Avoid common regrets when buying a home

o Not knowing enough about the house and its location. One regret expressed by 22 percent of homeowners in a 2013 survey by the real estate website Trulia is that they wished they had more information about their homes.

Some people buying homes in tight markets may try to beat competing offers by not requiring a home inspection, says Daisy Kong, a spokeswoman for Trulia. That means they may not discover problems until the sale is complete, she says. Home buyers who overlook these issues before signing could get stuck making expensive repairs and renovations they weren’t prepared for.

Other home buyers forget to research factors important to them, such as the quality of schools in the neighborhood, Kong says. Or they may not learn until closing that a crime was committed on the property, she says. Home buyers can avoid these surprises by making a list of the factors most important to them and asking about those things ahead of time, Kong says.

o Not buying a bigger house. This was the No. 1 regret listed by both NerdWallet and Trulia. Some buyers become so focused on specific neighborhoods that they miss good deals elsewhere, says Sarah Staley, a housing expert for Realtor.com. Branching out can increase your chances of finding a home with the space and features you need, such as a back yard, or number of bedrooms and bathrooms, Staley says.

o Not understanding financial details. About 41 percent of homeowners said they were unaware of all of their loan options, according to the NerdWallet survey. Among millennials, 19 percent of homeowners were surprised by how long it took to buy a house, according to the survey. About 15 percent said they were surprised by hidden fees.

The findings suggest some people do not do enough research about mortgages, fees and other costs of buying a home, Manni says. Some people may underestimate how much they should save to cover closing costs and other expenses, he says.

Buyers who don’t research their credit histories may miss a “black mark” on their credit reports that can lead to a higher mortgage rate, he says. Others may forget to compare mortgage lenders, and miss out on a better rate.

o Not giving a bigger down payment. About 18 percent of home buyers wish they had made a bigger down payment, according to the 2013 survey from Trulia, its most recent survey on the topic. Although a smaller down payment can get home buyers into a house sooner, it may lead to higher total cost. For example, some people can buy homes with as little as 3.5 percent of the purchase price down if they use a mortgage insured by the Federal Housing Administration. But because they are required to pay for mortgage insurance, they may end up paying more, Kong says.

Having a down payment of at least 20 percent can give you a better chance of snatching a home in a hot housing market, Staley says. Generally speaking, the larger the down payment, the lower the interest rate and monthly payment.

o Not saving enough in general. This extends beyond the down payment. Nine percent of homeowners said they did not feel as financially secure as they did before the purchase, according to NerdWallet. Some people were surprised by expenses they faced during the process, such as closing costs, Manni says. Others may be squeezed by other obligations, such as student-loan bills, Kong says.

Potential buyers can use online calculators to estimate monthly payments, Staley says. Families should also consider future expenses, she says. For example, young couples who want children should budget for child-care costs, Staley says.

The 5 Ps Of Buying A House

You never know, you may find out that you can actually afford more house than you had thought! Or when its time to put in an offer, it will be that much stronger and may be chosen over another offer that doesnt have the same types of prequalified documentation and prep work done.

PREVENTS: The saying goes that An ounce of prevention is worth a pound of cure. How this resonates with a home purchase! When buying a home, make sure to have a professional home inspection completed. Its better to know what youre purchasing now, then to be surprised with potential costly issues later.

POOR: If something is done poorly, why bother starting at all? If you have a poor vision on the type of home that youre looking for, youll spend a lot of time looking at houses, rather than buying a house. This situation increases exponentially when it comes to partners searching for a home!

Get crystal clear on what it is that youre looking for in: budget, location, amount of fix-up needed, style, bedrooms, bathrooms, etc. While you might not find absolutely everything youre looking for in a home, it will help to drill down on whats most important to you.

The better vision that you have ahead of time, the easier and more enjoyable the process will be.

PURCHASE: While you could find your dream house in your next purchase, life marches on and situations change. There may come a time in the future when youll want to sell that home for a different one. Keeping in mind the resale-ability of a home during the home hunt can increase the confidence in the purchase you make today, for the seller in you tomorrow.

Remember the five Ps: Proper Preparation Prevents Poor Purchase when buying your next home. Buying a home can be exhilarating, and confusing all rolled into one. By taking the time to plan now, youll feel more confident at the closing table later.

