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Only you can truly answer that question.  As you look at the prospect of a home payment it may seem quite daunting but here are a few things to consider.

Home prices historically have risen about 6% a year.  Meaning the home you are purchasing may be one of the best investments you make and as your investment grows you are able to enjoy the comforts of your home as well.

 The primary vehicle to retirement security for many has been their home.  The US savings rate has steadily declined from almost 10% in the 1960s to zero in this decade.  The counter force to this for many has been the appreciation of their home.  Home equity has been the saving grace for many a retiree.

One of the final things to consider is this.  Your house payment will be fixed.  Your rent is not.  Each year your payment will seem smaller and smaller.  As time goes by your salary will go up.  Prices of most things you buy will go up but if you have a fixed rate loan your payment will be the same.  So in a way you are locking in the price you pay for a place to live for 30 years.  After that of course you will be paying nothing.  Imagine now two peope who had a choice to buy a house or rent 30 years ago.  The price to rent or the payment to buy would be about the same.  It would have been about $200.00 for the average house.  Flash forward 30 years to 2008.  The guy who chose to rent would now be paying about $800.00 with an infinite number of ever increasing rent payments to go. The guy who bought a house would now be making his last payment of $200.00.  Which guy do you want to be?

Condo vs Townhome vs House

What is the difference in the costs of owning a condo or townhome compared to owning a house? The purchase price may be lower for a condo or townhome, but there are also association fees. In reality, they are just different ways of assuming the responsibilities of homeownership. It can, however, have a bearing on the mortgage amount for which you qualify.

Association fees

When you buy a townhome or condominium you become part of a Common Interest Community (CIC) in a Planned Unit Development (PUD), which shares some of the responsibilities and costs of homeownership. Those shared costs are usually paid by each unit owner in monthly association fees. Typically townhouse association fees include the following: Snow and lawn care Outside maintenance Sanitation (trash removal) Water/sewer (some include it, some don't) Hazard insurance covering the building structure and exterior (you should secure your own separate insurance for the interior, much like renter's insurance) Condominium association fees usually include the above, plus some or all of the following...usually, the higher the fee the more is included: Heating Security system Shared amenities, such as a pool and exercise equipment Cable Air conditioning Electric

Association Management

Associations are most often managed by a professional management company. However, some associations are self-managed by elected members of the community. Following are some questions you might ask about the association. Are there any pet restrictions? Do they have enough cash reserves to cover maintenance, etc? How do they pay for major improvements - from reserves from monthly fees or from special assessments? Are there any plans for any major improvements? What and when was the last major project, and how was it funded? Do they allow rentals? If so, are there any restrictions and what percentage is currently rented? How is soundproofing between units?

Qualifying for your mortgage

When you are approved for a mortgage, you will be approved for a maximum monthly payment. If you are buying a house your maximum monthly payment typically includes homeowner's insurance, but does not include the cost of utilities and maintenance. When you buy a townhouse or condo, your maximum monthly payment includes your association fee... which covers some, if not all, of your utility and maintenance costs. This means the same approximate qualifying monthly payment will buy you a condo, townhome or house at different prices ranges...see the example below. Monthly payments were calculated with 3% down at 5.5% interest for 30 years. Association fees in the examples include all the items listed above for the condo and typical townhome inclusions listed above.

Total monthly home budget

Keep in mind that although your qualifying monthly payments are about the same, in this example the condo association payments include everything except telephone. For the townhome example you must pay for your own gas, electric and cable. When you own a house you are responsible for all utilities and maintenance. Following is a comparison of total estimated monthly costs.

The right fit

All three forms of ownership are good options...it's a matter of finding the best fit for you. A house gives you more independence, but also greater responsibility. A condo or townhome has the security of more regular expenses and freedom from snow and lawn care, as well as outside maintenance.

CONDOMINIUM Most often one level in a multi-level building, shared entry and hallways, may have elevator Usually with security system, sometimes with onsite security guard and/or caretaker May have heated underground parking, parking in detached garages, assigned or unassigned open parking stalls or on-street parking only Most have party room, may also have shared amenities such as pool, exercise room, tennis courts Most association fees include heat, water/sewer, trash removal, snow/lawn care, outside maintenance and hazard insurance Some also include electric and/or cable Laundry more often shared, but may also be in unit Usually central heating plant TOWNHOME Often multi-level, sometimes with basement Enter directly into unit from outside, own from the ground to the sky Usually have some sort of outside patio and/or deck area Garage usually attached Complexes can be large or small At least one side wall usually shared, back wall may be shared or open to the outside Most association fees include snow/lawn care, trash removal, outside maintenance and hazard insurance, some include water/sewer Usually responsible for own furnace, air conditioner and water heater

 Summary

 Condos offer the convenience of having someone else see to the maintenance of the exterior of the unit. Keep in mind that monthly "condo fees" can be very expensive. You may find yourself paying for a swimming pool, tennis courts, playgrounds, and a community building that you never use. You may also be assessed for the repaving of the streets and other major projects. You will be at the mercy of a "condo board" that oversees the management of the common property owned by the condo association. If you decide to buy a condo, make sure you are comfortable with the fees.

