Buying a home can seem like a daunting process. When you think about it, it may just be one of the most expensive and difficult you will ever purchase. You need to be emotionally and financially prepared. Despite that, proper preparation, research, and determination can help you get that home you’ve been wanting and waiting for — from dreams of owning to the paths toward handing over the keys to your new home.
Before dipping your toe into the buying pool, it’s important to consider whether you are now ready to take the responsibility of owning a house. The first thing is to take a closer look at your budget.
To determine how much you can spend on a home, you may start by listing down all your expenses and reviewing your bank statements. That way you can figure out how much you are spending daily, from transportation, food, and streaming services to your leisure spending and take-outs. Taking a good hard look at your finances will help you decide if now is the right time to purchase a home.
It is crucial to know if it's the right time. Just because you can get a mortgage or financial assistance doesn’t always make it the right time to do so. Keep in mind that besides the mortgage, purchasing a property involves extra one-time payments that can mount up rapidly, such as closing charges, legal fees, and other connected costs like a house inspection. Moreover, don't overlook the cost of relocation or house upgrades. Plus, you’ll want to plan for those expenses like a moving truck or new furniture. The last thing you want to do is stretch yourself too thin financially.
Wondering what's next if you’ve already made up your mind to buy a home? The first step to getting the ball rolling is to find an experienced local real estate agent to guide you through the process.
Typically, the seller will cover the commission fees for both their agent and your buyer's agent, so hiring an agent won't typically cost you anything. The agent will not only help you find your dream home (which can be very tough in a seller’s market) they’ll also help you through negotiations and paperwork. When purchasing a new home it is nice to have some experts to advocate for you when discussing pricing or needed repairs with the seller or their agent.
Understanding your local real estate market is crucial. The housing inventory in your town and how you formulate your offer can both be significantly impacted by whether it is a buyer's or seller's market. To prevent missing out on or overpaying for your desired house, rely on your real estate agent's knowledge in this area.
Now that you have an idea of the current trend and the amount of your dream house, it’s time to get a pre-approval letter. A pre-approval letter is a written estimate from a lender of how much you will likely be able to borrow from them.
The letter will help you determine how much you can afford. It will also help demonstrate a secure home loan when you are ready to make an offer on a house. During a pre-approval process, a lender will do a hard look at your credit pull, take a look at your bank accounts, and review everything including your tax returns and pay stubs. They will also confirm your employment history and dive into your assets and debts.
Pre-approval means a near-certain approval for a loan up to the amount specified by the lender, assuming nothing changes. Pre-approval letters, however, typically only hold true for 60 to 90 days due to the cyclical nature of credit scores, employment, and financial stability.
Take your time in submitting all the requirements before getting pre-approved, be sure you're serious about buying because getting pre-approved more than once quickly could harm your credit.
Now that you’ve got the nitty-gritty out of the way, it’s time for the fun part—house hunting! Choosing a neighborhood can be overwhelming but you can narrow your choices by focusing on where you can afford a home.
You can also consider the location of the house to where you are working and if you have a family, think about the schools available in the area for your child.
You can also check the shops, groceries, and restaurants nearby for your convenience. Talking to friends and family and knowing where they live will help you check out your options. Learn more about your potential location by having a quick walk or a tour of the neighborhood to help you decide.
Once you have a preferred location, the next step is to check for homes. Consider major components of the home and lay out your preferences for each — including minimum square footage, rooms like bedrooms, bathrooms, dining area, visitors area, garage spaces, finished basement, or specific neighborhood. Make sure your agent knows all the personal preferences you want. That way, you will both make the most of your time.
Once you found the one -- a.k.a. your dream home -- it’s time to make an offer.
The amount you're ready to pay, as well as information like who covers which closing expenses, whether the offer is subject to conditions (such as having to sell your own house first), and the projected closing date, will all be included in an offer. This offer is a crucial beginning point for discussions with the seller even though it might be modified along the route.
Working with your agent closely can help you make sure your offer fits your specific situation and is competitive. In a highly competitive market, where attractive listings are scarce, sellers will be likely to receive multiple offers, so you want yours to be the most attractive while still not overpaying for the property. You’ll also want to move swiftly to avoid losing out to another buyer if you’re not on the seller’s market.
Hiring a home inspector is always a good idea, so schedule a home inspection as soon as possible. They can help you learn about any issues that may prevent you from buying. A licensed home inspector knows what to look for -- they will cover the condition of the home, especially when it comes to foundations of a roof, plumbing, HVAC systems, and other defects. It will give you the chance to reconsider or have room for renegotiate if structural damage or needed repairs are discovered.
It's time to hand over the keys after the home inspection and any repairs that you and the seller have agreed upon.
This is accomplished during the closing, which operates somewhat differently depending on your state. Regardless, the transaction is completed on both sides at closure.
Before the closing date the seller, the buyer, and their representatives will sign the papers officially sealing the deal. You’ll also be given a settlement statement that lists out exactly how much you’ll be paying that day.
It will show your final purchase price and all the included fees like insurance and tax payments. These are kept in an escrow account with your mortgage lender so they may pay the bills when they are due on your behalf.
The final purchase price will be deducted from any outstanding mortgage balance and any seller-paid closing charges, such as past-due real estate taxes, agent commissions, and title company fees.
