How to find the Perfect House. How to know what I want.

Purchasing a home is a pretty big commitment. It can be a pretty time consuming and stressful process if you do not know what you want, and if you have a bad Real Estate agent. I will talk about how to choose a Real Estate agent or what to look for in a later blog. I'd recommend having a general idea of what you want before choosing a Real Estate agent. I help many friends find their homes and figure out what they want. Here are some questions you can ask yourself to get you started.

INTIAL QUESTIONS

- Do I plan on living in this house long term or short term?

This is important because if you only plan on being in the house for a few years you may find a house you love but have to compromise on a must-have.  

-           What areas am I willing to live in? (Call the local police departments and see what the crime rate is. If this is important. In some cities you will pay more for a better neighborhood.)

-           Are schools and rankings of schools important to you? (Finding a home in a neighborhood to a specific school will decrease the area you are looking at.)

-           How far am I willing to drive to work?

-           How far am I willing to live away from easy access to things (Major roads, beaches, grocery, hospital, shopping, children’s post school activities, etc.)? (In many areas you are going to pay more money for smaller plots of land and smaller houses. If you look for acreage within the city you will be paying a great deal more for the land. If you look 20 minutes outside the city limits you may often find larger homes with larger pieces of land for a lower price. You just have to be careful. If you order a lot of pizza you’ll be driving instead of getting it delivered.)

HOUSE SPECIFIC QUESTIONS

At this point you should have your areas narrowed down. Now you are ready for your next set of questions you should answer prior to looking at houses and selecting a Real Estate Agent.

-           How many bedrooms do I want?

-           How many bathrooms do I want?

-           How large do you want your bedrooms and bathrooms?

-           DO you want a large kitchen or living room?

-           Do you want one story or two?

-           Do you want a den/family room?

-           Do you want your bedrooms together, or a separate master bedroom?

-           Where would you like your laundry room? (Some are in the house, some are in the garage, and some are in the kitchen.)

-           Is square footage important to me? How many square feet do I want?

-           Is a garage important? (A one care garage is not ideal if you really want to park a car in it. It is useful for storing stuff, motorcycles, and other items. If you own a Mini Cooper it might be alright.)
 

-          Do you want block or frame? ( I highly recommend block if houses are built from block in your area.)

-           Do you want a crawl space or slab?

-           Do you want a big yard? Can you handle the maintenance of a big yard?

-           Do you need a great deal of parking?

-           Is this a home my family can grow in or will we grow out of it?

-           Do you want a pool or hot tub? (These types of items come with maintenance.)

-           Do you want a Home Owners Association? (Keep the monthly and annual fees in mind. These will be additional on top of your mortgage.)

-           Is additional storage important to you?

-           Do you want a basement or attic room?

-           Do you want to have an office space in the house?

-           Do you want a formal dining room?

-           Do you want trees?

-           What kind of community do you want? (Kid friendly, more adults)

-           Do you want ceiling fans or high ceilings?

-           Would you like a sunroom?

-           Do you want a fixer upper or do you want a turn-key house? (When looking at fixer uppers you need to remember, there is more to fixing it than what you see. Not everyone takes there time to fix things properly. Also reference any additions to the house. Was the work done with a permit? Was the wiring done properly? There will be hidden issues not even the inspector will find.)

-           Does the exterior matter? Do you want Brick, stone, Vinyl siding?  (There are many different exteriors.)

-           Is a fenced in yard important to you? (An important thing to remember is that fence can be just as bad as good. Some neighborhoods will not appreciate a 6 ft. privacy fence. If a neighborhood has multiple fences then it won’t be a big deal; however, some neighborhoods will feel more like a prison if only a single house has 6 ft. privacy fence. I have heard that this minor thing can actually affect price.)

-           Do you mind being on a main road or do you want to be off the main road?

-           Do you want hard wood, carpet, and tile?

-           Is an efficient use of space important to you? (What I mean by this is the flow of some homes does not make any sense. You walk from one room to another and it just is not laid out conveniently. If my explanation is crap, you’ll see it when you walk through the house.)

-           Will I rent this house out, sell it or stay in it for decades?

