Student Loans & Mortgages: Owning Real Estate In Your 20s

No more than ever before, people in their 20s are looking into owning real estate. As mortgage payments have increasingly been the domain of younger and younger people, questions have arisen over the true benefit of owning a home at a young age and just what type of person should do so. Certainly, owning real estate at a young age is not for everyone and there are some things to keep in mind when considering the possibility.

Of course, one of the key benefits of being a young person is given up when committing to a mortgage, an element of freedom. It is difficult to pick up and move when a mortgage payment is due every month and that can weigh heavily on a decision to plant roots at any age. Add to that an uncertainty in income as a result of being fairly new to the workforce and it can be easy to see why up until recently, the idea of buying a home was foreign to most 20 year-olds.

Increasingly, the benefits of building equity in a home are speaking to young people, making the prospect of real estate ownership more attractive. While building equity is certainly a big benefit to planting roots with a particular piece of real estate, young people need to understand that those benefits are not instant and that a long-term commitment is necessary to reap any rewards.

Because of the propensity of young people to be in flux whether it be in job, location or relationship status, planting those roots can be difficult. For benefits to truly be seen through a build up in equity, payments have to made for a lengthy period of time on a mortgage. As many initial mortgage payments go towards the interest on a loan rather than the actual loan amount, they do little to build equity in a piece of real estate.

That piece of information can sometimes be missed by young people that simply want to build equity and aren’t sure how to go about doing it or just what it takes. Giving up freedom is a steep price to be paid and the benefits are not immediate.

An additional wrinkle that some young people are adding is early investment desires and the attractiveness of pulling a rental payment on a leased property. Becoming a landlord is no small decision and the burden of having to deal with individual renters and the upkeep that rental properties demand can be a daunting one.

Interestingly enough, that burden has been increasingly taken on by young people, perhaps suggesting a better dissemination of information about real estate investment opportunities and the gradual death of the stigma that being a landlord is only for the old or rich.

In the end, if you are a young person and have considered the prospect of getting involved in real estate investment or ownership, significant discussion has to take place with yourself over your goals in life and the value of flexibility to accomplish those goals. There are lucky people out there who land the perfect job early in life and for those people, perhaps they can be sure that they intend to stay in a certain area for a very long time. For those people, a mortgage makes sense and building up early equity can certainly pay off later.

For those that have a more muddied version of the future and would love the ability to be able to take that new job opportunity at a moment’s notice, perhaps early home ownership is not the way to go. The struggle between freedom and future fortune can seem like a difficult one, but by evaluating your personal goals, you can decide on whether home ownership is in your future.

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas.

Five reasons why buying a home is still a good idea


(ARA) – A still murky economy and uncertain real estate market may have you wondering if buying a home is a good idea. Whether you’re thinking about buying, or already have and just need some affirmation, you may find it comforting to know there are still plenty of good reasons for financially stable people to buy a house. Here are a few:

* Homeownership can help make good credit even better. If your credit is in poor shape, you’ll want to monitor it before seeking a mortgage. But if you have good credit, live within your means, and consistently make good financial decisions, a mortgage can be the kind of “good debt” that helps your overall financial health. Making regular payments on a mortgage shows potential lenders that you’re a less risky candidate for a home loan. Before you begin home shopping, it’s a good idea to check your credit. Enrolling in a product like freecreditscore.com can help you better understand and leverage your credit.

* A mortgage can function like an automatic savings plan. By now, you’ve read the news reports about how little we Americans save these days. Well, every year you pay on your fixed-rate mortgage, is a year of building equity, and equity is like money in the bank. When it’s time to sell – whether you’ve stayed in your home seven years or the full 30 year term – you’ll have created equity and should be able to sell your house for more than you owe.

* Homeownership comes with plenty of financial perks, including an income tax credit for property taxes you pay on your home. For detailed information on tax breaks check out IRS.gov. Buying a home also affords you the opportunity to halt your housing costs. Rent will always go up from year to year, but if you have a fixed-rate mortgage (avoid adjustable rates) your biggest annual expense – housing costs – will be locked-in.