Once the closing is settled, congratulations — finally the place is yours. You’re now the proud new owner of your dream home! Enjoy and start to picture your new life inside the walls of your new home.
Disclaimer: We know this is easier said than done; however, there's no need to worry. Our team at RE/MAX Advanced Realty - Indy Home Pros is here to help!
Our agents have 8 years of average experience in selling and buying just listed homes for sale, so rest assured that we have the expertise and skills needed to help your relocation quickly and seamlessly.
Contact us at 317-298-0961 to learn more!
As recession fears grow, you may be wondering how a recession affects house values. A recession can have an impact on property prices, but you should not expect home prices to decline. Any change in housing prices during a recession will be influenced by unique circumstances. These are the supply of available homes for sale, as well as the health and size of the active homebuyer audience.
Every day, we assist clients in determining the value of their real estate in Indiana. If you're not from Indiana but want to know what happens to housing values during a recession, keep reading.
A recession is a major reduction in economic activity that lasts for a lengthy period of time.. Recessions usually affect the majority of the economy, including the property market. A recession can have a variety of effects on the property market.
The most likely result is decreased overall activity. Fewer transactions will come from fewer sellers wanting to sell and fewer buyers willing to acquire. During a recession, observers and experts in the housing market should expect fewer home sales and purchases.
Second, the market's buyer and seller behavior will shift. More expensive house sellers may become more willing to negotiate with homebuyers. Homebuyers may benefit from this. Homebuyers, on the other hand, are likely to become more protective about property pricing and more demanding of concessions.
Finally, during a recession, housing prices can become more volatile. However, a significant price reduction is not guaranteed. Home prices are affected by housing demand, employment rates, interest rates, and inflation.
During a recession, housing prices might rise, fall, or remain flat. Both supply and demand are required in the housing market.
To better grasp what to expect or to make more accurate predictions regarding the housing market during a recession, you must first understand the elements that drive housing supply and homebuyer decision-making.
The following factors have the most sway over the US housing market. Understanding this will help you better predict what will happen to housing values during a recession.
Unemployment Rates
During a recession, the unemployment rate will affect real estate prices. If unemployment remains low, many people will remain confident in their ability to earn a living. This will boost homebuyer confidence and encourage greater property prices. However, if the unemployment rate rises, many purchasers will become hesitant and wait for a certain moment to buy a property. In this case, housing prices will plummet.
Interest Rates On Mortgage
Mortgage interest rates have a significant impact on home values. If mortgage interest rates are high and rising, there is a considerable likelihood that housing values will fall during a recession.
For starters, a higher mortgage interest rate increases the cost of borrowing money to purchase a property. As a result, to get the same repayment price, the buyer must offer less for the residence. Buyers can also offer the same amount but will have a higher mortgage payment due to the increased mortgage interest rate.
Second, rising mortgage interest rates reduce home prices by harming present homeowners. A family that owns a home but needs a larger home is unlikely to go from, say, a 3% mortgage rate to a 6% mortgage rate. Instead, that family will try to wait for the mortgage rate to fall. This restricts supply because that family is not selling, but it also removes activity from the market.
Finally, many first-time buyers will become dissatisfied with the process of purchasing a property. They saw the earlier lower rate as a squandered opportunity. Many people would prefer to wait for the cheap rate to return in the future. Again, during a recession, this activity will reduce total activity and may result in reduced property prices.
Wage Growth Vs. Inflation Rate
Inflation and salary growth go hand in hand. Consumers will feel the pinch as costs for basic goods and services rise. Homebuyers will be unwilling or hesitant to pay high costs for a property if prices rise faster than wages. If salaries do not keep up with inflation, house prices will fall during a recession.
Quantity Of People Within Specific Age Brackets
The size of the active homebuyer audience is important. The more people who are ready to buy a property at the entry level, the more activity and housing demand there will be in the housing market. This will cause housing values to rise. However, if there are few prospective buyers at the entry level, property prices will fall owing to a lack of housing demand.
The most significant factor to consider is the number of people aged 25 to 35 at the bottom. The United States currently has over 44,000,000 people in this age bracket, which is the highest number in history. This is one of the key reasons why the property market has performed so strongly since 2019. This big entry-level base will also help to stabilize housing values amid a 2020s recession.
Supply Quantity And Quality
What happens to house prices during a recession is heavily influenced by housing supply. However, supply comes in two parts.
The first component of supply is quantity. This aspect of supply is often mentioned. If supply is limited and demand is high, property prices will rise. If there is more supply than demand, housing prices are projected to fall. During an economic slump, the other component of supply that is less discussed becomes highly significant.
The other side of supply that is rarely discussed is the supply's quality. Specifically, the supply's aspirational desire. Homes must entice prospective buyers. For years, the same sorts of homes and home styling have been built in numerous sections of the country.
As a result, folks who can afford the latest and greatest in new homes may be hesitant to purchase. This is because the newest stock is uninteresting. This will create a bottleneck by keeping the middle tier of the market in their current homes owing to a lack of desire to relocate.
We hope that this post has enlightened you. If you have any questions or want to learn more about real estate, please call us at 317-298-0961 today!
