What It Takes to Purchase a Home

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Today’s loan qualifications require buyers to have a much better credit rating than before; however, this does not require credit to be perfect. For instance, there are major banks that will qualify borrowers with a FICO score of 650. Before the collapse of the real estate bubble, that number was 565. The other factor is that the days of no income verification, no credit verification, or obtaining an immediate second to make the loan over 100% of the purchase price is a thing of the past.

Having 20% down, a FICO in the mid to high 600′s, and a job are the basic necessities for acquiring a home loan. The 20% down is not mandatory, but it will help with eliminating the Private Mortgage Insurance premium, or PMI that is attached to a loan payment for those that opt to only put down the minimum 3% for FHA loans.

Take a Look at Debt

Finally, look at your debt, and only count things that are mandatory as part of the overall debt calculation. This number will not include utilities, cell phones, or food bills. Things included are car payments, student loans, and credit cards. If the overall debt that is paid every month, including the new mortgage payment, is 43% or lower, then borrowers will be able to purchase the home they have been wanting.

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HOAs, or Homeowners Associations, are part of life for a lot of people. Some people love them, and others feel as though they are too expensive and too intrusive. Of course, a lot of HOAs are very different from others. There’s no ?one size fits all? definition of what they do, how they operate, what they cost, or what they require. If you’re thinking about living in a place that has an HOA, be sure to ask plenty of questions. Get a copy of the Association’s bylaws and actually read them.

You might find them very boring, and you might not want to take the time, but the rules and regulations in them will apply to you and everyone who lives in your neighborhood. Finding out what’s in there is vital to your happiness and to your understanding of what you’re paying for and what’s expected of you. You can have an HOA for a condominium or apartment building, and you can also have one for a housing development. Many places don’t have them, but those that do can be very nice places to live – provided you agree with the rules and the cost of living with the HOA.

Whether HOAs are good or bad is something that can be debated for a long time. They have their uses and advantages, but for some people, the cost of them and the restrictions that they impose just don?t outweigh the benefits that they get. HOA fees can range from a few hundred dollars per year to hundreds of dollars per month, and the rules can be very basic or incredibly restrictive. Most are somewhere in between, but always be sure to ask (and confirm) whether there’s an HOA and what you need to know about it before you sign a purchase or lease contract.

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If you have a home that’s paid for and you want to sell it, you may want to consider owner financing. That’s where you agree to take payments from the buyer, and it’s often done with buyers who don’t have a lot of money and who don’t have the best credit. They usually have a reasonable down payment, but they won’t be able to get financing through traditional means. Some sellers are too nervous to use this option, because they’re afraid that they wouldn’t get paid or the buyers would start being late with payments. Most of the time, that’s not the case. Many buyers are struggling right now because they damaged their credit when the housing market imploded. They need some time to get back on their feet, but they’re also tired of renting.

For buyers like that, owner financing, or owner carry (meaning that the owner is carrying the note or mortgage, instead of the bank carrying it), can be a real lifesaver. For sellers, it’s also a good way to sell their home quickly and close faster. That way he or she won’t have an empty home sitting on the market after he or she has moved on, or the owner won’t have to stay living in his or her home for a long time, just waiting for it to sell. It is possible to move a home quickly in this market, and owner financing is one of the best ways to be sure that happens.

Of course, it’s not for everyone. If you have a house and you owe money on it, the bank won’t let you sell it to someone else without paying off the mortgage. At that point, owner financing isn’t an option – but you can rent your home out to pay the mortgage note, or you could lease it to someone with the option to buy it when his or her credit gets better.

photo credit: Ruth L

Homeowners insurance is recommended for any one who is considering purchasing or leasing a home or anyone who has a mortgage or considering a mortgage. This insurance works like any other insurance, it protects your investment. Insurance companies make it as easy as possible for homeowners to acquire affordable insurance for their home and property. Mortgage lenders depend on homeowners insurance to protect their interests. If a homeowner defaults on mortgage payments the insurance protects the lender’s investment. Previous insurance companies are the best source of information and will generally give discounts if customers purchase more than one product from their company. Real estate agents are also a great source of information when seeking to acquire homeowners insurance. They have insight into the latest laws and rules concerning homeowner?s investments, insurance and other valuable protection that individuals need.