* Mortgage interest is a good deal when stacked up against other types of interest that don’t do much for you – such as high credit card interest rates or low rates on savings accounts and CDs. Mortgage rates are low right now, meaning you can pay less over the life of a loan than at practically any other time in recent history. Plus, it’s the only kind of interest that you can deduct from your taxes.

* Prices are still relatively low and inventory is high. It’s been a buyer’s market for a long time, but that’s going to change. The question is: when will the market start to improve in your area, taking home prices with it? You’ll have to do some legwork and astute research to determine when is the best time for you to buy.

If you monitor your credit and are on a sound financial footing, buying a home can still be a good idea. And now is as good a time as any to make your purchase.

Avoid These Eight Mistakes When You Buy Or Sell A House

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By : Gary Torrell    99 or more times read
For most people, buying or selling their primary home, vacation property or rental property can be among their most important and expensive business transactions. This article offers advice to avoid some common mistakes, but does not cover the process and challenges of obtaining a loan to buy the property, which is often a critical step as well.
    1. Rely Exclusively/Primarily On A Broker. Real estate brokers are often helpful. They are experts at suggesting the initial asking price, marketing the property, and finding potential buyers. However, since brokers typically get paid only if a sale closes, they are biased towards closing the sale. This bias influences their advice, recommendations and guidance. Almost always, brokers will try to convince the buyer to offer more, the seller to accept less, and both parties to agree on key terms, so the sale closes and they receive a commission. For this reason, do not rely exclusively or primarily on the broker for objective advice, especially with the availability of online tools and experts to assist you.
    1. Sign Real Estate Contracts Without Consulting A Lawyer. Most real estate contracts come on pre-printed forms prepared by broker associations, such as the California Association of Realtors (“CAR”). While the CAR forms contain the minimum legal terms necessary, they are also designed to protect the broker from potential liability and ensure the broker receives the commission. You should retain a lawyer to review and revise the contracts and advise you of the meaning and legal consequences of the key terms.

      We often advise clients to negotiate changes to the standard CAR contracts, and reasonable changes are often accepted. The broker will want the seller to sign an exclusive listing agreement, which is often quite generous to the broker. A qualified lawyer can help you negotiate better terms in the contracts. Beware of any broker who discourages you from having a lawyer review the contracts before you sign them. Although there is a cost to retaining a lawyer, that cost will pale in comparison to the large sum paid or received in this significant transaction. Using a lawyer will also minimize the potentially disastrous consequences of signing contracts you do not fully understand, or contracts that do not protect your interests.

    1. Retain Third Party Vendors Based Solely Upon The Broker’s Recommendation. Brokers often have relationships with third party vendors, including mortgage brokers, lenders, home inspectors, building contractors, appraisers, insurers, home warranty companies, and escrow and title companies. Brokers often refer buyers and sellers to vendors that are supposed to act in your best interest, but are often grateful for the referral and want to help the broker receive the sales commission.

      Many broker referrals are competent and acceptable, but you need to check their references and see whether another vendor may better protect you and/or provide the same service at a lower cost. For example, most brokers are affiliated with specific escrow and title companies and prefer to work with them, but you can save $500-$2,500 (or more) by price shopping independent escrow and title companies, which typically charge less than broker-affiliated companies. Often, the broker-affiliated escrow and title companies will match the lower price.

    1. Skip Or Pay Little Attention To A House Inspection. For buyers, a thorough house inspection is a key step in deciding whether to close, insist on repairs, and/or renegotiate the sales price. Almost always, you should not retain a home inspector recommended by your broker or rely upon prior home inspections. Instead, retain and pay for your own inspection by a reputable, licensed building contractor with at least ten years’ experience as a general contractor.

