10 tips for buying a home

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After four years of economic crisis, signs have already begun to emerge that the housing sector is stabilizing. Many experts say that it is the right time to invest in a property, but you should exercise caution when buying a home

Other analysts believe that prices may continue to decline. According to Yale University economist and professor Robert Shiller, famous for predicting the housing crisis, the sector has yet to recover.

In an article published by The Wall Street Journal, Shiller cites the high level of foreclosures and high unemployment as factors holding back the price recovery.

If you are thinking about buying a home, these 10 tips can help you make the best decision:

  1. Get a financial self-assessment. Before buying, it is important to analyze your financial situation. The most important thing is to determine our income and the capital that we have available as a downpayment. Although loan interest rates are currently low, obtaining a mortgage is difficult. Banks are increasingly demanding in verifying your income and credit history.
  2. Set realistic expectations. If you are buying your first home, it is important that your expectations are realistic for the property’s increase in value. The average valuation of a home in the United States is 3.6% per year, according to data from the Case-Shiller index, one of the main indicators of house prices from the firm Standard & Poor’s. This indicates that it is no longer feasible to buy and try to sell after a few months or a year.
  3. Think like an investor. Think about the expected return on your investment, the risk and the term. The profitability if you buy to lease the property will be what you get from the rental income, less maintenance expenses and taxes. Along with the annual appreciation of the property, this becomes your profitability.

 If you buy a property to live in, one of your goals will also be to make the best possible investment. The best way to do this is by searching for the areas with the best schools because those areas tend to be poles of attraction for families.

  1. Consider continuing to pay rent. Compare the costs of buying and maintaining a home with the cost of renting it. Zillow.com just did this buy versus rent analysis for nearly 200 metropolitan areas and 7,500 cities in the United States. The study concludes that in 75% of the analyzed areas, buying is better than renting.

However, each buyer must do their own analysis. You can use the AARP calculator.

  1. Location, Location, Location. A house gains in value if it is located in an area with high quality schools and with good communication and transport routes to the main urban centers.
  2.   Become an expert. Gather information about the area you have chosen and the properties that interest you. It is important to know what houses similar to the ones you want recently sold for. You will only need to enter the address to know which properties are for sale and rent, as well as the recently sold ones.
  3.   Seek pre-approval for a loan. By seeking approval from a bank, the buyer will know your credit score and the interest rate at which you would obtain a mortgage. “It’s very important that you look at lots of different bank options to make a better decision,” says Ilyce Glink, personal finance expert and author of books on home buying.
  4.   The house can be a retirement plan. Moving houses can pay off. “It is an increasingly common strategy among people who are nearing retirement age or are retired. They move to a smaller house or sell and use the equity as a source of income, ”says Armand Cristopher, owner of the Dallas-based real estate firm Senior Living Realty, which specializes in seniors.
  5.   Consider the improvements. Calculate the cost of the additional investment the home requires. No property is perfect and even the newest ones require changes and modifications. It is key that the changes made are aimed at increasing its value.
  6.   Think long term. The home purchase is a long-term investment. It is recommended to buy with the prospect of keeping it for five years or more. This time allows you to obtain greater benefits from owning a property if you live in it or if it was purchased as an investment to rent.

 

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