| The following are not your usual home buying | | | | homes. It is easy to consider just the price |
| tips. For example, almost everyone will tell | | | | of a home, or what that means in terms of a |
| you that you should buy a home, but the first | | | | mortgage payment. However, there are other |
| tip below suggests an alternative. | | | | costs. If the home is in a flood zone, for |
| | | | example, insurance could be $200 per month |
| Consider Renting | | | | higher than for other homes. Look at taxes, |
| | | | insurance, utility costs (big homes cost more |
| This is all about time and place and your own | | | | to heat) and any other regular costs, so you |
| situation. Are you going to be in one place | | | | can honestly compare houses according to what |
| for long? If you are likely to move within a | | | | they will cost you monthly. |
| few years, you may be better off renting. | | | | |
| Transaction costs of buying and selling will | | | | Go to online forums to learn about a new |
| likely eat up any equity gains you get. It | | | | town. Many people like to talk about where |
| may seem profitable to buy at $200,000 and | | | | they live. They get to do this in various |
| sell at $220,000 two years later, but | | | | online forums, which you can search for by |
| commissions, closing costs and loan costs can | | | | entering the name of the town and "forum" |
| easily add up to $20,000, so where is the | | | | into any search engine. Be aware that these |
| gain? Also, there is no guarantee that prices | | | | are often places where locals complain about |
| will rise, and if they don't you suffer a | | | | their town, but you can also find interesting |
| real loss. | | | | and useful information, and ask questions. |
| | | | |
| Also, it is a matter of the ratio between | | | | If your real estate agent doesn't represent |
| rental rates and the costs of buying, and | | | | you, don't be loyal. If she is really a |
| what is likely to happen in the market. For | | | | seller's agent, she is obligated to pass on |
| example, suppose you are in a slow-growing | | | | comment you make to the seller, like "I think |
| stable area, and your total monthly cost to | | | | we can go higher if they reject our first |
| buy a home is going to be around $1,200. If | | | | offer." Even if she represents you, be sure |
| rent is anywhere near that for the same size | | | | she does it well. If you are shown three |
| home, you should probably be buying a house. | | | | houses that have nothing to do with the |
| | | | criteria you laid out, show the agent the |
| On the other hand, let's look at the example | | | | door. By all means stick with a good agent |
| of Tucson, Arizona in late 2005. You could | | | | who really helps you, but otherwise you can |
| buy a small home for about $190,000, with | | | | also call the listing agent for each house |
| mortgage, taxes and insurance running about | | | | you want to see. |
| $1,325 per month. But you could rent the same | | | | |
| home for just $675 per month. Now add to this | | | | Inspect the home yourself. You probably plan |
| the fact that home prices had been rising at | | | | to have a home inspection done by a |
| 20% or more per year for years, and 12% of | | | | professional before you buy. But you should |
| all recent sales were to speculators, not | | | | also visit the home a second time yourself, |
| owner-occupants (a sure sign of a market | | | | and do your own inspection. Bring a checklist |
| top). | | | | and look over everything, even if this takes |
| | | | an hour or more. In this way you can tell the |
| In this case, it would have made more sense | | | | professional inspector what your concerns |
| to rent. Had you bought there two years ago, | | | | are, and be ready with questions for him. |
| you would have paid $650 per month extra to | | | | |
| be a home owner, or $15,600 over these last | | | | There is another reason to do this |
| two years. In addition, the house would | | | | inspection. It has to do with a concept |
| probably be worth a little less now than when | | | | called "time investment." Sellers are more |
| you bought it. Better to have banked that | | | | likely to accept an offer if they have |
| $15,600 and bought the home today. | | | | invested more time and hope into a buyer. |
| | | | Negotiation secrets like this are a whole |
| Other Home Buying Tips | | | | other area of home buying tips - one that you |
| | | | may want to learn about. |
| Compare ALL costs when you look at various | | | | |