      Regardless, be sure to keep in mind that almost every inspection contract provides that the inspector is not liable for most errors or omissions. This means if the inspector misses something, the buyer may have little recourse against the inspector. Moreover, realize the inspector typically does not open up the structure to see the “bones” of the house. Rather, s/he only looks at what is readily visible. Be present during the inspection and ask the inspector questions as you follow him or her through the house. If the inspector offers a more thorough inspection at a higher cost, get it, because without it, you may not discover an expensive repair is needed until after you buy the house and the home warranty has expired.

    1. Rely Solely On The House Inspection Report. Even a good house inspector may lack expertise in architecture, geology, drainage and engineering. If the house inspection report, the lack of expected building permits for improvements, the age of the house, your own observations, or other disclosures suggest there may be something wrong with the structure or the land, retain and pay for a separate engineering report, architect’s report, soils/drainage/geology reports, or other expert reports prepared by a qualified specialist before you close and within the contingency period in the sales contract.

      Ironically, these specialists tend to overstate the risks they find, but provide much more detail than a general inspection report. Have the seller or broker obtain the permit file from the local building and safety department, then have a contractor or architect review it to make sure all the improvements were permitted. Unpermitted improvements can be a nightmare for a buyer.

    1. Neglect the Title Report and Title Insurance. For most home sales, a title company will issue a title report (which shows recorded liens and encumbrances), and issue title insurance. You should carefully review the title report yourself, or hire counsel to do so, and have the title company obtain copies of all recorded easements and encumbrances and make sure you understand their effect. If the lot is irregular or hilly, it is usually better to obtain an ALTA title insurance policy, which offers more coverage.
    1. Neglect Dispute Resolution Provisions. The CAR forms have provisions regarding arbitration (instead of court litigation) to resolve disputes. If you are a buyer and do not have a written agreement with your agent/broker, you will not be entitled to insist on arbitration to resolve disputes with your broker. Since disputes often involve buyers, sellers, agents/brokers and/or inspectors, the same dispute resolution procedures should be put in all relevant contracts.
    1. Pay Little Attention To Contingency Periods In The Purchase Contract. The main contract contains specific conditions to the buyer’s obligation to buy the house (e.g., the buyer must obtain financing, approve the condition of the house, and acknowledge the seller’s written disclosures) and specific time periods within which the conditions must be satisfied. These contingencies allow a buyer to cancel the sale and obtain a refund of his or her deposit. Many buyers and sellers expect their broker to follow up on these important conditions, and parties often fail to act within the express contingency periods or fail to get the contingency period extended. It is the buyer’s responsibility to act timely and have the contingency period extended if necessary, or else you may lose your deposit and/or be pressed to close on the purchase.

Please note many other issues can arise in any real estate transaction, but if you avoid the common mistakes described above, you’ll be way ahead.

Author has over twenty-five years of real estate legal experience representing buyers, sellers and lenders.

 

Buying a home: Prepare by getting your finances in order

(ARA) – For those considering buying a home, the current real estate market presents some unique opportunities. One of the side effects of the economic roller coaster ride of the past few years is that home prices have gone down and more homes have gone on the market. For buyers, that means more choices and better deals.  However, those same tumultuous years also can also teach buyers a lesson: Make smart buying decisions and be wise with your finances.

Impulsive buying is never a good idea when it comes to a purchase as significant as a home, but it was something of a trend at the height of the mid-2000s. Now, with banks lending far more cautiously, you need to be absolutely certain that your finances are in order – and healthy – to be able to get the best deal on your purchase.

There are a number of steps you can take to get ready to buy a home, and you might need to work on them simultaneously. Consider that you’ll need to start saving, if you haven’t already, but you’ll also need to review your credit score and do what you can to either maintain it or work toward healthier credit. Both of these tasks will help make the home-buying process better for you.

Your credit is an important factor in determining the terms under which you can get a mortgage. Broadly speaking, the better your credit is, the more positively you’ll be viewed by lenders – and that can lead to better interest rates. And because you’ll be paying off your home for years to come, it’s important to get the best rate possible.

