Buying real estate can be an overwhelming and surprisingly complicated process as many first time home buyers could probably tell you. There is a lot to consider and there is a lot that goes into making the right decision for you. Having the right information is the best way to make sure you choose the right option but it’s hard to know where to start. That’s why we’ve put together this list of common real estate questions and answers.
Question: What are the advantages of owning over renting?
Answer: Buying a house is not just paying for a place to live. A house is an investment in your future. You can decide to sell your house down the line or even rent out a room in your home should you fall on hard times (assuming you secure the proper permits, of course). More than that though, there are a lot of tax benefits to home ownership that aren’t available to renters. There are federal tax deductions that apply to home ownership. If you’re not sure what credits or tax breaks are available to you, talk with a lawyer that specializes in real estate to find out. Beyond that, it’s hard to argue with the freedom you get with owning your own home. You can paint, renovate or change what you want inside your home (and often outside your home) to suit your tastes – not an option often available to renters.
Question: What are the disadvantages of owning over renting?
Answer: As with most things, owning your own home does have advantages and disadvantages. Probably the biggest disadvantage to owning your own home is the responsibility that comes along with it. If something breaks or repairs need to be made, it’s up to you to do it yourself or hire someone to do it for you. If you were renting, that would be the responsibility of the landlord in most cases. General maintenance can also be an issue for home owners. Lawns need to be mowed, gardens or plants needed to be tended and any property damage is often your responsibility. Even so, for many homeowners the advantages far outweigh the disadvantages.
Question: What is a HUD home and should I consider buying one?
Answer: HUD homes can be a good option if you’re looking to buy a house but save a little money as well. When buying a home, a homeowner may opt for a HUD insured mortgage. If that homeowner is then unable to keep up payments on that mortgage and the home goes into foreclosure, HUD will pay the lender foreclosing on the home whatever amount is owed on the home. This basically means that HUD takes possession of the home and is free to do whatever it likes with it from there. Wanting to sell of the house as quickly as possible, HUD will relist the house at market value, offering the buyer a house at significant savings. The only inherent problem is that the home is sold “as is”. Sometimes that means having to spend a little extra money on repairs or renovations but it can be worth it for the money you save initially. Oftentimes, the cost of the house and the cost of repairs adds up to less than you would’ve paid for the house under other circumstances.
Question: Should I work with a real estate agent?
Answer: It is honestly up to you but it is recommended. A real estate agent will be versed in the local housing market and will be able to show you a variety of houses in your desired area that are within your price range. Your real estate agent will also be able to tell you whether or not you’re expecting more than your budget will allow – a reality check many first time home buyers will need. Finally, your real estate agent can help you negotiate the best possible price for the home you eventually settle on and can help you understand what you’ll actually be paying once closing costs and other associated fees are factored in which is definitely good information to have before you put in your offer.
Question: How much money do I need to buy a house?
Answer: This is a common but very tricky question to answer. This will depend on a great number of factors included but not limited to:
- Size of the house
- Updates in the house
- Size of the lot
- Location of the house
- Additional features in the house
- Current market value
- Current market trends
- Comparables in the neighborhood
- The seller
In general, you’ll need a down payment before you even go into settlement. Once everything has been settled, you’ll need to pay the purchase price of the home, money for various fees associated with purchasing the home and money to pay the closing costs unless the seller has agreed to cover the closing costs. It is important to remember to also budget for home furnishings, any renovations you plan to do immediately, the cost of hooking up utilities and the cost of actually moving your belongings into the home.
Question: What does a mortgage pay for?
Answer: This is another tricky one because a mortgage can cover different things depending on the mortgage itself. The average mortgage will cover the amount of money you borrowed to buy the house, homeowners insurance, and property taxes. Again though, this does change depending on various factors so make sure you ask lots of questions when you get your mortgage and really understand exactly what is covered in your specific case.
Question: If I have bad credit, can I still buy a home?
Answer: In most cases, it is a little more difficult to buy a home if you have bad credit but it’s not impossible. There are many programs out there that are set up specifically to help people with bad credit buy homes. For example, there are a few different federal mortgage programs you can apply for that can help you obtain the money you need to become a homeowner. They may also be local options available through local home buying programs that may be able to offer you assistance. The best way to find out if you qualify for help is to do a little research as regulations and requirements can vary from state to state and your eligibility will depend entirely on your individual situation.