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You want a cottage by the sea, a chalet by a ski run or a lodge in the woods. But vacation homes are quite expensive, and most of us don’t have the time to care for a second home in addition to our primary residence? So, here is an idea: Split the financial obligations with a family member or friend!

Buddying up sounds great on paper, but purchasing a vacation home with family and friends can be risky. After all, if things do not go well, it can spell the end of your friendship. Not to mention you may end up in a legal battle over the home. After all, you might already be commonly renting a vacation place with said friends or family. Or you could take turns using the house, so you don’t actually overlap.

Still, this approach can also turn into an express lane to disaster if you don’t navigate the relationship with care.

Do not panic! Before you sign on the dotted line, here are some important questions to protect your finances and also leave your ties of friendship or family intact.

 

TIC or LLC?

Ownership of property by 2 or more parties who are not married- friends, relatives (it makes no difference) can be setup as a limited liability corporation (LLC) or as a tenancy in common (TIC). And while setting up an LLC will entail hundred dollars in additional fees and a tad more paperwork. A limited liability corporation can make it easier to give away or sell an interest in the vacation home and you are treated like an individual for tax purposes, but with the extra protection of a corporate liability shield. An operating agreement will be drafted to establish the obligations and rights of the members in the LLC.

Why this is important: Under a tenancy in common, somebody who’s injured while in your shared vacation home can sue you and the other co-owners for all you are worth. Additionally, due to the fact that you own a house with somebody else, you’ve less control over who can be allowed to enter the house. So if your nephew wants to celebrate his high school graduation with a blowout party on your vacation home, and somebody steps on a broken glass, it can come back to bite you. This is much less of a risk if you choose an LLC.

 

Who is responsible for what?

Another reason why you should set up a limited liability corporation instead of a tenancy in common: Limited liability corporations are normally required by law to have an operating agreement. You should have an attorney draft an agreement which clearly explains everybody’s ownership interest.

That ratio, be it 80:20 or 50:50, will determine how costs like real estate taxes and insurance are divided. The agreement should also clearly explain who the manager of the vacation home is, capital improvements and how the maintenance of the home is going to be paid for and performed. The agreement gives the owners a guideline so that everyone knows- before they own the place -what the parameters are.

You can think of it as real-estate prenuptial agreement, it’s there to ensure that things run smoothly and head off resentment at the pass. Otherwise any under discussed issues- like who is supposed to close up for the season or even clean out the gutters – can quickly and easily turn emotional.

 

Who gets which holidays and weekends?

People purchasing a house together should ask themselves if the other owners plan on being at the house at the same time, or alternate in using it, since vacation homes normally have a prime-time of just a few months.

Normally, everyone wants to go to the vacation home at the same time of the year, during school breaks for example. If the owners do not talk about this in advance it can lead to everybody showing up at the home on the same day- which isn’t exactly the tranquil vacation home you have always dreamed about.

If you decide to split, you should work out an annual schedule in advance and also consider rotating who gets the major holiday weekends. You should also agree that swaps and changes can be made but only with the permission of all the parties involved.

 

To rent or not to rent?

From time to time your vacation home is going to be unoccupied no matter how many co-owners you have. If you are a neat freak and do not like strangers sleeping in your bed, you’ll not want to rent your vacation home. However, your brother might want to make some cash by renting out your shared vacation home.

You should hammer out whether you are going to rent out the vacation home so that you can generate income when you are not there. If all the parties agree to rent the vacation home just ensure where you are purchasing will allow that. Some communities do not allow short term rentals.

 

What happens if somebody wants out?

You should have at least one discussion about how long everybody wants to be on-board and what happens if one of the co-owners wants to sell. Giving the other owners right of first refusal if you want to sell your share is a way to reduce conflict. You should think about if you can afford to buy out a co-owner or if you’ll be able to cover the extra maintenance costs and mortgage in the event somebody wants out.

 

In tough real estate markets, buyers might take a gamble on a home that’s not listed. Here is how you should handle an out of the blue offer. It is the unexpected envelope in the mail or knock on the door. A complete stranger says he/she wants to buy your home, and for a wonderful price.