It is wise for homeowners to talk to several insurance companies before they make a final decision. It is relevant to the insurer to purchase the right kind of insurance at the right price. Not having enough insurance can be devastating in times of emergency disasters. Injuries happen everyday and if someone is injured on personal property belonging to the insurer he or she can be sued, by the injured party or / and their representative. Homeowners insurance protects not only the insurer but others as well.

How much insurance coverage the homeowner needs can be easily calculated into several factors. Making a analysis of how much the home is worth (value) and how much it will cost to replace or rebuild, is essential when seeking to purchase homeowners insurance. Not being properly insured is the same as being under insured. If a $150, 000 house and it contents is destroyed by fire and the insurer only has$100,000 worth of insurance the insurer would have to pay the remainder of the house’s value and replace the contents, all out of pocket. By having the proper amount of insurance this scenario would only be a scenario. Homeowners are encouraged to protect their investment by insuring their property and contents for what they are worth.

Obviously, any mismanagement of money is a major problem for the members of a home owners’ association. This could fall into several categories, including money that is poorly spent (for example, completing some major work without getting multiple quotes to ensure value for money) or worse, illegal uses of the money. At the same time, it can be just as bad if your home owners’ association charges fees which are too low, and the reserve fund is then unable to cover necessary maintenance such as painting or emergency replacement of broken items.

Other complaints against home owners’ associations can include unfair elections for the leading roles, incorrect or illegal use of home owners’ records, or fining home owners excessively or unnecessarily for apparent violations of the rules. If you have a complaint against your association, be sure to follow it up with the relevant offices.

• Try to find out if there are any complaints against the home owners’ association. These associations quite commonly become involved in litigation and you should be aware of these kinds of problems in advance of signing a contract.
• Ask to see the current financial details of the home owners’ association. The requirements vary but you should be able to at least have access to an annual balance sheet and to see how much money is in the reserve fund – if the complex is older, there should be a larger reserve fund available to fix up problems as they occur.
• Get opinions from member home owners if you possible – try to ask around the complex to see what the other owners feel about the way the home owners’ association is being run, and ask them if there are any potential problems as a new buyer.

photo credit:?Matt Biddulph

Before signing a contract with a management company you need to spell out all of your requirements and the job duties in writing so there is no misunderstanding about who is to handle what tasks. This may change over the course of time and as it does there should be a new contract or agreement written and signed by both parties or representatives thereof.

Once you’ve hired a condo management company the Board of Directors or the President should not waste their time micromanaging, but trust the company you’ve hired. Initially you’ll need to supervise some activities, ask for resident’s impressions and keep an eye on things, but after that its time for the condo management firm to take over and do its job.

If you live in one of these developments the HOA will organize committees or rules which will help keep the shared property and facilities in the best working condition and appearance. They may even arrange for regular maintenance and oversee such activities. An HOA may also be responsible for enforcing local rules that may have been violated by homeowners. Such as subdivisions that have restrictions on hanging out laundry, certain landscaping requirements, abandoned automobiles in driveways, et cetera.

In addition to serving as sort of an ad hoc rules enforcement agency and pseudo property manager, HOAs are often charged with helping developers bring in more clients and show the open properties, so in effect they also act as realtors at times.

If you’re moving into an area with an HOA its important to determine what the reputation of your HOA is and how they work with residents. You don’t want to get into a situation where the HOA makes the living situation unbearable and on the other hand, you don’t want an HOA that doesn’t have your neighborhood’s best interests at heart.

Well Thought out Argument?