One of the biggest financial decisions you'll ever have to make is buying a house. It's more than just looking at what looks good for you and your family; it's about considering each stage of the process and the many factors that come along with it.
But that doesn't mean that it's always complicated. There can be a way to simplify the process and make smart and efficient decisions.
In this post, we'll help you by sharing more about the process so buying real estate in Indiana can be easier and smoother.
Establish A Budget
When you visit the ideal home, it can be depressing to learn that it is out of your price range.
Determine how much you can afford to spend to save time and disappointment. The general recommendation is to spend no more than 2.5 times your annual pay. You can use online budget estimators to find an appropriate house budget range that works for you.
Be sure to review other expenses on your bank statements, such as cable bills, gas, entertainment, food, and the like, to see where you may cut back on spending.
Get A Mortgage Pre-Approval
Being pre-approved for a mortgage rather than just being pre-qualified is the best approach to gaining an advantage in the competitive sellers' market. Pre-qualification would entail that lenders assess a homebuyer's affordability based on the data provided by the buyer.
Lenders who have determined how much they can lend after confirming the borrower's (buyer's) income, assets, and credit score are said to be "pre-approved." Pre-approval would expedite the loan acceptance and underwriting procedure even though it is not regarded as a loan commitment!
Start Your House Search
You can employ a real estate agent to assist you in your search for affordable housing. The best course of action is to make a list of your key priorities, such as the size of your home, whether it is a beginning home or a lifetime home. Looking for a rockstar real estate agent? If yes, we're here to help!
To help you further limit your options when looking for a home, keep the following in mind:
Rank the priorities from least to most important for your agent, who will show you a list of homes fitting your specific criteria.
Sleeping Costs
Owners of first-time hours might not be familiar with sleeper prices. These are costs that you failed to account for when making your budget. It's a mistake to solely think about the mortgage payment and ignore those hidden expenses, which could quickly build up!
Homeowners' insurance, property taxes, association dues, yard upkeep, utilities, repairs, and other expenses would be considered sleeper charges. If these expenses are not planned for, your disposable income will be reduced, which will make it more difficult for you to pay your mortgage.
Limit Credit Use
Before you use your credit card to make purchases or apply for store credit, stop and think. Until the loan is closed, the lending company is free to check your credit at any moment. This would imply that any strange or significant financial activity could ruin your deal's chances!
If an unexpected or unforeseen circumstance arises, discuss it with your loan officer to find out how it might have impacted the application.
Have Your House Inspected
Home inspections are still a requirement when buying a property, even though lenders won't demand them to obtain a loan. An expert will examine the home during a home inspection to search for any current or potential problems.
They will perform several checks, including testing the electrical systems and the roofing as well as making sure the appliances function as promised. You'll be given a list of the issues found after you're done.
Look carefully over the list for any significant problems or substantial health risks. Before concluding a sale, get in touch with the seller and ask them to fix the problem, such as replacing broken shutters. Move on to another house if things don't work out.
Without a home inspection, you can be forced to make expensive repairs that you'll be responsible for paying for after the sale.
Obtain A Home Valuation
Home appraisals are reviews that inform you of the current value of the home. Before making a mortgage-financed home purchase, you will require an appraisal.
Given that they are unable to lend more money than a home is worth, lenders will demand this. If the evaluated value is ever less than the offer, acquiring finance could be difficult.
Additionally, buyers must include an appraisal contingency in their offers so that, if the appraisal comes in below the asking price of the property, they can withdraw their offer or renegotiate the price without losing their earnest money deposit.
Request Repairs
You must ask the seller to address any faults found after reviewing the results of the home inspection. This can be done by:
List the problems and the requests you have, and your agent will send this information to the seller's agent. Alternatively, you might bargain with the vendor directly.
Conclusion
Without a doubt, the stressful process of purchasing a property can reduce the enthusiasm for investing in a new home. However, knowing what comes next can make you feel a little calmer after you are familiar with the procedure and what it entails. That way, you can gather your thoughts, choose a home wisely, and then take pleasure in it after making the significant purchase!
We hope that this post about the home-buying process was extremely helpful to you. Keep these guidelines in mind if you're buying a house to help you get around a bit more easily.
If you have questions or want to learn more about the home buying and selling process, our team at RE/MAX Advanced Realty - Indy Home Pros is here to help!
Ah, summertime—the perfect season to bask in the warm sun, enjoy outdoor activities, and give your home some much-needed TLC. With longer days and pleasant weather, it's the ideal time to tackle those home maintenance tasks that will keep your living space in tip-top shape. Whether you're a seasoned homeowner or a first-time buyer, this comprehensive summer home maintenance checklist will guide you through the essential tasks to ensure your home stays beautiful, functional, and ready to embrace the season.
Check the Air Conditioning System: As the temperatures rise, your air conditioning becomes your best friend. Start by cleaning or replacing air filters to ensure optimal performance and clean air circulation. Don't forget to check the overall condition of your air conditioning system and schedule professional maintenance if needed. A well-maintained AC unit will keep you cool and comfortable all summer long.
Inspect and Clean the Gutters: The gutters play a crucial role in directing rainwater away from your home. Over time, they can accumulate leaves, debris, and dirt, which can hinder proper water flow and potentially cause water damage. Grab a sturdy ladder, put on some gloves, and remove any debris from the gutters. This simple task will help prevent costly repairs and keep your home dry during summer storms.
