortunately, it’s entirely possible to effectively cool your home while reducing your family’s carbon footprint. As you’ll find, creating an energy-efficient summertime cooling apparatus is well within the abilities of any homeowner.
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