It’s even quite common for an old friend of an acquaintance to approach you about their desire to buy your home. Getting an unsolicited offer for your house can feel a little odd.

What are you supposed to do when you get an enticing offer from a home buyer when your house is not even on the market? It occurs more often than you would think, and it is helpful to carefully consider all your options, whether you have thought about selling your home or not.

 

Why does this happen?

While you go about your day to-day business and enjoy the comfort of your home, able and ready buyers are eager to be home owners. In most areas of the country, the inventory for houses is still at record lows.

Quite frankly, there simply are not sufficient options for home buyers, so they are forced to think outside the box. Some of the zealous home buyers decide to take matters into their own hands, and mail letters to houses in the neighborhoods they desire and hope for a winner.

 

What should you do?

If you do not have any desire to sell your home, do nothing. However, some homeowners will want to hear what the home buyers want to say, and others may seriously take into consideration an off-market offer.

Your first step is just to listen. You will want to first vet the prospective homebuyer over the phone so that you can ensure that they are serious. Often, real estate agents will search for expired listings and reach out to the owners in an effort to drum-up some business for themselves. It is a way they accumulate real estate properties to sell.

You should ask the prospective home buyer how long they have been searching, if they have already made other offers, and what are the areas they desire.

You should then ask the homebuyer why they decided to select your house. A homebuyer who mails an offer directly to you and only you most likely really wants your house, as opposed to the home buyers who send postcards to fifty people.

Hear them out and try to better understand their experience in the market, possible price or terms and motivations.

You will most likely have to show them the house. If they seem serious, you can take that step. You should however be cautious when letting a total stranger into your home.

 

Enlisting a real-estate agent

If you used the assistance of an exceptional local real estate agent when you bought your house, you may want to engage them again at some point.

Although sellers and buyers dream of completing a deal and saving cash on real-estate commissions, it is normally a better strategy to first consult with an experienced and honest agent. A good real estate-agent looks out for the long-term relationship, and being the adviser to an off market sale is also in their best interest.

Most real estate agents will help in an off-market deal for a reduced commission, because they do not have to prepare and show the house for several weeks or months.

 

Off-market deals might not pan out

These deals do not at all times come to fruition for a wide variety of reasons- frequently, it is because the seller isn’t motivated enough to let the house go.

And in almost all off-market deals, there is a struggle over the last few 1000 dollars – and that conflict frequently keeps the house sale from happening.

The home buyer wants to be given a discount, due to the fact that they know the seller is not paying a real-estate commission. The seller wants the market-value because the house is worth what it’s worth. Both the buyer and seller want to benefit from the real-estate commission savings.

In many cases, if the home buyer wants to purchase, they have to pay the price quoted by the home owner. The homeowner has what he/she wants, and buying off the market is, in some ways, a good opportunity that they have to pay for.

One of the most important steps in the process of buying a home is the final walk-through. This is where the buyer can confirm the house is in the same condition he/she has agreed to buy it in. It’s also an opportunity to ensure that the agreed upon repairs, if any, were made as specified and nothing has gone wrong with the house since he/she last looked at it.

Sometimes, home buyers do not pay enough attention to the final walk-through because they’re too excited about finally closing on a home particularly if it has taken a while to find the right home for them. This may lead to small problems once the buyer takes ownership. On the contrary, the final walk through can raise both negative and positive emotions during this last part of the home selling process.

It is smart to take the walk-through seriously and think things through. Do not see it as just checking a box. During the walk through you should open all the faucets and inspect them for leaks. Ensure that the appliances work, turn heat or/and air conditioning on and off, flush the toilet and open every window to its fullest, then close it tight and check for air leaks.

Below are some tips for buyers to help them complete an effective and smooth walk-through.

1. Avoid a walk-through on the closing day 

A walk-through can lead to the discovery of repairs that have to be made, but that you did not know about before. If you do the walk through on the same day as the closing, you might not have enough time to have the problems resolved.

It isn’t uncommon for two walk-throughs to occur. The first walk-through identifies some problems for the buyer, and the second ensures those problems were addressed.

You can also push back the closing so that you can address the issues. However, the problem is that your lender might not have approved a delayed closing. It is better to thrash out any issues well in advance.