Examine the Roof: A healthy roof is your first line of defense against the elements. Inspect it for missing or damaged shingles, cracks, or signs of wear. If you spot any issues, consider arranging for repairs or consulting a professional roofer. By addressing roof problems promptly, you'll avoid potential leaks and preserve the integrity of your home.
Clean and Repair Outdoor Spaces: Summer is the season for outdoor relaxation and entertaining. Sweep and clean patios, decks, and outdoor furniture to remove dirt, pollen, and grime. Check for any repairs needed, such as loose boards or rusted metal. A fresh and inviting outdoor space will be the perfect setting for your summer gatherings.
Service the Lawn and Garden: A lush and vibrant lawn adds beauty to your home. Trim trees and shrubs, mow the lawn regularly, and tend to your garden. Remove any weeds and apply mulch where necessary. Proper maintenance will keep your landscape thriving and create an inviting oasis for outdoor enjoyment.
Inspect and Clean the Exterior: The exterior of your home requires attention, too. Check for cracks in the siding, peeling paint, or any other signs of wear. Clean the exterior surfaces using a power washer or a gentle cleaning solution, as appropriate. A fresh and well-maintained exterior will enhance your home's curb appeal and protect it from the elements.
Test Sprinkler Systems: A well-watered lawn is a happy lawn. Test your sprinkler system, making sure all sprinkler heads are functioning correctly and adjusted for proper coverage. Repair any leaks or broken components to ensure efficient watering throughout the summer.
Check Windows and Doors: Windows and doors play a significant role in energy efficiency. Inspect their condition, including screens, weatherstripping, and caulking. Replace or repair any damaged areas to keep the cool air inside and the hot air out. Your energy bills will thank you!
Service the Pool: If you're fortunate enough to have a pool, proper maintenance is crucial. Regularly clean and maintain the pool, balancing chemicals, checking filters, and ensuring pumps are functioning optimally. Safety measures like fences and gates should also be in good condition to provide a secure environment for everyone.
Test Smoke and Carbon Monoxide Detectors: Safety should always be a top priority. Test smoke detectors and carbon monoxide detectors, replacing batteries as needed. This simple step ensures that your home remains protected from potential hazards.
Clean and Inspect Outdoor Lighting: Outdoor lighting adds ambiance and enhances security. Clean exterior light fixtures and replace bulbs as needed. Inspect and repair any wiring or fixtures for safety and reliable illumination during warm summer nights.
Check and Clean the Dryer Vent: Lint buildup in the dryer vent can be a fire hazard. Remove any accumulated lint to ensure proper airflow. Consider professional cleaning if necessary, as it helps prevent potential accidents and keeps your dryer running efficiently.
Inspect and Clean Chimney and Fireplace: While the fireplace might be the last thing on your mind during the summer, it's an opportune time to inspect and clean the chimney and fireplace. Ensure they are in good condition for safe and cozy use when the colder months return.
Check the Insulation: Proper insulation helps maintain a comfortable temperature inside your home. Evaluate the insulation in your attic and walls, adding or replacing it as needed to improve energy efficiency and reduce cooling costs.
Service the Garage Door: Don't overlook the garage! Lubricate hinges, tracks, and rollers of your garage door for smooth operation. Check the safety sensors and ensure proper functioning to keep your vehicles and belongings secure.
Refresh Interior Décor: Summer is a perfect opportunity to give your home's interior a refreshing makeover. Consider updating your décor to reflect the bright and airy feel of the season. Swap out heavy curtains for sheer or light-colored ones to let in more natural light. Incorporate vibrant, summery colors into your throw pillows, rugs, and accessories. Bring in some fresh flowers or potted plants to add a touch of nature and a pleasant aroma to your living spaces. A simple interior refresh can go a long way in creating a summertime ambiance that uplifts your mood and makes your home feel rejuvenated.
With this summertime maintenance checklist in hand, you'll be well-prepared to give your home the care it deserves. By taking the time to complete these essential tasks, you'll create a comfortable, beautiful, and safe haven for yourself and your loved ones to enjoy throughout the summer season. So, grab your tools, put on some sunscreen, and let the summer shape-up begin!
Feeling inspired to take your summer home maintenance to the next level? If you're ready to sell or buy a home this summer, our dedicated team of RE/MAX Advanced Realty agents is here to assist you every step of the way.
With our in-depth knowledge of the local market and a passion for helping clients achieve their real estate goals, we are the perfect partner for your summer home journey. Whether you're looking to sell your current property and find a new place to call home or searching for your dream house to make lifelong summer memories, we've got you covered.
Our experienced agents will provide personalized guidance, expert advice, and the necessary resources to ensure a successful transaction. From marketing your home effectively to attract qualified buyers to finding the perfect home that matches your desired summer lifestyle, we'll be there to make the process smooth and stress-free.
Take advantage of the summer season's vibrant energy and exciting opportunities in the real estate market. Contact our RE/MAX Advanced Realty team today at 317-298-0961 (West Office) and 317 317-881-3700 (Greenwood Office) or visit our website at www.remaxadvancedrealty. Let us help you make your summer home dreams a reality!
