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Frequently Asked Questions: Home Buying

April 12th, 2017 Posted in learning about money, Property Investment
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There really is a lot going on when we move home. From money changing hands to a full on moving process. It’s a process that brings up a lot of questions. Let’s break down some of the most common questions that are asked when moving home!

1 – How Do I Get A Mortgage?

Well, you need to go to the bank. A mortgage is a loan given to the buyer by the bank so that the buyer can purchase the property from the seller and then pay the bank back. Mortgages are usually paid back over a long term period. To gain access to a larger loan from the bank, you’ll have to pay a bigger deposit, just so the larger amount of money is at least secured in some way. There are plenty of different mortgage providers, so you can shop around. But why would you want to shop around? Aren’t they all just the same? Not really, each lender will add a different amount of interest on top of the repayments, meaning the same loan could be made more expensive.

2 – What Happens If I Don’t Pay Back The Mortgage?

If you don’t pay back the mortgage, your house will be repossessed by the bank. This is because the house is what you have borrowed against to achieve the mortgage in the first place. You’ll also lose your deposit. This isn’t an instant process, but it will be put in action within thirty days of a missed mortgage payment. Within ninety days the bank will have started the foreclosure process, which would be their attempt to repossess the house. This can lead to the bank auctioning off the site to reclaim the money. There are plenty of ways around this – just try to make back the payments. You could also try to sell the house.

3 – What Happens If I Can’t Meet Mortgage Payments?

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Refusing to pay a mortgage and not being able to pay are two different things. If you know that you won’t meet your monthly payment, you need to let the lender know. In almost all cases, a lender would rather you work to meet payments. It means they don’t take a loss on their investment in you. You could switch to simply pay the interest on your mortgage to lower the cost, or work out a new plan. In many cases, help is available for you to seek if you know you won’t be able to meet payments.

4 – Is Buying A Home Better Than Renting A Home?

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Some people rent, some people buy. Many people would say that renting is ‘dead money’ – your cash isn’t going anywhere. However, some people can’t afford to buy, or they might not be ready for the responsibilities that come with home ownership.

When is renting better than home ownership? Well, it’s circumstantial. If you are always on the move – renting might be better. If you don’t want to dive into the world of home maintenance, renting is better. The ‘dead money’ argument, for the most part, is true. Buying homes are solid investments, but a lot of the monthly costs involved with home ownership don’t go towards paying off the mortgage – insurance, tax, energy bills. Don’t kid yourself into thinking that dead money isn’t involved with a mortgage.

What’s more, interest rates are pretty low – meaning that in most cases, a mortgage might be cheaper than renting. This depends on your down payment as well, though.

5 – How Do I Handle The Legal Side?

This is where things get difficult. There are a lot of legal documents and papers that need to be filed when buying a home. While a keen legal eye might get far, it is worth leaving the job to experienced agencies in the field, like www.tbw.uk.com/conveyancing-law/property-lawyers-solicitors-bexleyheath.html who can handle a number of things. These agencies deal with areas such as declaring property boundaries, neighbour disputes, the fixtures included with the sale, building permissions, guarantees, regulation certificates, validate the owner of the property, register the site and much more. Of course, these can be handled by yourself, but it is worth hiring legal help. There are a lot of pitfalls associated with home ownership.

These cover the basic areas of buying a new home and should be more than enough to get you started with your interests. There are a number of areas to branch off into as well – such as researching down payments, mortgages and of course, the complex legal side of home ownership as well.

 

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The Wrong Fairy Tales: Ignore These Mortgage Myths!

April 10th, 2017 Posted in learning about money, Property Investment
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The Wrong Fairy Tales: Ignore These Mortgage Myths! - mortgage sign image

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Very few people are able to buy a house outright. Some people will try to make the argument that this is a problem unique to our financially-troubled times, but the truth is that we’ve rarely not lived in “financially-troubled” times where a lot of people were able to buy homes without assistance from some institution.

Banks and other lenders have been pulling the financial strings of the vast majority of homeownership for a long time, and it will probably continue to be that way for a long time yet. The fact is that, unless you’re pretty darn wealthy, you’re going to need financial assistance to get a home. Heck, even the wealthy need the assistance at times, when you consider modern house prices.