Come to the group with a well thought out argument that is carefully worded and non-accusatory. If possible, document your attempts to remedy the situation on your own before you involved the HOA.

Listen to the Options

You may know exactly what you want done, but your solution may not be the most practical or even possible. Be willing to hear what solutions are actually available and be prepared to help if you can.?

Follow Through

If you’re able to come to a resolution, hold up your end of the bargain and make sure the HOA or any other parties involved hold up their side as well.

Dealing with an HOA should be treated like a professional transaction, but it can’t be discounted that this is your home and you have a personal vested interest in the outcome. Remember that the HOA probably is not as personally involved as you are and emotional pleas may fall on deaf ears, this is why acting in a professional manner is more likely to get a positive response.

photo credit: Nuneatonolly

Throughout the nation, there are neighborhoods which are set back from the road and surrounded by gates that are guarded by security personnel who monitor the comings and goings of people on the grounds. These gated communities are highly appealing to some home buyers who like the exclusivity, privacy and security that they feel is afforded to them when living in one of these neighborhoods. However, others feel that the drawbacks of living in a gated community actually outweigh these perceived benefits. Whether or not to live in a gated community depends greatly on the things that you value in the neighborhood where you live.

Benefits of Living in a Gated Community

The following are some of the most common benefits that people who enjoy living in gated communities will cite:

• Exclusivity. One of the things that people really like about living in gated communities is that these are considered to be exclusive neighborhoods. They’re kind of like the modern version of the old walled castle where only certain elite people are allowed in. Of course, if you have the money, you can move into a gated community which wasn’t true of old castles but there’s still the feeling that you’re living in an exclusive place. It’s something of a status symbol that people can show off.
• Sense of security. The comings and goings of the neighborhood are monitored which tends to make people feel safer about living in a gated community than they would in a typical neighborhood. These areas tend to have low crime rates which confirms the feeling that these are safe neighborhoods.
• Privacy of the neighborhood. This monitoring of activity does more than create a sense of safety; it creates a feeling that this is a private neighborhood where you can conduct your daily business without a lot of interference from the outside world.
• Quiet atmosphere and general beauty of the area. The gated community tends to be quiet and peaceful with a beautiful appearance. Landscaping is maintained and noise is controlled so it’s possible to feel really at peace even when living in and around large urban areas.

Drawbacks of Living in a Gated Community

Not everything is great about living in a gated community. Some of the most common things about the gated community that people dislike include:

• High cost of the home. The homes in a gated community are going to have a higher value than the homes in a typical neighborhood. This adds to the exclusivity of the neighborhood but can be a drawback at the time of purchase.
• Ongoing cost of living in a gated community. There are additional costs associated with living in a gated community. For example, you may pay higher property taxes to live here or you may need to pay fees to the homeowner’s association here. These cause additional financial drawbacks related to the purchase of the home in a gated community.
• Rules of the neighborhood. There are rules when you live in a gated community. They may vary depending on the community and can be as strict as what color the homes can be painted to as general as requiring that trash not be left out several days in a row. Some people just want to live in their homes and not be bothered with the rules of the gated community where they could live.
• Invasion of privacy in the sense of being monitored. People may like the fact that the neighborhood is monitored in terms of the safety it provides but it’s also a little disturbing to know that a guard is watching everyone who comes and goes from your home. Just the hassle of having to make sure to get visitors approved to be let in is too annoying for some people.
• Sense of elitism. Although one of the main reasons that people like the gated community is because it’s an elite and exclusive community, this is also one of the things that some people don’t like about it. Not all people want to be associated with a home that is “rich”, “snobby” and “elitist”.

Deciding Whether or Not To Live in a Gated Community

For some people, the benefits of the gated community will easily outweigh the drawbacks of living in a place like this. For other people, it’s a no-brainer that the gated community isn’t the right place for them. To determine this, it’s important to consider what you really seek from the neighborhood in which you live. If what you want is what is offered by the gated community, determine whether you can pay the costs that come along with those benefits.