WHY ARE THESE THINGS IMPORTANT

Some of these things may seem funny or not important; However, you’d be surprised at how much many of them begin to matter when you are looking. Some will occur to you once you live in the house. There are a great number of houses and only some of them will be right for you. These questions are only to help you narrow down your search. It gives you a place to start. Once you begin to look, you can change your mind on some, maybe something that seemed important became less important because you find better qualities in a house that you did not anticipate.

The way you look at a house should also be influenced by the long term intended use of the house. I am going to use my houses I have in Alabama as an example. I purchased a 4/2/ 2.5 plus bonus room. I bought this house because I was pregnant and I wanted my son to grow up in a stable environment with a large yard. I did not buy the house with the intent to rent; however, it is rentable because I bought it with all the right things in mind (rooms, bathrooms, yard, schools, and crime). I moved out of the house when I lost my son to natural causes. After a short period of time of renting in a condo I decided to purchase again. This time I knew it was a rental. I wanted something inexpensive. The important things for me were a large kitchen, a garage and close to everything. I only planned on living in the house for a year. I considered renting a house but I can’t see spending $800 per month on a rental when I can just buy a rental property with a retirement fund that wasn’t doing squat. I figured putting the money into a house was not a bad route. Now I pay $175 less than the cheapest house that fulfilled my needs. Now I have a second house in a prime neighborhood, close to schools, with three bedrooms, two baths, and a large two car garage. I am not a big fan of this neighborhood, but the house will fulfill the needs of the family I rent it to. They will have three large bedrooms, open concept, large kitchen, easy to maintain yard and a two car garage.

Honestly, I really enjoy living outside of the city. I can have bonfires and a garden in my back yard; I have room to run around. I just feel more comfortable there. For me, this second property was just a means to an end. In March I will get to move back into a house that I love. I realize that most of you that read this will not be doing what I did, but I just want the readers to understand the difference.

When I first started looking for houses a friend of mine gave me a great piece of advice. When you find a house that is right for you, you’ll know it. It’s a feeling, kind of like when you meet a right person for you. You just know it is a fit. The other thing to remember is there is more than one house that will be the right fit. You may run into making an offer just an hour too late. Do not get disappointed by this. It happens often. If you know it is good, someone else will know it is good. I’m not saying jump on the first one, but you will feel it. If your realtor has ten houses to show you in one day and you love the third one, look at the rest and decide towards the end. You may just be mesmerized by one room.

When talking to people I compare house hunting to dating, mainly online dating. Pictures will only show you so much, if it falls within what you want, do not be afraid to look at something that looks disappointing, you may be surprised what you get and vise-versa. When you get to the house thoroughly look at it. It might be beautiful on the outside and on the inside but if you look deeper you may find ugly secrets that aren’t for you. I will do another blog on this within the coming months.

I hope this helps you get on your way. I know that Real Estate Agents can be less and less helpful now that so much is online. If you have a question or an idea please write me and I will be happy to write about it or answer a question if I am knowledgeable on the subject.

 

Danie

Things to know about Home Inspections

Today I would like to discuss home inspections. The title of the inspection and the way it is presented can be pretty misconceiving. I remember the first time I purchased a home. I was told I would need a home inspection. It is where a professional will find all the problems with a home. As a young woman I assumed that this meant they would find all of the problems. This turned out to be false.

During my first home inspection they missed a number of issues that within the first few months had to be fixed. It can be costly and time consuming but you may want a few additional people to come out. After purchasing my first house I had learned that my ducts and insulation were out of code. That cost me $3000 to get them up to code. I found out through the course of replacing light fixtures that additions were improperly wired. I also found out that a very large 500 sq ft addition did not have attic access or ventilation.