Start by checking your credit report. You’re entitled to one free check of your report, from TransUnion and other credit reporting agencies every year.  As much as you need to check your report to find out what shape your credit is in, it’s also essential to review it for inaccuracies or fraudulent activity, both of which can have a negative impact on your score.

If your credit health needs some work, start taking action immediately. Paying bills on time, reducing your overall debt and limiting new credit inquiries can all help to build your credit – but be patient as it can take time for your positive actions to take effect. Nevertheless, the sooner you make the effort, the sooner you’ll see results.

Making a prudent decision about buying a house comes down to an honest assessment of what you can afford. Keep in mind that you might be approved for a loan that’s larger than what is practical for you to afford. While it may be tempting to buy a pricier house, the stress of struggling to make payments could diminish your enjoyment of your new home and even put you at financial risk. One rule of thumb is that most borrowers can afford a home loan that runs about two and a half times their annual salary.

Buying a home is a complex process, but one that is ultimately very rewarding when done right. By organizing your finances well in advance, you’ll help set yourself up for success. For more information about credit and buying a home, visit www.transunion.com.

Rent or Own? The Pros of Each

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By : Andy Asbury    99 or more times read
For some people, owning a home is an integral part of achieving the American Dream. But for others, and perhaps a growing number of people, home ownership is not in the cards. And oftentimes, that is a calculated choice people make. The reality today is that some people simply prefer to rent a home instead of own one. Of course, there are upsides to both renting and owning.

Owning a home: Pros
The home is yours. Want to change the paint color? Go ahead. Refinish the floors? You can do that, too. Build equity as you make monthly mortgage payments? Check. People who own their condo, loft or single-family home have flexibility to make the changes they want, provided they are not outside the bounds of city ordinances (in the case of single-family homes) or association co-op rules (in the case of condos and lofts).

And in some markets, including Minneapolis, owning a home actually makes more economic sense. According to a recent Wall Street Journal survey (based on data from Zillow, Inc.), 12 of 27 metro areas favor owning a home rather than renting one. In Minneapolis, for example, the average monthly mortgage payment for homeowners is $776, compared to the average monthly rent payment of $953.

Homeowners also enjoy a sense of security. They are not subject to landlords who do not want to extend a lease, or who are not prompt in dealing with issues that arise. Additionally, homeowners essentially invest in themselves each time they make a mortgage payment or complete a home-improvement project.

Renting a home: Pros
You are not the owner. That means your landlord, not you, likely is responsible for major repairs. Furnace goes out? Call the landlord. Ditto if, for example, the roof develops a leak. For that reason, people who rent can take comfort in knowing exactly how much of their money goes into their home each month or year.

Renters also enjoy flexibility. Since leases generally last for fixed periods of time, renters can live in one spot for a year or two, and then try somewhere else. Or maybe you have a job that keeps you on the move. In that case, renting is a good choice because you are not on the hook for selling a home before you can move.

Renting also tends to be less labor-intensive than owning. Renters often can decorate a home to line up with their personal tastes, but they generally do not need to worry about things like landscaping, mowing the grass in the summer, or removing snow in the winter. As a result, renters have more time for the activities they enjoy.

Author and Broker, Andy Asbury, studies Minneapolis condos, closely. His team of Urban Agents at Better Homes and Gardens Real Estate Area Leaders are focused on the latest trends in buildings like the Carlyle in downtown.

Taking a Closer Look at Advantages of Foreclosures

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By : Jacquelyn Marks    99 or more times read

Many people would look at the concept of foreclosures as something so negative. However, what they do not realize is that there are several advantages that people would find in foreclosures than just losing homes, both for the property sellers and buyers.

It is a known fact that when a property has been seized by the state, the bank or a certain real estate agency because the owners were no longer capable of producing payments for the property. It can also be used to settle unpaid debts and loans such as when the owners decided to file for bankruptcy. In addition, because of all these, people tend to over look the positive things that they can actually get out of foreclosed homes and properties.