So, you've finally decided to buy a property. The question is, would you purchase a new one or an old home?
In the first part, we talked about the pros and cons of buying an old home; now, we're going to do the same with a new house.
So sit back, relax, and let us help you decide.
A few advantages of purchasing a new home include upgraded appliances, modern floor layouts, and fresh paint. However, there is also something to be said about the psychological advantages of moving into a brand-new house. Let's look at some of the benefits of the new building. When you're the first person to live in a house, the home is what you make it.
Because new homes are constructed to last, owners of recently constructed residences frequently experience lower monthly maintenance costs. 26% of homeowners reported paying $100 or more a month or more for maintenance, according to the American Housing Survey. However, the percentage of homeowners who bought recent construction residences is substantially smaller. In actuality, 73% of these homes only paid $25 or less a month on these expenses. It is also simpler for new homeowners to obtain a house warranty because of the reduced maintenance requirements.
The importance of energy efficiency has grown over time, therefore generally speaking, a home's environmental impact decreases with age. Due to their thicker, dual-pane windows and more well-insulated walls, ceilings, and floors, new homes better retain heat in the winter and air in the summer.
Given that some modern homes have built-in solar panels and other renewable energy sources, there may be an even greater emphasis on efficiency depending on the home's design.
Along with ensuring your family's physical safety, homes that are code compliant also offer many advantages. Newer homes require less upkeep and are given the safety seal of approval since they must adhere to stronger safety requirements, which often leads to cheaper insurance costs and higher resale value.
Although flowing, open-floor designs have become more popular, we have seen similar trends reflected in recent home development. However, new homes aren't always bigger than older ones. As a result, there is more storage space, more open areas for entertaining, and a higher average square footage.
There are numerous reasons why opening a brand-new home is exciting, but there are also a few disadvantages when compared to existing homes. You must keep in mind that nothing remains brand new for very long, regardless of how recently built the house is or how recently it was built. Keeping that in mind, think about the following drawbacks of purchasing a new property.
Newer homes are generally less centrally located and frequently found in the suburbs because city centers are typically crowded with older residences. Some prospective home buyers may find this distance from the downtown area to be less than ideal because it frequently results in longer commutes for both work and leisure.
Close-quarters living has resulted from home builders learning to sacrifice yard space to maximize the square footage of the house as land becomes more scarce.
The vegetation in these smaller outdoor areas is also younger. Older homes have had decades to develop their landscape, but newer homes have had much less time to develop their landscaping, hence new homes frequently have simple landscaping. In the long run, poor landscaping can reduce curb appeal, which could make it more challenging to sell the house in the future.
As was already established, newly constructed homes cost 30% more on average than older ones. If high upfront costs won't work for your financial situation, you may be better suited for an older home, as they typically require less money upfront and will allow you to stagger home maintenance costs throughout the life of the property. However, if higher upfront costs won't work for your financial situation, you may be better suited for a newer home.
Conclusion: Age is just a number.
Making the best choice for your home requires a lot of compromises. Homebuyers must be very clear about what they want and need in a home, and the age of the property is only one factor to take into account.
Older homes might be a perfect choice for homeowners that place a high value on distinctiveness and are prepared to invest the required time, effort, and money to preserve and protect that uniqueness. These historic homes may age gracefully and serve as a reminder of simpler times for their owners with the correct maintenance. However, a newer home might be more appropriate for you if modern convenience is your main concern.
If you're ready to purchase your first home or you want to find which house is best for you, our team at RE/MAX Advanced Realty Indy Home. Pros are here to assist you!
Ranked as the #1 RE/MAX Team in Indiana, our seasoned professionals are more than willing to answer your questions and/or make buying or selling a home fast, easy, and exciting!
Call us at 317-298-0961 or click this link to get started.
You'll probably hear the word "escrow" used in a few different settings if you're buying a house. Let's examine what escrow is, how it functions, and how you, as a property buyer, seller, or homeowner, might profit from it.
Escrow is a type of legal agreement where a third party temporarily holds money or property until a certain condition (such as the completion of a purchase agreement) has been satisfied.
During the home-buying process, it is utilized in real estate transactions to protect both the buyer and the seller. Throughout the mortgage, the funds for taxes and homeowner's insurance will be kept in an escrow account.
Real estate usually uses escrow for the following two reasons:
Escrow accounts come in two different varieties because they have two different purposes.The first is utilized during the home-buying process, whilst the second is utilized throughout your loan.
Your purchase agreement for a house will typically include a good faith deposit, sometimes known as earnest money. Your payment of this deposit demonstrates your commitment to buying the house. Usually, the seller is entitled to the funds if the contract fails owing to the buyer's error. The deposit will be added to the buyer's down payment if the house purchase is completed.
An escrow account will be established to keep the deposit to safeguard both the buyer and the seller. Until the deal is finished, the good faith deposit will remain in the escrow account. The cash is then used to pay the down payment.
Occasionally, after the house has sold, money is kept in escrow. Known as escrow holdbacks, this is what it is. Escrow holdbacks are required in a number of circumstances. Perhaps you consented to the seller staying in the house for an additional month, or perhaps you found a problem with the house during the final walkthrough.
If you're having a new house built, money can stay in escrow until all the work has been approved by you. After the conditions are met, the monies will be released to the relevant party.