When bringing in a home inspector find one that is highly rated and has years of experience in construction. This will be beneficial; however, it will not guarantee they will find everything.
If a home has additions and they were added before permits were a big deal, or they were not completed with permits I would recommend bringing an electrician. The specialists I highly recommend having come out is a roofing company, electrical company, and HVAC at the least. You will likely have to pay for the time of the electrician, and you may have to pay for the HVAC depending on who you go with. I recommend a roof person because they know what they are trained to know what to look for. FYI Roof Salesmen are not school trained. They are normally sent out with another salesmen, they are trained what to look for and then let loose. This means there is still room for human error. My last boyfriend was a salesmen for roofs and flooring. HVAC is a little better. Companies who do this are to provide a licensed and certified technician. They will be better suited to find leaks, out of code insulation, dirty coils and other issues your home inspector could miss.
Depending on where you are located termite inspections, mold inspections and sink hole statistics are important things to look at as well.

Even though many people are home owners, there are those who are looking to make the easiest improvements or repairs possible. I wish we could expect people to take pride in the home repairs they complete;but that is not always the case. Additionally FHA and VA inspectors have higher standards than normally required by a bank providing a standard loan. Even with these higer standards things can get missed. The inspectors they send out are not always impressive. As much of a safety net as it may seem, human error is still a factor.

The homes I have purchased are located in Alabama and Florida. Please keep in mind that each state is different. They have different requirements and different qualifications. Each year the requirements change and what I know may no longer be relavent. I want to help those that have questions and do not know where to start. I love google and I google all of my questions and concerns and hope for the best answers possible. I apologize if I am not an amazing writer; however, I hope you can see past that and have a better understanding of the steps in the home buying process.

As always thank you for stopping by. I hope this has been helpful.

Danie



 

A Homebuyers Checklist for Dealing with the Bank.

Everyone has made good and bad decisions when it comes to finances. Investments, debts, and late payments are all economic realities. Each of these items can and will have an effect on the documentation that has to be provided to the mortgage lender or broker. Although some banks have certain documentation requirements you have to fulfill, sometimes they are not always punctual with a list. That is why I decided to create a list. I am going to break this down the best I can. This list comes from my experience over the last three years. This list can be considered a guideline of what you will need to provide. There might be onesie-twosies of items you will need to provide but I assure you this is a great start.

The first few things you will need to provide regardless of your past will be an average of 60 days of bank statements. This means all of them. I am relatively new to the property rental business. I now have two rentals and I thought keeping my money separate was a good idea. Having to provide information for more than three accounts can be difficult. I learned this based on having six checking, two savings, and multiple investment accounts. I will go further into this subject in a different blog. Keep in mind all money that gets deposited and transferred must be traceable. This can be a difficult process if you are like me and move money from one account to another.

They will want pay stubs, proof of mortgage payments or rent payments. Be prepared to provide copies of all checks for the duration of your current lease if you have a landlord, and a copy of your actual lease. I moved out of my last house into an apartment because I was supposed to go to Kosovo. Keeping copies of my receipts for interbank transfers was the furthest thought from my mind. This caused difficulty. The apartment I rented was a side deal.

Another thing to consider if you have a current mortgage on a rental is how you receive your statements. I receive mine quarterly. Although this is not a bad way to go, you may want to request a current statement depending on where you are at within the quarter. Do this when you have made an offer. It will take a few days to receive this statement. Just in case you do not know how quarters run:

Quarter 1- Jan-Mar

Quarter 2- April-Jun

Quarter 3- Aug- Sept

Quarter 4- Oct-Dec

Having these statements will show that you are paying your payments on time. It will also show money being deposited into escrow and being paid out to insurance and property taxes.

For those who have had any late payments in the past a statement of explanation will be required. Underwriters will want an explanation for why things were paid late. Underwriters can look past certain discrepancies. Not everyone has perfect credit. They will also inquire about all credit inquiries including theirs.

Information on investments you may have will be expected. They will want to see current statements. For most items the magical number is 60 days. Some banks will want 90 days. Having that extra thirty days on standby is not a bad idea. If closing takes longer than 60-90 days you may have to provide the next 30+ days of information. This can be common in short sales. I waited nine months for my first home. I had to be approved three different times.

f you pull money out of a retirement fund to invest in a home  you will want to keep the statement, all documents for the funds, and copy of where it was deposited into the account. Accountability of all sums of money in the account you will be paying out of whether it is for closing or not will have to be explainable. I have my money sitting in my school account and I had to explain every deposit and transfer even though it was for school and not closing.  

