Obstacles to Home Ownership

big-houseMuch has been written and reported about the difficulties young adults face in our economic times.  Wages have stagnated, inflation has not. An income that could support a family of four fifty years ago cannot pay the rent on a two-bedroom apartment in today’s dollars.  With the rising cost of higher education, those who have pursued a college degree get saddled with student loan debt whether they graduate or not and it’s an obligation that cannot be relieved by bankruptcy.  Between student loans, car payments, and ever rising rent costs, how is anyone supposed to save for a down payment on a house?

While I would not argue that establishing an independent, adult household is an easy prospect, there are choices that make it harder than it has to be.  Here are a few things that can add to the difficulty of being able to buy a home.

  1. Delaying marriage.  High divorce rates give marriage a bad name.  Here is the good news.  More than half of all first time marriages last a lifetime.  Those that get married and stay married are up to four times wealthier than their single counterparts.
  2. Not delaying having children.  If getting married makes you wealthier, having children makes you poorer.  If you want to have financial stability in life, get an education, get and stay married, and wait to have children until after you are married.  Having children outside of marriage in the new normal for this generation of young adults and it may be a contributing factor to why they can’t afford to buy a house.
  3. Supplementing income with credit. When we leave our parent’s home, we all would like to maintain the lifestyle we enjoyed there.  But, usually that isn’t possible because we don’t have the income to sustain it. Many solve that problem using credit cards. Using a credit card with a plan to pay it off is one thing.  Using a credit card for living expenses is another.  If you cannot live on what you make, you need to find a new job or a new way to live. Borrowing money for liabilities will bring you nothing but poverty.
  4. Buying new cars on credit.  According to financial advice guru Dave Ramsey, car loans are the single biggest destroyer of personal wealth.  Most of us are not auto mechanics and the fear of being stranded along side the road with a broke down vehicle is real.  However, a membership to a discount towing service and regular car maintenance is vastly more affordable than the loan payment, taxes, and insurance on a new car.  If you are willing to make due with a paid off clunker, you will have the means to save for something better and maybe a garage to park it in.
  5. Not tracking spending. When finances are tight, it is important to know where each dollar you earn is going.  If there is always more month than money, it may be time to re-evaluate your life choices. If housing costs are more than 50% of your income, that is not a sustainable situation.  It may be time to consider moving to a cheaper location, a smaller apartment, or sharing with roommates.  If eating out is a huge expense, may be now is the time to learn how to cook.  Brewing coffee at home in a coffee maker can also breath life into a sickly budget.

If you marry young and well, delay having kids for a few years, live within your means, and drive old cars, you will likely be able to buy a home sooner than you think.  Make these mistakes, it might take you a lot longer.



An Argument For Open Houses

I have heard it said that open houses are more for real estate agents trying to find potential clients than they are a means of marketing a home for a seller.  While there is some truth to this claim, agents can make new contacts at an open house, the open house is also a valuable selling tool.

IMG_1705First, an open house provides an opportunity for buyers to tour a property at their own pace without the formality of making an appointment or the worry of wasting someone else’s time.  In today’s information age, most buyers do research on their own before selecting a real estate agent and open houses are one of the ways they can narrow their search criteria.  Second, open houses are a way for neighbors to see what is being offered and how it compares to their own home.  It can inspire them to call a friend who they would like to have as a neighbor or entice them to make an offer themselves.  Finally, an open house provides a seller with instant feedback from the public about the positive and negative features of the home, giving the owner the opportunity to make changes that will make the home more appealing and able to sell.

The following is a list of things sellers can do to improve their home’s first impression.

  1. Sweep the front sidewalk and exterior entry.  Clear any cobwebs or dirt from door and window frames.
  2. Make sure there are bright, working bulbs in all light fixtures and turn them on.
  3. Don’t stuff the closets.  People will open them and you don’t want anything to fall on them.
  4. Open all the blinds and curtains and clean the windows.
  5. Clear the front and side of the refrigerator of papers and magnets.
  6. Clean window blinds and check window sills for dead flies.
  7. Clean the air-intake vent and bathroom fan.
  8. Remove small appliances from kitchen counters to clear as much space as possible.
  9. Take down family photos.
  10. Remove evidence of pets as much as possible.  Put the litter box in the garage.
  11. Live plants are great.  Fake plants are not.
  12. Put your cosmetics and medications away, out of sight.
  13. Clean tubs and toilets
  14. Take out the trash
  15. Make sure the house smells pleasant. Light a candle, bake some cookies, or spray an air neutralizer.

Look Before You Leap

cliffIt’s Open House season and many of us have caught home shopping fever.  It’s easy to see why.  It’s so much fun to dream about what you will do to make a new and different house your own: plant a garden, host parties on the deck, or enjoy a relaxing night by the fire, but hold on!  Before you get too emotionally invested, here are a few things to take into consideration before leaping into a new home purchase.

  1. Take the time to shop and qualify for financing before you start looking at homes.  Unless you have a pile of cash sitting around, you will need a loan to pay for your house.  By securing financing ahead of time, you can make strong offer, knowing what you can afford.
  2. If you qualify for a traditional mortgage with a 20% down payment, a commercial bank may offer you the most competitive interest rates.  However, if you are self-employed, have a smaller down payment, or wish to use a government program, consider using a mortgage broker.  They work with multiple lenders and can find the right loan to fit your situation.
  3. Meet your potential neighbors.  They can be a great resource for information about local activities, businesses, and public services.  You can also get a first impression of what they are like and whether you want to live next to them. You can have a great house but it’s not worth it if you have unpleasant neighbors.
  4. Research the cost of utilities.  The gas or electric company can give you historic usage for the property and applicable rates.  The city can tell you what the average rate is for water, garbage and sewer.  Recycling may be included or an extra fee.  Check to see what companies provide phone, internet, and cable services.  You’ll also want to see if your cell phone works and how good the cell coverage is in the area.
  5. Visit the property at different times of day to get an idea of lighting and noise levels.  Traffic may be non-existent during the day, but busy in the morning and early evening when people are coming and going. A home that is bright and sunny during the day could be a dark dungeon at night if there isn’t adequate lighting.
  6. Check the physical markers of your lot boundaries to see what is actually included.  You don’t want to assume ownership of what actually belongs to your neighbor.  You’ll also want to know if there is something, like a fence or outbuilding, encroaching on the property you wish to buy.
  7. Make sure you know about any deed restrictions, community covenants, or conditions placed on the property.  There may be rules about any number of things including outbuildings, paint colors, building materials, lawn care, landscaping, or noise levels.  Even if you are okay to conforming to these rules, it is always better to know ahead of time.
  8. Find a good real estate professional to guide you.  The internet provides a place start your home search, but the information it provides is often outdated and/or inaccurate.  A good realtor has access to the most accurate and timely information regarding the market and can guide you in making the right decision. She will answer your questions and make sure there are no unhappy surprises.  Please call me when you are ready to start your home buying adventure.