    • Because of the increase for homes in the United States, the number of possible homes for sale has also increased. This means that potential homebuyers will also have more opportunities to find the houses that they need.
    • Good quality homes will be up for grabs. If you will be going through the foreclosure listings, you will find that there are some houses up for sale, which have been repaired and repainted. The reason behind this is to eliminate the competition through presenting homes that are ready for occupancy. Of course, who would not like the idea of doing fewer repairs on a pre-owned home? Moreover, because sellers would like to sell their properties immediately, they will also be amenable to do some negotiations, and eventually settle for low and acceptable prices.
    • Low-priced homes are indeed an advantage. Since there are many homes that are now available in the real estate market, the prices of foreclosed homes have decreased by at least 35 percent. This is perfect for buyers who are leaning toward buying very affordable properties. The houses will then be sold easily, thus giving the sellers an equal amount of opportunity to pay for all their loans or debts that caused them to give up their homes.
    • Investors have higher chances of acquiring more assets. The influx in the rate of foreclosed homes in the market caused a lot of businesspersons, investors and individuals to turn their views on buying affordable properties as forms of investments. Because who knows, the real estate industry might pick up in a few months or years, and these assets can definitely be worth much more as soon as the market comes back to life.
    • Seeing many foreclosed homes being bought one after the other, the hopes if p0ssibly helping the economy recover suddenly appears to be at arms’ reach. This gives people a more positive outlook on how they can pull this industry back on its feet.

Knowing all these advantages can definitely help convince more and more people about grabbing the good opportunities that foreclosed homes offer. This list can also guide potential buyers and sellers when it comes to how they should sell or buy properties.

Dealing with Foreclosures: Seeking Legal Help

It is not at all surprising that most people fear that giving their homes up for foreclosure would mean that they would be unable to recover and lose whatever is left in their possessions. Although part of it may be true, it doesn’t mean that there’s no way to get through all these without lenders and banks draining them dry of cash and other properties.

Facing foreclosure may mean that you will be giving up the home that you have always wanted for various reasons: You may either be unable to pay for the remaining mortgage payments or settle your remaining debts and other loans. And even after you have surrendered your property, there would still be a possibility that your lenders will still file a case against you because the value of your home is not sufficient enough to complete all your dues.

Bad as this situation may seem, there are in fact positive ways to deal with all these legal concerns. First, you can talk to your lenders to see if your debts can be waived, at least what’s left of them. Second, you have to look for a reliable real estate or bankruptcy lawyer to help you out. More often than not, your lawyer would advise you to file for either a Chapter 7 or a Chapter 11 type of bankruptcy, for you to be discharged off your debts. Now, the kind of bankruptcy you can file will depend on your financial situation.

File a Chapter 7 if you are unemployed and if you have no other means of earning enough money to pay for your debts. Once proven in court, your possessions will be put up for sale, which can be done by a court-appointed trustee. On the other hand, if you have a business and you feel that your business is about to go under, file for a Chapter 11 to help you avoid having your properties included in the foreclosure listings. What you also need to keep in mind is the fact that bankruptcy can reflect on your credit standing for a long as 10 years. Therefore, you need to make sure that this is what you really want to do, otherwise, it would be best to look for another way to fix your foreclosure issues.

There is another way to fight foreclosure that does not leave a bad mark on your credit scores. Moreover, this can be done if you will consider selling your property in advance. You may be unable to hold on to your home, but you can surely hold on to the opportunity to be debt free. The money that you get out of the sale of your home can be used to pay off your existing debts and if you have some money left, then you will have a better opportunity to start fresh and to start acquiring new properties for you and your family.

Dealing with foreclosure can also be avoided through preparation. Never let the opportunity of learning everything about how to safeguard your property pass, and all you need to do is to talk to a real estate expert who you can trust for the “do’s and don’ts” in acquiring properties, as well as with a legal representative to discuss the legalities of bankruptcy, foreclosure and acquisition of property.

ForeclosureFreeSearch.com is the leading resource provider for onlineforeclosure listings.