Melissa Rolland is a real estate salesperson and realtor. She lives in Tolland with her husband, Todd, an associate broker and realtor. Together, they manage the Rolland Realty Group at Keller Williams Realty. You can connect with them at www.RollandRealtyGroup.com, https://www.facebook.com/rollandrealtygroup/, or 866-408-8059.

8 Signs It’s Time to Walk (and Maybe Run) Away From a Home

It happens: You’re buying a home, but something just doesn’t feel right. Are you just getting cold feet–after all, this is likely the biggest purchase of your life–or is that lingering worry telling you those yellow (or, dare we say, red) flagsshould be a deal breaker?

Here are eight signs that you would probably be smart to walk away from a house. (You can thank us later.)

Sign No. 1: The inspection turns up something majorly wrong

Sure, you might cringe at some of the current owners wallpaper choices. But cosmetic issues are relatively easy to fix compared with, say, a vintage electrical system that’s one spark away from a fire.

4 Costly Real-Life Lessons Learned While Buying a Home

Buying a home is exciting for sure, buton the flip side, a whole lot can go wrong during the process–scary events that can quicklyturn this American dream into an American horror story. As proof, check out these home-buying nightmares from people who want to share their anguish with the hopes that they can spare futurepurchasers the same fate.

Home staging … or hiding?

We ended up buying what we knew was a nicely staged fixer-upper, but we had no idea really what we were getting into, saysApril Daniels Hussar ofVerona, NJ. When we finally got the keys and moved in,we literallycried. There was a throw rug melded to the kitchen floor. And the entire house smelled like cat pee–something we somehow had never noticed until then. The sellers made very good use of candles and who knows what else! We had to redo all the wood floors.

Lesson learned: Staging is supposed to enhance a home’s features, but it may also cover up its defects, says Colby Sambrotto, president and CEO of USRealty.com. He suggests going through a house several times before buying it.

How to get rich renting instead of buying a home

Nan
Palmero/Flikcr

In an earlier post, I assessed homeownership
from an investment perspective and found that homes are terrible
investments that barely keep pace with inflation.

This poor investment, however, does force the average American to
save the money they’d otherwise spend.

The result? The median net worth of American home ownersis
over 30 times the median net worth of American renters. Home owners might not get
back every dollar they put into a home, but they’re getting back
a lot more than the American who rents.

But it need not be that way. Here is how any renter can beat the
average American home ownerin the long run.

First off, you need to save a down payment by age 33

That’s the average age of the first-time home buyer.

Instead of using it for a physical home, you’re putting a down
payment on what I call a “money mansion.” You can’t live in your
money mansion, but it will make you rich. According to
themedian American home price($229,000), a
20 percent down payment is $45,800. Invest this in a brokerage
account that tracks the market — where you can hope for a
7 percent annual return.

Here you have one major advantage over the home owner: You can
open the account right away and begin collecting interest instead
of piling up a lump sum in savings. Just make sure your money
mansion is worth $45,800 by age 33. Assuming you collect 7
percent interest per year, you could save as little as $3,000 per
year and still make it, even after taxes. Or you can play it safe
and save $4,580 per year from 23 to 33 — on top of your 10
percent retirement savings.

Once your money mansion hits $45,800, you need to feed it a
portion of your monthly income equal to what the home buyer
spends on their mortgage. See, the home buyer is essentially
saving this money because at the end of a 30-year mortgage, they
own a house worth all the money they put into it, which has
(hopefully) matched inflation. But this is the tricky part.

On average, homeowners spend 15 percent of their after tax
income on their mortgage, while renters spend 30 percent of their
after tax income on rent. That means you need to put 15
percent of your income into your money mansion on top of
your rental payment if you want to beat the average home owner.
This would be the time to move into a one bedroom with your
significant other to save on rent. Every dollar you don’t spend
there is a dollar you can put toward your 15 percent.

If you take these steps, 45 percent of your take-home pay goes to
rent (lt; 30 percent) + money mansion (gt; 15 percent). This
means you’re living off of only 55 percent of your take-home pay.
Do you currently do this? Probably not. But that’s what it takes
to beat the home owner.

Joe Raedle/Getty

So, lets talk numbers

If you manage to rent + save + invest, how much do you win in the
end?