Finally, something else I highly recommend that you keep in mind is all statements need to have your information and account number on them. It is always helpful to highlight important information. Create a folder on your desktops and keep everything in there. If they ask for something more than once you have easy access to it. If you do it this way, it can be sent off quickly.

Soldiers, there are some things you need to know. Some banks will want more than a Leave and Earning Statement. They may ask about mybiz. Here are some links. I was not able to get it to work. http://www.cpms.osd.mil/Content/Documents/DCPDS-EV-FactSheet-LO.pdf, https://compo.dcpds.cpms.osd.mil/, http://cpol.army.mil/library/benefits/EmploymentVerification/EmploymentVerificationDirections.pdf. These are what you will need if you can get them to work. They may have to speak to your leader to verify employment. It is silly; however, civilians do not always understand this.

As I said earlier I am going to break up the list. The second part of the list is more for people who have more than one home; however, they are still learning the process.

For those of you who are entering the rental property business and you are still learning there are some things to keep in mind. Banks do not recognize rental income until you claim it on your taxes. Typically they prefer two years on your taxes. It can vary by bank; however, this has been my experience.

That is it as far as my list of how to get started. Although this is about what you need I would like to make a few other suggestions. If you have credit card debt pay it down to about 20% if you can. This will help your interest rate. Paying off auto loans will minimally help your interest rate. Cancelling credit cards can also have a negative effect on your credit. I have learned a lot along the way. I have made a lot of these mistakes. I have dealt with a lot of disorganized companies who do not communicate properly. Sometimes you are put into a difficult position when it comes to documentation and closing dates. I have had to switch companies or hire mortgage brokers. Please be careful with mortgage brokers. They cost you extra in closing and are not always top notch. You can run into communication issues with banks too. Choose wisely. I hope this makes the process easier on someone.

 

 

 

A Home buying Checklist

o   60 Days of Bank Statements

o   60 Days of Paystubs

o   Proof of Rent/Mortgage payments

o   Copy of all current leases

o   60 Days of Mortgage statements (if applicable)

o   Late Payment Explanation

o   60 Days of Statements for investments (401K, TSP, etc)

o   Proof of funds for closing and all other money.

o   Tax Returns for the past two years

o   Proof of all other incomes (alimony, child support, second employers, etc)

 

 

The list for the Newer Investor with more than one property

 

o   Copy of leases on investment properties

o   Proof of income on investment properties (Checks, deposits, etc)

o   Mortgage statements for all other properties.

 

 

 

My Bio about my home buying and investment experiences!

Hi!

Everyone one thinks they know a thing or two about home buying. I would like to group myself into this category. Let me give you a brief run down. I learned about seriously investing when I was 22. When I returned from Iraq I decided to purchase a home with all the money I saved up. When a person is stuck in a third world country it is tough to spend money unless it is on crap. I worked sixteen hour days on average I did not have time to spend my money on junk.

Buying a house at twenty-four years old can be overwhelming. I did not have a father to guide me through, I just went along and tried to figure it out. I am sure at any age home buying can be difficult and overwhelming. We normally have tons of questions. I used google like a mad woman. However, there were still many failures in that journey. My first house is a very expensive crash and burn when it comes to investing and a return on investment. My first house will likely never be worth $140,000.00 ever again.

Over the course of time I would like to blog about my experiences in purchasing homes. I purchased a home in 2010, 2011, and purchased my third home as of July 2013. I have two homes up for rent. Being in the service and a decreasing economy has had its affects on where I live and what I do with my property. Even with being well into a third property it has not been a charm. All the things I thought I learned did not help with the third. Because of this I have learned about dealing with banks, mortgage brokers, insurance, short sales, regular sales, property management/managers, things to look for, and many other things.

There are many articles out there but they are from the "expert" who knows everything because they learned it in school or as a real estate agent. How many of these "experts or agents" have purchased a home themselves? There might be some, but who puts everything in one place. I have googled the living crap out of all sorts of things and sometimes I do not find the small nitty gritty stuff. Some how it gets missed. These are the things I hope to help with. If you have a specific question shoot me an email and I will answer it if I can.

If anyone reads this Thank you for stopping by.