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5 common mistakes first-time American homebuyers make

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Photo: Dan Moyle/Flickr

Buying a home is typically the single largest financial transaction of a person’s lifetime, and often comes after years of highly detailed prep work.

Yet, despite the many hours spent browsing listings, attending open houses and scrimping to save for a downpayment, many first-time buyers still fall prey to several common pitfalls along the path to homeownership.

We recently sat down with Bridget Harvey, a licensed associate real estate broker with the Harvey Team at Douglas Elliman, and Zack Tolmie, a home lending officer with Citibank to discuss some of the common mistakes first-time homebuyers make and how to avoid them.

1. Not taking advantage local experts

Americans use apps to buy everything from car insurance to tacos, but that doesn’t mean they should only rely on their smartphones when it comes to purchasing a new home. It’s understandable — apps are convenient, usually free, and devoid of human contact. And that’s precisely why homebuyers should skip the apps and opt for actual facetime with a living, breathing broker and banker.

“Often people just call an 800-number or go with their family banker in Texas when they’re ready to buy, but you need someone who understands the local marketplace to help with the process,” says Harvey.







Photo: Bridget Harvey

Ideally, buyers should look for someone who is not only personable, but professional, and who can offer knowledge, experience and local insight beyond the limited scope of an app.

Plus, navigating the murky waters of the internet can be tricky — not to mention misleading.

“Sometimes when consumers are browsing listings online, they think they are contacting that seller’s agent directly and will save some money. But really they are just giving their information away for free to someone who has purchased that information and likely has nothing to do with the property,” says Tolmie.

Many buyers use apps to avoid hiring a mortgage banker, but in essence, all they’re doing by using an app is putting an interface between the banker and themselves.

Tolmie adds that using online calculators is like selling your information to a cold caller who may not have your best interest at heart.

“And something you end up losing by going with an app is a professional’s local expertise, like not being able to meet at the agent’s favorite coffee shop or talk about local hot-spots or landmarks worth checking out,” says Harvey.

Also, the person lurking behind the app never gets to know anything substantial about the potential buyer beyond debt-to-income ratios and bank statements.

“There’s enormous value to having that social interaction with someone who knows what your down payment means to you,” says Tolmie.

2. Not understanding the numbers

Most popular home listing websites include some sort of “how much home can you afford” calculator, where users can enter their income and guess their creditworthiness. The website then spits out a potential price-range and estimated monthly mortgage payment.

Homebuyers frequently misread the information and end up buying more home than they can actually afford.

“An online mortgage calculator may tell you that you can technically afford to buy a house valued at $300,000, but in reality, based on your larger financial picture, including debts and goals, you really shouldn’t be buying anything over $250,000,” says Tolmie.

First-time homebuyers are often not aware of the “hidden” monthly costs that come with buying a home and extend beyond the mortgage payment, like lawn or pool care, home and appliance maintenance, and labor costs. According to the listing site Zillow, these “hidden” costs can easily add up to almost $10,000 annually.

3. Money trails

National home prices and rents have risen by 73 percent and 61 percent, respectively, over the last 18 years. Yet wages have only grown by 31 percent over the same period. So, it’s not surprising that one in three Millennials reportedly anticipate that family members will cover 30 percent or more of their downpayment.

But while such gifts are nice — and not to mention extremely generous — buyers don’t always account for the money properly.

“Because of the Patriot Act, the bank looks at two months of statements and if there is a large deposit from overseas, it has to be sourced and that can delay the process if the country of origin doesn’t handle statements the way the US does,” says Harvey.

Aside from gifts, buyers often liquidate their stocks to raise funds. But much like buying a home, timing is everything.

“Liquidate as soon as possible, a year to sixteen months out, and get that money into your account. You never know what’s going to happen to the stock prices and currency rates and conversion rates. You might not be able to afford tomorrow the same home you can buy today,” says Tolmie.

Plus, major world events like Brexit can significantly lower your buying power overnight.

4. Inadequate financial planning

Homebuying is a lengthy process, from the time it takes to save for a downpayment to the months of waiting for the sale to close. One mistake first-time buyers make is jumpstarting the process before they’re really ready.

Homebuyers should start working with a financial planner as soon as they’ve begun thinking about buying a home. The earlier, the better — especially if a buyer’s finances need a little help.

“Self-employed homebuyers especially should be having a conversation with their Certified Public Accountant (CPA) every year, and saying I’m not looking to buy right away but I may want to buy in the next couple of years and I want to make sure that my tax returns reflect adequate income to afford the kind of home I want,” says Tolmie.







Photo: Zack Tolmie

Looking at all the available options in terms of deductions with a CPA or mortgage banker is one of the most crucial and beneficial preparatory stage steps a buyer can take.

“Lockdown your finances and decide with your CPA what deductions to take and what to pass on if you plan on buying a home in the next few years. It’s a crucial step for anyone who is self-employed, but also worried about how much home they can afford based on their returns,” says Harvey.

Harvey suggests reverse engineering your taxes with a professional to ensure that it reflects adequate income to the bank for the home of your choice and you should be vigilant not to deduct more than that.

“It’s reflective of today’s economy. More of us are self-employed or commission-based, so you have to figure out how to navigate that kind of income and make it tell the story you need it to tell to buy your perfect home,” says Harvey.

5. Open houses

Many homebuyers only start attending open houses once they’ve begun the process. But, open houses can be a treasure trove of information and a great opportunity to connect with a local professional you may want to work with when you are ready to buy.