Using the average American household income of $54,000 as a
guideline, your 15 percent money mansion contribution becomes
roughly $5,100 per year after taxes. If you start with a “down
payment” of $45,800 and contribute 15 percent of your monthly
income every year for a “30-year mortgage,” you’ll have $728,000
in your money mansion (that’s after taxes, with a conservative 7
percent yearly return).

So the gamble you’re making is that today’s average American
house will not exceed $728,000 in value after 30 years of appreciation. If our
$229,000 house keeps pace with inflation, it will be worth only
$555,000 — and that’s a big if. A hundredyears of
inflation-adjusted US housing prices suggest that a home
increases only 0.1 percent in value per year on average.
Your home probably won’t be the exception.

Looks like the renter wins

He or she gains25 percent more net worth, and all of it
liquid and free of closing costs. Some would say the liquid
capital is worth a premium.

But the renter only gets to live on 55 percent of their take-home
pay during their life while the home ownerlives on 85
percent. That’s an extra 30 percent of income — not spent on rent
— to spend on life. The home ownercould easily invest the
difference and beat the renter.

The home ownerhas other home-related expenses, however.
Home upkeep and repair costs average 1 percent of the value of the home per year.
On our $229,000 home, that’s $2,290 per year. But taking
inflation into account, you can expect the costs to rise over
time. Over 30 years, that could be $114,000 or more.

The home owneralso pays property taxes. These vary widely
by state and county. For the sake of simplicity, let’s assume our
median American home ownerpays a median American property
tax of 1 percent of the home value per year — which is lower than
many countries surrounding major metros.

So how does that figure in? Over 30 years, those home upkeep
costs and property taxes will eat into 50 percent of the income
the home owner isn’t spending on rent. So the home owner’s true
take-home savings are just 15 percent of income. They get to live
on 70 percent of their income, while the renter, on average,
lives on just 55 percent. But at the end of the road, the renter
is 20 percent richer.

Suddenly, homeownership doesn’t seem like such a great
deal. By renting and investing, you can end up with enough
money to buy a homein cash by the end of your life —
and you will never pay a penny of interest, or property taxes, or
buy a new sump pump along the way. What’s more, homes are risky
investments. You never know how the community, city, or state
will turn. By comparison, investing in the market seems like a
pretty safe bet. I don’t know about you, but it’s a renter’s life
for me.

Rent or buy in Utah? The numbers say buy…NOW

When buying a home, 20 percent is the magic number recommended for a down payment. Unfortunately, at least for first-time home buyers, 20 percent can be incredibly hard to come by. And waiting to save up that 20 percent may not be the best financial move for many buyers.

In a 2014 survey by Zillow, more than two-thirds of renters indicated that their biggest barrier to homeownership was saving for the downpayment. With median home prices in Utah creeping upwards of $245,000, would-be homebuyers would need $49,000 to put 20 percent down.

Don’t Get Burned: 6 Mistakes to Avoid When Buying a Beach Home

3. Forgetting about the neighbors

It’s easy to fall in love with beautiful beach vistas and forget about everything else, saysKonnie Warburton, a real estate agent with Sereno Group in Santa Cruz, CA.

Before you buy, make sure you look beyond the stunning views and gorgeous house–as with any other home purchase, you should look into who your neighbors areand the zoning laws. Be sure to do your homework on the community. Is it a spring breaker’s paradise? A sleepy town for retirees? Will your kids have anyone to play with?

Take, for example, a couple Warburton recently helped to buy a beach home for their retirement. They were looking forward to meeting like-minded, beach-loving homeownersin a cohesive neighborhood. Instead, they’re one of only three permanent residents in their five-street enclave. At certain times of the year, their neighborhood is overrun by vacation renters; at other times, it’s deserted.

“Buyers need to research public records carefully,” Warburton says. “Also, finding out the culture of the beach location is so important.”

4. Not using a compass

We all know location is one of the most important aspects to consider when buying a home. And buying on the beach is kind of the “ultimate” location, isn’t it? But having a fabulous oceanside home doesn’t mean you have it made in the shade.

When you’re buying a coastal property, you also need to become something of a meteorologist. You need to know which way the wind blows. You need to know which way your home faces. And you need to know if your west-facing home is more prone to storm damage than a south-facing home.

