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How do I know how much I can afford?
It is important to know how much you can afford before you begin looking at homes. You should also talk with a lender and get pre-approved for a loan. This puts you in a stronger negotiating position with a seller.
As a rule, your monthly housing costs should not be more than 28% of your monthly pre-tax income, including the mortgage payment, real estate taxes, and insurance. If you have long-term debts, such as student loans or car payments, your monthly payments, including your housing costs, should be less than 36% of your pre-tax monthly income. Some loans, such as VA and FHA loans, are more flexible with these basic guidelines. Depending on which type of mortgage you select, you can consider houses in various price ranges. An adjustable-rate mortgage will usually enable you to qualify for a higher loan amount. Your Realtor can help you make the basic calculations.
Is it worthwhile to have a home inspection done?
You have finally found the home that is right for you, but you have some questions about the structure and condition of the home. A home inspection is the best place to get answers to your questions. There are companies that specialize in inspecting new and used homes. Most sellers allow a reasonable amount of time to have the property inspected after the purchase agreement is agreed upon and prior to closing.
It is wise to have a home inspection, even is the house is new or everything appears to be in perfect condition. The inspector can provide important information about the house. Where are the gas and water shut-off valves? How do the circuit breakers operate? What type of routine maintenance should be done for each system? The inspector’s fee is an investment that can save you money later!
Will we get hit with capital gains taxes when we sell?
Most of our sellers make a profit when they sell their homes. They often have questions about how capital gains tax will impact them. If you are selling your primary residence, you do not have to worry about paying taxes on your profits if your gain does not exceed $250,000 as a single taxpayer (or $500,000 as a married couple filling jointly). This new tax law comes from The Taxpayer Relief Act passed in August of 1997. Regardless of your age, you are now free to roll from none to all of your gain into another home without further tax consequences.
Different rules apply when you sell income property. If you sell one property then purchase another, the taxes will be due for the year the sale occurred. On the other hand, if you arrange to exchange one investment property for another, you can defer the capital gains tax. To ensure complete tax deferment you must acquire a replacement property which is equal or greater in price than your exchange property, and move all of your equity from the old property into the new. It is not as complicated as it sounds, but you do need professional help. Many Realtors and attorneys specialize in helping their clients put these 1031 tax-deferred exchanges together.
My offer has been accepted. . . but now I'm having second thoughts! Help!
Congratulations — you are about to become a homeowner! Your initial euphoria may be short-lived, however, as you begin to have second thoughts about the purchase. First, it’s the mortgage. It seems like so much money, and it will take thirty years to pay for it. You look over the cash you will need for the closing and feel like you will never be able to afford to dine out again! Finally, you stare at the inspector’s report and convince yourself that the roof will blow off and every major system will fail the day after you move in. You’re in a frenzy. You ask yourself, “What have I gotten into?” The best thing to do if you begin having “second” thoughts is just relax! These feelings are so common that they have even been given a name — “Buyer’s Remorse”. “Buyer’s Remorse” is almost always a temporary malady, but call your Realtor if you are having an extreme attack. We have experience in helping our clients through the home-buying jitters.
Why should I list my home with a realtor? Can't I just sell it myself?
When you get serious about selling your home, the chances of your selling it quickly for top dollar will improve considerably if you list it with a real estate sales professional. If you doubt this, consider the fact that nine out of ten homes sold today–more in some markets–are listed with a professional Realtor. Listing your home places it on the local Multiple Listing Service that is subscribed to by a majority of real estate sales professionals. Through the MLS listing, your home is assured of getting the widest possible exposure to the market place.
Some buyers shop the home market on their own, but most save time and money by using the services of a real estate sales professional. Ask yourself which homes the real estate sales professional is going to show the prospective buyers–homes listed on the MLS or those that are not? If you still want to try to sell your own home, you should know that you will face stiff competition when it comes to attracting qualified buyers!
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