Preparing to Buy a Home

Buying a home can be a very rewarding and enjoyable experience, when you are properly prepared. Being prepared means knowing what you want and can afford. In order to have everything work to your advantage you must have knowledge of your financial situation and be prepared to back it up with credible records. The benefits of preparing to buy a home far out weigh what a person experiences when they are not prepared. Being unprepared means that someone else is in charge of your choices. This may mean that they’ll be working to their best advantage and not yours.

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Finding a Home

Homes that need work are excellent bargains if you do your homework. If you do not do your homework properly, that bargain can turn into a money pit. Cost overruns, contractor disputes and building violations can wipe out your equity.

A good source of homes that need work are corporate owned properties. Another source are homes that are owned by the various government agencies.

Understanding Home Appreciation

Think of appreciation as the paper profits in real estate.

Your profits exist only on paper–in this case, your deed–until you actually sell the house.

If you buy a house in a rapidly appreciating area, there is no guarantee that property values will be the same or higher when it comes time to sell. The economy may sour or your neighborhood may lose its luster. If you buy at the height of an upswing when demand drives up prices, you may overpay. Just like in the stock market, the flip side of boom is bust, or at least correction. If you overpay and prices settle out 10 percent lower down the road, you may not recoup all of your investment. Appreciation is nice to have, but not what you should bank on when you buy or sell a house.

Should I Buy A Fixer-Upper?

One persistent myth in real estate is that anyone can make money by buying a fixer-upper or foreclosure property at low cost, doing the renovation work themselves and then reselling at a profit.

Squandered Equity

Appreciating prices in real estate is a good thing if you control the situation. It does a homeowner no good to be in an environment where real estate is appreciating at rapid rates and financially your are not able to benefit.

Buying Right

One of the factors for real estate to be a good investment is buying the property right.

The first thing that you must do is get your financing in order. Determine how much money that you have to apply to the purchase of a property and how much you would like to pay monthly. Your total mortgage payment (principle, interest, taxes and insurance should not be more than 30% of your gross monthly income.

“Buying Right” Part 2 by Raymond Byard

Homes that need work are excellent bargains if you do your homework. If you do not do your homework properly, that bargain can turn into a money pit. Cost overruns, contractor disputes and building violations can wipe out your equity.
A good source of homes that need work are corporate owned properties. Another source are homes that are owned by the various government agencies.

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