Kathryn Bishop, areal estate agentwith Keller Williams in Studio City, CA, relates the story of her friends from Detroit, who moved west and bought a condo in Malibu, CA, with a gorgeous view of the water, perfect for viewing sunsets–or so they thought.

“When the moving truck arrived, the first things unloaded was the outdoor furniture, which my friends quickly set up on the balcony, opened a good bottle of wine, and waited for their first view of the sunset,” Bishop recalls. “Then they found out that their condo did not face west, and they would never see a sunset from their balcony. Everyone assumes that the Pacific coast in Malibu faces west … not true.”

5. Skipping out on the proper insurance

The No. 1 mistake people make when buying a beach home is using it as a short-term vacation rental without the proper insurance, saysHans Tonjes, a broker with Living Room Realty, in Manzanita, OR.

In his market on the Oregon coast, about 25% of the homes have some kind of rental activity going on at least part of the year, and most homeowners insurance doesn’t cover that, Tonjes says. “It’s very important to speak with your agent about how you’re using the property so that any losses are covered,” he says

And, of course, there’s disaster insurance. You already know you’re going to pay a pretty penny on your homeowners insurance premiums. But depending on where you live, you might need topurchase homeowners insurance with supplemental hurricane coverage. And don’t forget about separate windstorm and flood policies. We know–it’s going to strain your wallet in a big way, especially with skyrocketing flood insurance premiums. But you’ll consider it money well-spent when disaster strikes.

6.Not using a coastal home inspector

We hope you’re using a local, licensed home inspector, or one who comes recommended byyour real estate agent. But maybe you want to do a friend a solid, or you’re inclined to tap the inspector you worked with when you bought your first home.

Unless that inspector is an expert in coastal properties, resist the temptation. Otherwise, you could be setting yourself up for big problems down the road.

Beach homes are subject to a very corrosive environment that presents unique issues, Tonjes says. An inspector from the city or out of the area might not necessarily be looking for these issues.

For example, a coastal environment can completely break down galvanized joist hangers in decks and flashing on buildings, Tonjes says.

A coat of paint can hide some of these liabilities, but a coastal inspector is going to be searching for the unseen but likely issues our salt air and wind-driven water and sand can present, he says.

This isnt to throw a wet blanket on your beach dreams. But the more prepared you are before diving in, the sweeter the sound of those waves will be.

Down payment holding back renters from buying a home

Almost 70 percent of renters in 20 US metros say coming up with the down payment is holding them back from homeownership, according to the first Zillow Housing Aspirations Report.

Even though a mortgage payment is more affordable than a rent payment on a monthly basis, renters say they can’t buy a home due to the pricey down payment.

Almost 70 percent of renters surveyed cite the down payment as a greater barrier to homeownership than debt, job security and qualifying for a mortgage. Just over half of renters cite qualifying for a mortgage as a barrier to homeownership, and half say debt is holding them back. Almost 40 percent of renters say job security is keeping them from buying a home.

The US homeownership rate is near an all-time low and has been falling since 2004, although members of the largest generation of Americans — millennials — are coming of age and starting to think about buying a home and settling down. Rents are also at record highs, costing almost 50 percent of the median income in some cities. Making a monthly mortgage payment is cheaper than a monthly rent payment in all but two of the 35 largest US metros, but first renters need to save enough money for a down payment.

The Zillow Housing Aspirations Report, a semi-annual survey sponsored by Zillow and conducted by IPSOS, asks 10,000 renters and homeowners in 20 metros across the country about their views on homeownership and their personal housing expectations going forward.

Here are some highlights from the report:

Over half (63 percent) of renters are confident that they will be able to afford a home someday, with 25 percent planning on buying in the next three to five years.

Millennial renters are more confident than any other generation that they will be able to afford a home someday, with 34 percent planning on buying in three to five years. Almost a quarter (22 percent) said they plan to buy in one to two years and 2 percent of millennial renters said they never plan on buying a home.

The majority of respondents (66 percent) believe owning a home is necessary to live The American Dream, and 72 percent believe owning a home increases your standing in the local community — millennials believe these two statements more than any other generation.

