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