“Open houses are free to attend and buyers should attend a lot of them. They give a real-world view of what they can get for their money, and also help buyers nail down what they really want and don’t want in their ideal home,” says Harvey.

Open houses provide the perfect spot to network with local brokers and often bankers. Buyers can test the waters and ‘try out’ different professionals until they find their perfect fit. “It’s so important to like the people you are working with. You can end up having daily interactions with these people over the course of the two to three months it takes just to close on a home,” says Tolmie.

“It’s both finances and feels. You have to trust this person to know intimate details, not only about your finances but about your life, and to trust that they will use that knowledge to best serve your needs and wants,” adds Harvey.

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5 DIY Home Improvements for the COVID-19 Lockdown

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The global coronavirus pandemic has forced millions of people around the world, to spend more time in their homes this year than they have spent in a long time. As people sit around day after day within the confines of their home, it becomes easier to notice all the areas of the house that need some work. Fortunately, everyone can now afford the extra free time to do the home renovation project they’ve been putting off for years.

Due to the on-going global health crisis, you may not be able to hire any help for your home improvement project; this means that whatever new project you plan to do around the house, whether it’s repainting the home, or installing floor heating systems, you would have to do it yourself.

Here are some do-it-yourself that you may like to try out.

Upgrade to Smart Home Appliances

It’s 2020, what better year to embrace the future by installing a range of high-tech devices that make life extra easy. For instance, with a smart thermostat, your home’s heating and cooling system can go off on their own when not needed, keeping your electricity bills lower. Other appliances that you can make smart include your lighting, home security, music and more.

Clean out your Garage

Homeserve suggests a garage cleanout as a great home improvement project for this season because cleaning out your garage provides some fresh air, the heavy lifting provides some workout and you feel an enormous sense of accomplishment when it’s done.  What’s more, the day would be far spent by the time you’re done with this project. Cleaning out your garage would require you to sweep out any dirt or debris, and get rid of other useless items that may have been stored there for a long time.

Start a Repainting Project

There’s always room for a fresh coat of paint to make everywhere look more alive, so grab a paintbrush and add some extra character to your home. The good news is that you don’t even have to go out for the paint, you can have it shipped directly to your door. Southlandremodeling suggests that if you had 2019 palette or older in your home, now is the time to embrace the latest colour hues of 2020, that show off a more contemporary style and make your home look more sophisticated.

 Build a Patio

Now is the time where every family would enjoy having a paver patio or an outdoor deck, somewhere to sit and get some fresh air when you’re tired of being cooped up inside all day. First you have to ensure that your home has enough space for a patio and that you have enough skills to handle a hammer and other tools for simple construction.

Next you order your needed materials online and get started. There is a great sense of satisfaction that comes with being able to create an outdoor space that your family can enjoy while being stuck at home.

Install some floor heating systems

Installation of floor heating systems is one of the best home improvement projects that one can get. Many people prefer to hire professionals to do these kinds of installation but if you are up for it, it’s not impossible to do this on a DIY project and get a valuable addition to your home for about half the cost.

Finally

There is no reason to continue holding out on your dream DIY home renovation projects, especially now that you have all the time in the world due to the COVID-19 stay-at-home order. Now is the perfect time to transform your home all by yourself!

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13 Montreal Apartments For Rent That Have Breathtaking Outdoor Spaces

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With Quebec’s moving day just around the corner, many people are starting to look for a new property to rent. And, now that Montreal real estate activity is back in action, you can start trying to find the perfect space again. And, if you ask me, an apartment that comes with outdoor space is a must when living in the city.

From balconies to shared rooftop spaces, we’re all looking for a place where we can be outdoors. 

Now, more than ever, fresh air is something that we’re all craving. And, with summer coming faster than we think, finding a place with access to the outside is on so many of our checklists. 

Luckily for you, we at MTL Blog have made your job very easy and have gone through listings throughout the city to showcase some of the best rentals, all of which have outdoor spaces. 

Some of these properties offer private balconies while others have surreal rooftops you get access to. Regardless of which one you fall in love with, you’ll be sure to have a summer to remember living in any apartment on this list. 

Get ready for moving day because after looking at these properties, you’re going to be ready to pack your belongings.

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Montreal real-estate market hit hard by pandemic

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Like many industries affected by the COVID-19 pandemic, the red-hot Montreal real-estate market has suddenly chilled.

After 61 consecutive months of increases, the Montreal Census Metropolitan Area reported a 68-per-cent decrease in residential sales transactions in April 2020 compared with the year-earlier period, according to the Quebec Professional Association of Real Estate Brokers.

The most recent residential real-estate market statistics for the Montreal area showed 1,890 residential sales transactions were concluded last month. Those figures are based on the real-estate brokers’ Centris provincial database.

Montreal has been hit harder than other Canadian cities by the pandemic, and the drop in sales was seen in all six main areas of the Montreal CMA.

The drop in sales applied to all three property categories. Single-family home sales fell 68 per cent (1,048 transactions): plex sales dropped 67 per cent (161 transactions); and condominium sales tumbled 69 per cent (675 transactions).

Despite the drop in sales, real-estate prices rose in the CMA. The median price of single-family homes increased by nine per cent to reach $360,000, while the median price of condominiums climbed 12 per cent to $289,900.

Compared with April 2019, the median price of plexes (two to five dwellings) increased 10 per cent to $595,000.

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