With home values across the country at their highest point since June 2007, cobbling together a 20-percent down payment on a home costs more than two-thirds of the US median household annual income. In pricier markets like San Jose and Los Angeles, buyers must come up with more than 180 percent of the median annual income, making a home purchase out of reach for many aspiring homeowners.

“With home values close to record highs, it’s no surprise renters are concerned about coming up with enough money to buy a home,” said Zillow Chief Economist Dr. Svenja Gudell. “Rising rents are also a factor — it’s extremely difficult to save when you’re paying record-high rents. While it is possible to put down as little as 3 percent on a home, the trade-off is a higher interest rate and costly private mortgage insurance, a financial tradeoff that may make sense for some buyers. But with interest rates rising in 2017, it’s important to remember that a lower interest rate can save buyers thousands of dollars over the life of their loan. For those trying to save for a down payment, it’s important to set realistic goals and realize it may take a few years. Also, consider working with a reputable financial advisor to help set a budget that works for you.”

San Jose, San Diego and Los Angeles had the greatest share of renters say affording the down payment is the number one barrier to owning, at over 72 percent. Women (72 percent) were more likely than men (62 percent) to select the down payment as the top barrier to homeownership.

One-third of buyers used more than one source of funds for their down payment, including gifts and loans from family, according to the Zillow Group Report on Consumer Housing Trends. Over half of buyers saved by setting aside a little money at a time.

Mortgage rates on Zillow ended the month of March at 3.94 percent, down from a high of 4.13 percent in the middle of the month. Home shoppers can use the Zillow Affordability Calculator to see how varying loan amounts and down payments will impact monthly payments and the lifetime balance of their mortgage.

Tips For Buying A House In Wisconsin’s Competitive Seller’s Market

If youre in the market for a home in Wisconsin, be warned: it’s tough out there.

A combination of strong demand and tight inventory is leading to one of the most difficult and competitive environments in some time for buyers.

I’ve been doing this for 15 years, and this is the most competitive market I’ve ever seen in real estate, said Tina Balaka, sales director of Shorewest Realtors’ South Metro office in Greenfield. We’re seeing buyers really have to compete in order to get an accepted offer on a property that they love.

The Wisconsin Realtors Association reports record homes sales in the first quarter of 2017, and prices are heading up as well. Median home prices rose to $163,000 in March 2017, a 5.2 percent increase from the previous year.

While urban areas such asMadison and Milwaukee are hotspots for home sales, Balaka has heard of similar activity all across the state.

Buying a home right now iseven tougher if you’re in the market for your first home, said Balaka, who is also the former chairwoman of the Greater Milwaukee Association of Realtors.

The first time homebuyer market is incredibly competitive, because that’s your most affordable housing right now, and that’s where we’re seeing the pricing going up,she said.

And real estate experts, including Balaka, believe this trend could continue.

Based on what we’re experiencing right now, we do think we’ll still see some tightened inventory for the rest of the year, and we do see prices continuing to go up,she said.

So, if you’re still looking to buy in the coming months, what do you need to know in order to even have a chance in this market?

First off, be prepared to move quickly.

Buyers have to have their running shoes on,she said. If you’re thinking about buying a home, you almost have to consider this a part-time job.

That means scoping out properties as soon as they hit the marketand being ready to jump on them immediately.

If you like it, write an offer, she said, noting it’s likely numerous other offers from prospective buyers will come in as well. But you have to be prepared.

That means having your mortgage pre-approval letter ready, as well has having your personal finances in order.

In addition, Balaka suggested including a little extra something in your offer that may give you a leg up: a personalletter detailingwhat you love about the house, or why you’d be happy living there.

A seller looks at all of these (offers), and it’s very hard to decide at times, and it can be overwhelming, she said. Anything that a buyer can do to have just a little extra leg up …can make that little difference, to help them get that offer accepted.

But she also stressed that even then, you may not get your first choice of house.

It could be the second or third or fourth offer that you write on before you actually get the house, Balaka said. There are several buyers that are all doing the same thing, so you are competing.

That said, she encourages buyers not to force an offer, if they’re just not feeling a house.

While the search for a house can be frustrating and emotionally draining, Balaka encourages prospective buyers not to give up, and said a little bit of patience can go a long way.

If your dream for home ownership is really going to happen, it can happen, but you just have to have some patience, she said. If it’s meant to be, it’s meant to be. The right house for you will come along.