Investment

Am I Ready To Buy Property?

Ready to Buy Real Estate

So, you're tired of renting and would rather see that monthly payment go toward a home of your own rather than continue to line the pockets of your landlord? Before you sign those mortgage papers, let’s take a hard look at a few things:

  1. Are your finances in order?
  2. Do you have money saved for a down payment?
  3. Can you afford the monthly payment without changing your lifestyle?
  4. Are you committed to living in the same place for the duration?
  5. How are you at maintenance?

Fix your credit rating

Review your credit report and FICO score. Fix any problems, and dispute any mistakes well before you talk to a lender. Mortgage lenders are looking for you to display a record of financial stability, so don’t move money around or close up credit card accounts just yet.

Start saving now for a down payment

If you can put down 20% of the cost of a prospective home, then you will have more options than someone who cannot. 20% is usually the cutoff to not be charged mortgage insurance, but even 5-10% down can mean more choices in lenders. The more you can put down, the better off you will be; however don’t completely drain your emergency reserves or you could end up in trouble down the road.

Figure out your debt-to-income ratio

You’ll want to do this for your current (pre-mortgage) debt and income as well as for your future (post-mortgage) debt and income, as prospective lenders will be doing the same. You want about 36% of your monthly income going toward your debt and other regular obligations. Any more than 43% and you will probably have a hard time getting a loan. Chances are that if you could do anything to raise your income in a significant way, you would have done that already, so work to reduce your debt as much as possible.

You’re probably going to be there for a while

In general, you want to plan on keeping new property for at least five years. Most people should probably think even longer term (10-20 years). As long as you’re continually improving your property to some degree, it will continue to gain value, and the longer you can hold onto the investment, the better the payout will be. This means that you’d better like the neighborhood, because you’re making quite a commitment to it.

Every house is a fixer-upper

One of the most easily overlooked -- or at least overestimated -- aspects to buying your own home is your ability to fix things when they break. If you don’t know how to repair a leaky faucet then you’ll want to learn, because calling the landlord to fix it is no longer an option. That doesn’t mean you have to do it all. But after the fourth or fifth call to the plumber, you’ll probably want to start learning how to fix things yourself. And every house -- no matter how old -- is going to need a fix sooner or later.

Being a homeowner is both rewarding and affordable -- if you go into it with full awareness of the pros and cons. Asking yourself these questions and answering them shouldn’t scare you off from buying a home, but will hopefully lead you to making the right decision at the right time.   If you have questions, contact us today. You can also read all of our blog posts here.

Real Estate Investment 101

A home for sale.

Investing in any type of real estate can be a profitable venture; however, knowing key aspects of the practice makes all the difference when it comes to being successful. Here are a few elements to keep in mind before buying real estate and/or selling real estate in todays market.

  1. Know the Neighborhood. Be sure to get a good feel of the neighborhood before purchasing a house for investing. Know the demographics, school zone, income, housing marketing, etc. This will help project into possible future investment benefits.
    • Make sure there are not a high number of vacancies already available in the area. This may mean a lack of interest in the majority of homebuyers in the area. Choose a well-populated neighborhood that has a low turnover rate when it comes to moving.
  2. Have Goals. Create long- and short-term investment goals. This will help gauge a workable plan of action and will provide motivation to stick with this plan. It may be important to work alongside a professional Realtor, like one from Coldwell Banker Plourde Real Estate, to determine the most profitable and realistic goals for a specific situation.
  3. Sorting Through Legalities. Develop a professional relationship with a real estate lawyer who has an extensive amount of knowledge and experience in real estate investment. A real estate lawyer can help develop contracts, answer legal questions, paperwork, etc.
  4. Get Pre-Approved. Before looking into any investment plans, get pre-approved for a loan or mortgage. This may reflect a more financially-stable individual, aiding in the offering and buying process.
  5. Comfort. Get comfortable with a property before buying. Visit the house more than once and really get to know the workings of the property. Rather than purchasing on impulse, it is best to always ask questions, familiarize with the neighborhood and the surrounding homes, and become at ease with the homes qualities. This can help provide a deeper insight before investing.
What are your thoughts on investing? Are you seeking to invest in real estate? Let us know in the comments! Please feel free to also let us know your thoughts on Twitter and Facebook.