When you purchase a home, your lender will set up an escrow account for you to pay your taxes and insurance. Following closing, your mortgage servicer takes a portion of each payment and puts it in an escrow account until you have to pay your taxes and insurance.
Escrow's needed amount is a shifting target. You may pay different amounts of taxes and insurance premiums from one year to the next. Based on the bills that were paid the previous year, your servicer will compute your escrow payments for the following year. Most lenders demand that at least 2 months' worth of extra payments be kept in your account to make sure there is adequate money in escrow.
Every year, your lender or servicer will review your escrow account to verify sure the amount being collected is appropriate. They will issue you with what is known as an escrow refund if their examination of your escrow account reveals that they have gathered excessive sums of money for taxes and insurance.
If their study reveals that they haven't gathered enough data, you'll have to make up the gap. If there is a shortfall in your escrow account, you can be given the choice to make a one-time payment or increase your monthly mortgage payment.
If you want to learn more about escrow or how to buy your first home, our team at RE/MAX Advanced Realty - Indy Home Pros is here to help you!
In our previous post, we talked about the basics of real estate purchase agreement. Now, we’re going to learn more about it by discussing earnest money deposit and closing expenses while answering some of the most frequently asked questions about real estate purchase agreements.
Consider earnest money as a deposit made in good faith by a buyer to a seller to demonstrate the buyer's commitment to their deal to buy a house. A buyer may withdraw from this deal at any time but will forfeit the earnest money deposit, save if the seller fails to satisfy specified restrictions.
The purchase agreement will specify how much earnest money is needed for the real estate contract. In a sense, it acts as insurance for sellers who usually want to make sure they aren't wasting their time or missing out on other chances by pursuing a contract that won't close.
To prevent any problems and guarantee that it is distributed properly and on schedule, this earnest money is often kept in escrow by a third party. When you close on the property, any funds deposited into escrow will be used for your closing expenses or down payment.
Closing costs are the additional charges that purchasers and sellers must pay in order to finalize a real estate transaction. Loan origination fees, discount points, appraisal fees, title search fees, title insurance, surveys, taxes, deed recording fees, and credit report fees are a few examples of these expenses. Three business days prior to a scheduled closing or settlement date, lenders are required by law to give buyers a closing disclosure.
What fees apply to closing? They are essentially processing costs and ongoing costs that you will pay to your lender after you close on a home.
Amounts for typical expenses including home appraisals, title searches, property taxes, homeowners insurance, lender's fees, and ownership transfers are included in closing costs. Your purchase agreement should specify who is responsible for paying these closing charges (parts of which may be divided between the buyer and seller).
Final closing fees may range from 3% to 6% of the cost of a home.
The most frequently asked queries about real estate acquisition agreements are listed below.
A real estate purchase agreement is not filed with county records, so it does not need to be notarized in order for it to be legally binding.
When the option is specified in the real estate contract or when the laws of your state permit it, a real estate contract may be ended. State laws typically permit the termination of a contract when a seller omits to disclose any significant problems with the property.
The costs involved with creating this contract are normally covered by the seller's agent commission charge, which is paid as part of the closing costs.
The terms and conditions under which a property will be sold are clearly spelled out in a real estate purchase agreement, which is a binding legal instrument. It's created to assist you prevent hitches by taking into consideration aspects related to a property purchase and sale. It's built to safeguard both buyers and sellers and ensure a smooth transaction.
As you go about buying or selling a home, being aware of the fundamentals of this document can help you avoid any potential hazards.
One of the most common ways to purchase real estate is through auctions. Make sure you're ready with a knowledge of how they operate and what you need to know before bidding to avoid the drama of the bidding contest.
Various laws and norms apply to auctions, and they differ from state to state. If you intend to participate in an auction, this quick guide offers an overview of what to anticipate as well as advice on how to get ready.
You must be well-prepared before bidding at an auction because the bidding process is public, and you must pay the deposit and sign the contract after your bid is chosen as the winning one. These are the things you might want to consider.
Anyone planning to place a bid at an auction should be familiar with the associated lingo. Here are some of the main terms you should be familiar with, however, this is not a full list:
Unless the bidder and seller agree on any additional stipulations before the auction begins, auctions do not often have a cooling-off period and are typically unconditional offers. If your bid is accepted, the deposit must be paid and the documents must be signed right away after the auction. You must enter an auction ready to finish the transaction should your bid be accepted. If you back out of the deal, you could be held responsible for any losses the seller incurs as a result and lose your deposit.
Researching the current auction regulations in the state or territory where you intend to purchase is always a smart idea.
Before you start looking for a home, it could be a good idea to have your mortgage pre-approval prepared. When a lender determines how much you can afford to borrow based on an evaluation of your finances and credit rating, this is known as a home loan pre-approval. With this knowledge, you may begin your search for homes within your price range without getting overexcited.
It's crucial to understand that a pre-approval does not imply that your loan application will be approved in full. Keep your lender informed of your financial condition and any changes about the property you intend to bid on.
The deposit amount is specified in the contract of sale and is normally 10% of the property's sale price, though you may be able to agree with the vendor on a different amount before the auction begins. It's crucial to be aware that properties sold at auction do not have a cooling-off period, so if your offer was the highest, you will need to pay a deposit right away.