Getting a mortgage is, in all likelihood, how you’re going to get your own home. So it’s important that you’re not falling for any myths about mortgages! Here are some of the most common.

A pre-approved loan is a sure thing

Yes, you should definitely get a mortgage pre-approved before you start shopping for property. But this doesn’t mean that a pre-approved mortgage is the same thing as a mortgage! However, once you’ve made an offer on the place, the lender is going to double-check everything. After all, things may have changed between that pre-approval and the final approval. Remember that prefix: pre-approval. It’s not total approval just yet!

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A high income is all that matters

Let’s say you’ve got one person earning $100,000 a year and another that earns $50,000 a year. The first one is going to get the best mortgage rate, right? Well, not necessarily. There are a lot of factors to consider. Ms $100,000 may also be paying about $60,000 in debt every year, whereas Ms $50,000 is only paying maybe $3000 in debt. The latter has a healthier cash flow, so has the upper hand! Another thing to consider is the type of work you do. Ms $50,000 may be a scientist with a steady career ladder ahead. Ms $100,000 may be a self-employed freelancer who could potentially earn much less in the following year!

Your credit needs to be spotless

It’s true that a good credit score is highly desirable if you want a mortgage. But you’re not expected to have a perfect score. But if you have a middling score – and many people do! – then it’s not exactly a deal breaker. In general, a few blemishes won’t hurt you overall as long as you have a steady income and pay your bills.

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Image Credit Flickr and Cafe Credit

You need to have 20% saved for a down payment

20% is the amount that always gets thrown around when it comes to saving up money for a down payment on a home. And, yes, that is the best minimum to have if you want the best mortgage rates. But it’s not necessary – after all, that 20% is usually quite a lot of money. There are a lot of good institutions who will give you a mortgage with a down payment of about 5%, for example. Don’t assume you’re doomed if you haven’t saved that magical amount of 20% just yet!

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The Modern Investments

April 5th, 2017 Posted in learning about money, millionaire mindset, Money Tips, Property Investment
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Since the global crash in 2008, the wealthy have been looking for new places to invest their money. Banks seemed like a safe option but for the super rich, they became a worry zone, this was because most banks would only guarantee the safety of set limits of cash. So if you had 500k sitting in the bank and the bank went bust, you would only get 75k of your money back.

Ok, so most of us aren’t sitting around with half a million dollars in the bank. However, that doesn’t mean we can’t draw some inspiration from the High Net Worth Individuals (HNWI) and invest some of our money into the trends they are setting.

Property is always a good place to stash your cash. Firstly you have a tangible asset, something that might lose money but will, at some point make money. You are far more likely to break even over a few decades than end up with a loss. So this could be seen as a safer bet than your bank. The interest rate on savings at most banks is rubbish. Investing money in property and renting it out could see you making a far better return than you were in your savings account. There are two safe options for investing into a property. One is to find any new houses for sale, especially ones which are being built in areas that aren’t currently fashionable. If you find out information about any potential projects in this neighborhood, you may see that house prices will go up. Eg, if there is a new school or business applying for application. This could push up home prices. The other option is to go old. Look for the worst house on the best street, invest a little time and money into doing it up, then sell it.

Another great alternative investment has been the classic car market. You need to stay ahead of the game here, making smart purchases before the rest of the world cotton on. For making smart purchases before the rest of the world cotton on. For example, the BMW Z3 is a cute little car which is set to be a future classic. You can pick one up for a few thousand dollars, in fact, you can find them for under 1000 dollars, you can then invest a little time and love into restoring it, and in 5 years time, you could have a car worth 15,000 dollars.

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What about investing in wine, companies like Woolfsung have been advising HNWI on the wine investment sector. Here the idea is that you buy up predicted good years and then stash them away in a cellar for ten years. Most vineyards have a pattern when it comes to years so experts can predict which will be good. Of course, there is always the risk that you may get it wrong, or that you haven’t stored it the right way. Then the wine will be ruined, and you lose the investment.

Check out what the elite pack is investing their money in and see if you can replicate it on a smaller level. You never know, your horse might come in.

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Selling Property? Read This First

March 23rd, 2017 Posted in Money Tips, Property Investment
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Selling a property isn’t quite as simple as a lot of people make out. It can be a complex and daunting task. After all, there’s a good reason why so many people hire outside help during the process!