A traditional single family residence will probably give you the best return on your investment depending on where you are located. The only downside is that you are responsible for all exterior maintenance including lawn care. As long as you do not get carried away with landscaping, hiring a lawn care service is fairly cheap if you don't want to cut grass. A house with vinyl siding or other maintenance free exterior will eliminate the need to paint in the future.

Personal Note

I hope this information will be of some assistance to my first time homebuyers in Burlington County, New Jersey.  Your first venture into real estate can be a scary one. That is why I am a Real Estate consultant.  My job is to explain to you the ENTIRE process, help you find the home of your dreams and hold your hand as you go through the process.  Read my testimonials.   I know that I am biased, but you can not find a better Realtor & Real Estate Consultant in Burlington County,NJ. Feel free to give me a call today.  I will gladly answer all of your questions without any pressure.  When you are ready to start looking for a home, you will gladly call me because of how well you have been treated.

Have a great day

 
Leander McClain, Burlington Township’s Top Realtor & Real Estate Consultant, EXIT Buyers Plus Realty, 15 E. Broad Street, Burlington, NJ 08016 609-505-6578(cell)

Buying a home can be a long, complicated and frightening process, and it is important to be prepared. Knowledge is power when it comes to negotiating the difficult world of home prices, interest rates and mortgage loans. For a first time home buyer, there are many factors to consider before you buy. The more information you can gather before you start shopping, the better off you will be.

Look Beyond the Price

 

When it comes to securing a quality mortgage loan, it is important to look beyond the interest rate to the true cost of the loan, both now and in the future. Read the paperwork, including the fine print, carefully, especially if the interest rate is below market rates. Upon closer inspection you may find that the interest rate is guaranteed for only a short period of time, or that it is subject to rise sharply in the future. Your mortgage loan may be the most important contract you will ever sign, and it is essential that you understand your rights and your responsibilities before signing on the dotted line.

In many cases it will make sense to hire a lawyer to review the mortgage paperwork for you. Many communities provide some sort of first time homebuyer program designed to help renters become homeowners, and these organizations may be able to provide the legal advice you need at a price you can afford.

Every Situation is Unique

 

Every homebuyer will have a different set of circumstances, and it is important for the lender to consider those factors. Some homeowners may plan to move in a year or two, and they may be able to benefit from a variable rate mortgage. Others will plan to remain in their home for decades, and those home buyers may benefit from the stability of a fixed rate mortgage and its predictable and stable monthly payment.

It is also important for those buying a first home to factor in the additional costs of the mortgage when deciding how much they can afford to pay. Things like closing costs and the high price of private mortgage insurance can drive up costs and eat into funds that would otherwise be available for home improvements, furnishings and other essentials. In some cases sellers may be willing to pay some of the closing costs, and some lenders will be able to negotiate those closing costs downward. The key is to ask those questions before the closing date arrives, and to be prepared to search for a better deal if necessary.

First time buyers should also be on the lookout for any hidden fees. These small nuisance fees can add up to hundreds of dollars on closing day, so be sure to scour your paperwork for any such fees. If you are unsure about the legitimacy of any charge be sure to ask for a valid explanation. Again, an experienced real estate attorney can provide valuable insight into which fees are reasonable and which are out of bounds.

And of course first time home buyers should not lose sight of the home itself in the quest for the perfect mortgage. Any defects should be pointed out to the seller well before the closing is to take place. The costs of every needed repair should be carefully negotiated prior to the purchase, and buyers should always follow up to make sure that all requested repairs have been made. A home is a major purchase, and it is important to make sure that everything has been taken care of before moving in.

New Orleans Condos, The mortgage interest deduction on your taxes is a very big deal!

    The interest rate deduction on your taxes is a big deal when considering your total cost of ownership.  The interest you paid as well as property taxes are deductible on your federal and state income taxes.  Let's look at an example of someone in the 25% bracket for federal taxes and 3% for state taxes.  Most people hate giving the government more of your hard earned money.  Renters miss out on this gift and its a very big gift.  The gift gets larger as your tax rates gets steeper.

      With a $200,000 mortgage your interest and principal is $1076.  The interest for the year one in your loan is $9921.  If your combined tax rate is 28% you will realize a tax benefit of $2778.  If you break this savings down on a per month basis or $232 per month which is savings to you.  Your out of pocket cost is lowered by this amount.  This is something that a renter does not get.  The taxes are also deductible.  If you are a renter the landlord works this into your rent so you are paying for his taxes but get no tax benefit.  The higher the rate the more you will save.