The sale agreement specifies the seller's settlement date. Property settlement times range from 30 to 90 days on average, though they can differ. The deposit will be forfeited, and you might also be responsible for any losses incurred by the seller if you are unable to complete the transaction.
Although there isn't a foolproof recipe for auction success, the following basic advice might be useful:
Before the auction, you must have completed all of your pre-purchase investigations and research. Consider pest and building inspections, unit-specific strata reports, and performing your due diligence.
Anyone looking to buy a property at an auction should seek advice on the legal requirements in their state or territory, the terminology involved, and the state of their finances due to the demands placed on the winning bidder at an auction, including providing the deposit and signing the contract and the lack of a cooling-off period.
You must have your money in order before signing up on the auction day since you will need to pay a deposit after the auction is over. This also entails having your deposit available.
Keep lines of communication open with the auctioneer and make sure they are aware of your desired bid amount and the increments you wish to boost it by.
It's crucial to be aware of your upper financial boundaries when making split-second bidding decisions. Set an ideal price range and an upper limit so you'll know when to stop bidding.
eBay for real estate? Not quite, but granted that they adhere to social distancing rules, property auctions can still take place during lockdowns connected to COVID-19 thanks to the development of internet auctions.
This might enable prospective buyers to view the results and the bidding process of other comparable properties before making a real-world offer.
If you plan to bid, you must create an account on the preferred platform in advance and successfully pass an ID verification, which typically calls for your driver's license. The agent you visited to examine the property will receive the information.
Our expert real estate experts can help if you're thinking about buying your first house at an auction but don't know where to begin.
To learn more, contact us at RE/MAX Advanced Realty by dialing 317-316-8224 today!
In the first part, we talked about different real estate techniques for investors, including live-in-flip, real estate flipping, house hacking, and investing in Single-Family Rental (SFR) homes.
Now, we're going to learn more strategies to help aspiring and current investors like you!
Serving as a middleman between a home buyer and a home seller, real estate wholesaling involves either charging a fee for the service or keeping the difference between what the seller receives and what the buyer pays.
This frequently entails "driving for dollars," or scouring communities for properties the investor believes they may profit from. Investors may also employ MLS listings and direct mail marketing campaigns or they may just keep an eye out for For Sale By Owner (FSBO) signs.
Real estate investors can invest without actually owning any real estate by using REITs, or real estate investment trusts, which function as mutual funds. Investors purchase REIT shares in a manner akin to purchasing stock or mutual fund shares, and the trust pays dividends to its stockholders.
To allow citizens to engage in large-scale, income-producing real estate, Congress formed REITs in 1960.
All dividends given to shareholders by REITs are deductible from their taxable corporate income. According to the Securities and Exchange Commission's Office of Investor Education and Advocacy, the majority of REITs do not pay corporate tax since they distribute at least 100% of their taxable revenue to shareholders.
In general, REITs are thought to be a wise investment. The 40-year compounded annual return on REITs, as measured by the FTSE NAREIT Equity REIT Index, is 9.44 percent.
Groups that invest in Real Estate Investment Groups (REIGs) are associations of private investors who pool their resources and expertise to make real estate investments utilizing a variety of techniques. Contrary to a REIT, a real estate investment group is not a taxable corporation with a board of directors subject to stringent regulations. For instance, REITs must have at least 100 investors by the end of their first year, and no more than five people may possess at least 50% of a REIT.
In contrast, private agreements rather than governmental rules control real estate investment organizations. The structures, membership fees, and levels of engagement for REIGs are all flexible. Investors who want to have an interest in actual real estate may want to consider joining a real estate investment group.
Purchasing certificates of property tax liens is an indirect method of real estate investing. When a property owner doesn't pay their property taxes, the municipality where the home is located will file a tax lien, which is a legal claim on the property. It serves as a formal claim to the assets for the owed sum.
These don't resemble mortgage liens, which grant a lender the right to the property until the borrower repays the loan.
A certificate stating the amount owed and the interest rate that the lien owner will receive is issued by the municipality when a tax lien is placed on a piece of real estate. Following that, the certificates are auctioned off to investors; at the moment, 28 states permit the auction of these certificates. Property tax arrears amounting to over $21 billion annually, according to the National Tax Lien Association, making it a substantial area for investment.
When a bidder wins the auction, they pay the outstanding taxes and acquire the right to either foreclose on the property or receive their money back when the homeowner makes up the unpaid taxes. The homeowner has a set period to make the payment or risk foreclosure. The lien holder recovers their investment plus interest if the homeowner makes good on their payment.
Another real estate technique for investors is called BRRR or Buy, Rehab, Rent, Refinance, Repeat.
The plan involves purchasing a house, ideally below market value, rehabilitating it, renting it out to pay the mortgage, obtaining a cash-out refinance, and then using the profit to start the process over again.
This is not a method for beginners; rather, it is for seasoned investors because it includes finding amazing discounts on houses that need some renovation but are still profitable investments.
Since the investor will be paying the mortgage while the renovation is taking place, it is crucial to understand the costs and length of the repairs that will make the rental property appealing to residents. It's crucial to increase the property's curb appeal because kitchens and bathrooms often have the highest return on investment.