If you’ve decided to sell a property, be it the home you’re living in currently or another property, then guides like this are pretty essential. Read on to make sure the process is smooth and gives you the best return. These are the things you must take into consideration.

The reason

Why are you selling the home? This may dictate how you’re going to sell it. You need to consider how fast you need to sell it and how much you need to sell it for. Let’s say you’re an investor. If you have the time on your side, then you can afford to wait to ensure you get the best price possible.

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Now let’s say you’re a family who are looking to move home. This, of course, is very different and even more sensitive. You’ll want to sell the place fairly quickly. But you need the best price you can get so you can afford the best house possible for your move! All this is to highlight that the reason for selling a property will determine how you go about the sale – and what results you should expect.

Getting the word out

Most people will choose to work with real estate agents in order to get the marketing done correctly for their house sale. But it’s not a process you should be completely divorced from. There are several steps you can take in order to be more proactive.

For example, writing up an in-depth introduction and description of the property will be appreciated by many customers. Using floor plans software to provide detailed floor plans along with the listing will help give people a clearer vision of the house. And you can even use social media to help advertise the property you’re trying to sell. The more proactive you get during this process, the more you may end up getting out of it!

Selling Property? Read This First - open house image

Wikimedia

Value

This can be the most sensitive part of this process. Some would say it’s the simplest; it can’t be that hard to find out the home’s monetary value, right? Well, don’t jump to any conclusions. Do your best to get to a close estimate. You should do this from a few angles. Getting a valuation by a professional home value assessor is the obvious and best step, but you can also judge the value by other means. If possible, find out the values of some of the other homes in your neighborhood. Check out crime rates and the proximity from valuable amenities, too.

Let’s say you want a good mix of a fast sale and a good price. Try this popular (but slightly risky!) tactic: find out the value, then take 15% or so off that price. It should be a tasty-looking price that brings all the potential buyers to the yard, much like the famed milkshake of Kelis. The desired outcome? These people bidding against each other. This results in the value increasing to the original value, and perhaps even further.

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4 Ways To Own Real Estate

March 6th, 2017 Posted in Property Investment
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4 ways to own real estate - house icon image

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Getting on the property ladder is becoming increasingly more difficult. Before taking the dive into real estate, it’s important to consider all your options. Here are the four major ways that you can own property.

Traditional Buying

Traditional buying is still the main route into property. This is where you buy both the building and the land. Many choose to go through real estate brokers to find property. Finding a seller direct can sometimes be cheaper, but limits options. Some agents may charge buying fees, but this is generally reserved only for sellers. In either case, negotiating the price is recommended – you should aim to haggle of 5% of the value if you can.

You can also buy property off of an auction. Auctions are also a great opportunity for flipping property – discussed later on.

Leasing

In most cases, leasing property involved renting for a fixed term. This could be anything from a year or more. Some lease opportunities are more flexible than other – you may own the property, just not the land. In this instance, you may be able to make minor adjustments to the house as if it were you own. When it comes to traditional renting, hammering a nail in the wall might need permission from your landlord. Leasing is only half owning property, but is a cheaper alternative to buying and a more fixed alternative to renting. In many major cities around the world, the bulk of property is leased.

Self-building

Can’t find a property that meets your criteria? You can always build your own. It can cost up to a third of the price of buying (building and buying the land included), with the option of a self-build mortgage preventing you from having to pay outright. However, it can be a lengthier and more complex procedure. Whilst hiring architects, solicitors and builders isn’t too difficult a task, buying the land is a complex procedure. Land may be environmentally protected, may have limiting restrictions set by a local planning committee or may be physically unbuildable due to the ground. Before buying always check with the current landowner as to what the current restrictions are. In most cases you may negotiate prices.

Flipping

Flipping involves swapping one property directly for another, and so requires you to already own some form of property. By doing it effectively, you can earn a lot of money. Fail to flip correctly and you’ll lose a lot of money, making it a risky venture. Many who get involved in flipping property will buy property off an auction, possibly renovate it and then sell it for a profit. You can flip property without being worried about the profits however – if you want to directly swap with someone to a property that is less value but may be in a better location, you can do this.

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