   The other benefit that often forgotten is that during the first year you have increased your equity by $2963 and paid down the principal by that amount.  When you sell you will realize your equity tax free plus any gain if you live in your condo for two years. 

     You can also look for a $7500 tax break as well if you are a buyer for the first time in the last 3 years.  All this is great but people do enjoy having their own place with a chance to improve your property with sweat equity.  Think what your out of pocket expenses are when thinking about purchasing your place.

       Other recent articles Rent versus Buy,  New Orleans Interest Rates fall off Cliff, Its a New Orleans Buyer's Market. 

By Coco Clayman-Cook

Recently I represented a client who was selling their luxury condo.  Ultimately, the condo sold very quickly to a large corporation based in downtown Los Angeles.  More and more companies are charging their HR departments with the authority to look for and acquire luxury condo properties for company assets.

When you stop to consider how much it costs to house visiting executives in luxury hotels it's easy to see why corporations are now buying luxury condominiums. Real Estate is a strong investment.  If you have the opportunity to build equity instead of throwing money away, it is always better whether you are an individual, a family or a corporation.

Starting the day after Christmas, attention will focus on the new year. With this, both resolutions and predictions move to center stage.

Since the market has slowed lately (both seasonally and economically), I have been spending a great deal of time preparing for 2009. New technology, a new "niche" website and blog, a new contact management program, adding a new "farm," a new education/coaching program, and developing some new twists on old marketing schemes are all figuring into my 2009 plan. I have also been analyzing what worked in 2008 to determine whether it stays or goes in 2009. But I'll write more about these items over the next few weeks and hope that you will share your plans as well.

I'm also going to save my Predicitions and Resolutions for later. Frankly, the writing over the next few days will help to crystallize all the ideas that have been bouncing around my head into solid goals.

So here are a few pluses and minuses that I think we all need to consider in our thinking about 2009:

PLUSES

• Low interest rates
• A Large Inventory
• Pent-up Demand
• Investors seeing real estate as the "investment of choice"

MINUSES

• Buyer Fear of the Unknown (Economy; Job Loss)
• Tighter Credit Guidelines
• (On Cape Cod) Springtime Listing Flood
• Continued Foreclosures (in spite of the Federal bailout)

There is a lot to think about. The most important consideration for everyone who wants to have a good year in 2009 is this: BE PROACTIVE. Anyone who sits around and waits to see what happens is bound to be disappointed.

Your thoughts and comments are welcome!

 

For the last 3 years I have been telling my agents, my customers, and anyone else that would listen that print advertising for real estate is on it's way out.  The listings were old, the ads didn't contain the newer listings, and you weren't able to get a feel for the home like you can with virtual tours and online video.

Apparently, I was right.  A new study conducted by Harris Interactive and sponsored by Intel Corp. finds that 65 percent of adults feel they cannot live without Internet access. Additionally, 71 percent consider it important or very important to have Internet-enabled devices, such as laptops and mobile communications on hand almost constantly.

According to the survey, 46 percent of women and 30 percent of men would rather go without sex for two weeks than give up Internet access for the same amount of time. For women ages 18-34 it was 49 percent and for women ages 35-44 it was 52 percent. For men ages 18-34, it was 39 percent.  I don't know for sure, but I would guess that newspapers and other print advertising have NEVER experienced that kind of popularity!

Obviously, the study didn't focus on real estate, but if people are that passionate about Internet access, wouldn't it just make sense that the Internet is where they are going for their information?  The 2008 National Association Of Realtors Profile of Buyers and Sellers says that more than 90% of home buyers 44 years old or younger used the Internet as a source of information during the home buying process and 87% of ALL buyers used the Internet during the process.  It goes on to say that 69% of buyers used the Internet FREQUENTLY to find a home compared to 15% that used a print or newspaper advertisement frequently to find a home.

If you are a professional listing agent, it only makes sense to spend the bulk of your advertising dollars online.  We're in our 2nd year of 100% Internet advertising.  We've invested heavily in our website, SEO (search engine optimization), and listing syndication.  In November we had over 652,000 page views of our 53 listings on just Realtor.com.  That's over 15,000 views per listing in a single month.  If you consider that Hitwise gives Realtor.com a 7.68% market share and our listings are are also on seven of the top ten real estate web sites (as well as hundreds of other sites), we estimate that each listing is viewed an average of 150,000 times each month!

There isn't a publication in the world that can guarantee that my listing will even be noticed in the pages that they print, but with inexpensive (or free) tracking software, I can tell my clients how many times their home has been viewed, how many times the virtual tour has been taken, and how many times, the potential buyer has looked at a video of the neighborhood.  I can even communicate all of this information to the customer on a weekly basis with just a click of the mouse.  It doesn't surprise me a bit that half the adults would rather give up sex instead of Internet access.  This is exciting stuff!!!!