The next stage is to find trustworthy tenants to rent the property to for a rate that at least covers the mortgage payments until the investor can refinance. Before refinancing, banks typically need a "seasoning" time, and a cash-out refinance needs a particular amount of equity. Additionally, lenders rarely refinance an empty home, so the investor will need to have a strong credit score—typically 620 or higher—to qualify.
The investor continues the process by locating another contract. It is not a passive investing approach, even though it has the potential to be profitable. A network of lenders or the capacity to take out a home equity line of credit (HELOC) may be necessary for the investor since it may be challenging to obtain a typical mortgage on a distressed property.
This is a method for paying off debt on several rental properties so that you own them free and clear. It can also be used for real estate investing. Financial expert Dave Ramsey popularized it as a method of paying off personal debt.
The strategy includes:
The mortgage on the rental property with the lowest balance must get the largest monthly payment feasible using all available resources, including savings from a day job and all rental revenue. The investor will continue to earn the same amount of money when that is paid off, but there will be one less mortgage to pay off. The snowball grows larger with each mortgage that is paid off since the investor has more money to pay off the subsequent mortgage. Finding quality rental properties at competitive mortgage rates and practicing disciplined saving for the years necessary to carry out the plan are requirements of the strategy.
Buying a house is an exciting and significant milestone in many people's lives. That’s why it's crucial to approach this process with careful consideration and thorough research. In this blog post, we will explore some essential factors you need to know before purchasing a house. By keeping these considerations in mind, you can make an informed decision and find a home that suits your needs and budget.
One of the first steps in the home-buying process is determining your budget. Assess your financial situation, including your income, expenses, and existing financial obligations. This evaluation will help you establish a realistic price range for your house hunting. By knowing your budget and sticking to it, you can avoid the pitfalls of overspending and ensure a financially stable future.
The location of a house plays a vital role in your day-to-day life. Consider your lifestyle, commute times, and proximity to essential amenities like schools, healthcare facilities, grocery stores, and recreational areas. Research the neighborhood to assess its safety, community atmosphere, and potential for future growth. By choosing the right location, you can enhance your quality of life and even potentially increase the property's value over time.
Different types of properties cater to various lifestyles and preferences. Determine whether you are looking for a single-family home, townhouse, condo, or apartment. Each option has its own advantages and considerations. For example, a single-family home offers more privacy and space but may require more maintenance. On the other hand, a condo provides a low-maintenance lifestyle with shared amenities. Understanding your preferences and the associated responsibilities will help you narrow down your choices.
Evaluate your space requirements based on your family size, future plans, and daily routines. Consider the number of bedrooms, bathrooms, living spaces, and storage areas you need. Think about the house's layout and how it aligns with your lifestyle. A well-designed layout can enhance functionality and ensure a comfortable living experience for you and your family.
Before making a final decision, thoroughly inspect the condition of the house. Look for any signs of structural issues, plumbing or electrical problems, and indications of damage or neglect. Hire a professional home inspector who can identify potential issues that might affect the property's value or safety. Understanding the condition of the house will help you estimate the cost of repairs or renovations and make an informed decision.
Explore different financing options available to you, such as mortgages, loans, down payment requirements, and interest rates. Consult with multiple lenders to understand the terms and conditions, ensuring you find the best fit for your financial situation. A pre-approved mortgage will strengthen your negotiating position and simplify the purchasing process.
Engage the services of a qualified home inspector to thoroughly evaluate the property. They will assess the structural integrity, identify potential issues, and provide a comprehensive report. A home inspection is crucial as it can uncover hidden problems that may not be immediately apparent. Use the inspection report to negotiate repairs or adjust the purchase price accordingly.
While buying a home is a personal decision, it's important to consider the potential resale value of the property. Factors such as market trends, location desirability, and the condition of the house can influence its value over time. While you want to find a home that suits your needs, keeping an eye on its investment potential can provide financial security and flexibility in the future.
Some properties may fall under the governance of a homeowners association. Review their rules, regulations, and associated fees. Understand the restrictions, maintenance responsibilities, and any additional costs involved in being part of an HOA. This information will help you determine if the property aligns with your preferences and lifestyle.
Ensure you have a clear understanding of the legal aspects of the home purchase. Review all contracts, agreements, and disclosures carefully. Consider working with a real estate attorney to navigate through the legal intricacies. Their expertise will ensure a smooth and legally sound transaction, protecting your interests throughout the process.
Research the property's insurance costs and property taxes. These expenses can vary depending on the location and type of property. Factor them into your budget to determine the overall affordability of the house. Adequate insurance coverage and understanding the tax implications will contribute to your long-term financial planning.
Investigate any future development plans in the area. Infrastructure projects, zoning changes, or commercial developments can significantly impact your living experience and property value. Research local government websites, talk to real estate agents, and stay informed about upcoming developments that could affect your chosen neighborhood.
Buying a house is a significant decision that requires careful consideration.
Hiring a trusted real estate professional who is an expert in the real estate market, one who can provide you with objective advice and guidance on the essential factors mentioned above can help you approach the home-buying process with confidence to make an informed decision. Happy house hunting!
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Indianapolis IN 46234
dennis@indyhomepros.com
317-316-8224