 

2. Use your cell phone to check the outlets

Plug a phone in and out of the electrical outlets so that you can ensure that the electricity works. You want to avoid moving in your belongings, only to realize that some of the outlets do not work.

Bring your charger and phone to the walk through and test all the electrical outlets. It’s easy and quick.

 

3. Have an eye for junk left behind by sellers

Sometimes, sellers may be too caught up in moving to their new home that they may forget to remove their old household junk. You should take the time to check the attic, under the deck and garage. The sellers might just assume that you want to use their old paint cans or an old propane tank..

In fact, the seller should leave the house completely empty. Some of the left behind items, like the paint, can be toxic or may require special provisions for their disposal.

 

4. Ask for keys, alarm codes, garage openers and manuals 

Before completing the final walk-through, be sure to ask for working keys to all the doors, garage openers, alarm codes, and any system or appliance manuals. It is also a good idea to ask the seller for copies of receipts for any promised repairs.

 

5. Be emotionally prepared for a surprise

Buyers normally fall in love with a house that is full of belongings, furniture and art. They see it as a welcoming home, and remember a warm feeling.

Fast forward to the close of escrow and you are faced with an empty house, which can feel rather hollow and cold.

Buyers are usually surprised by how they feel when they enter an empty home. Besides the emptiness that is created by the absence of furniture, some imperfections may show up – carpet stains, mildly bleached doors, holes on walls which previously covered by paintings or a television screen etc. An empty house tends to show poorly; hence you should prepare yourself mentally before the walk-through.

The journey towards owning a home is usually a long one, filled with ups and downs and lots of excitement. The final walk through is one of the last steps of what may end up being a multiple year process.

Consider the walk through well in advance and prepare for it physically, mentally and emotionally. Know what you are looking for, make a list of all the things that you need to check, and keep your feelings and emotions in mind.

Seeing something that you love (or hate) can cause you to blurt out all kinds of things, some of which you may regret. Because while you can (and should) at all times be upfront with your real estate agent, you might not want to be quite so forthright around the sellers (or the listing agents working for them).

So before you decide to step into a house and stick your foot in your mouth, heed these top things never to say to sellers or their real estate agents when you are shopping for a new home.

 

1. “This is my dream house!”

Have you ever played poker? Well then you should know that if you would like to maintain a strong negotiating position, you should never tip your hand… Interested parties who express their unchecked passion for a house are shooting themselves.

These are the types of things which can help sellers obtain more cash from the buyers. This is due to the fact that they really know how much this home really means to them. Any negotiating strategies and all discussions about the home are best left in private. Saying a few nice things about the home is not bad—just do not gush. Gushing=bad.

2. “That couch is hideous”

Do not tell the sellers—or any real estate agent present—that they’ve poor taste in furniture or décor. Their style may not suit yours, but that is no reason to insult them. If they hear you bad-mouthing their curtains or rug, then they may just select another buyer.

3. “I can afford to spend X”

In spite of the fact that it is definitely a good idea for the prospective buyers to discover just how much they can afford, buyers should keep the information strictly between them and the Realtor.

Prospective home buyers should not address with the seller or the seller’s agent anything concerning their ability to pay a full price offer or financing. This hinders the ability to negotiate the best price for the house. If you are asked, you should say that finding a home that is fairly priced is what matters to you more than the amount you can afford.

4. “I cannot wait to get rid of that”

Even if you are thinking that the home will be perfect once you get your hands on it, do not let on. If the new buyers are planning to remodel a house in which somebody raised their family and has many memories, the buyer should not say that wall color is terrible—cannot wait to repaint this place or I cannot wait to tear that swing set down. The seller can simply reject their offer or come back asking for more cash upon hearing that somebody wants to completely remake the home where they made lifetime memories.

5. “Why are you selling?”

Yes, you might want to find out why the sellers have decided to sell their house. Keep it to yourself! It is considered poor taste to ask, and it might just open a can of worms. You should never ask the sellers why they’re selling the property, there might be personal reasons such as job relocation or divorce or something worse- none of it is your business. Creating a possibly uncomfortable state of affairs will not help you down the road, in case a bidding war emerges.

6. “What’s it really like to live here?”

Sure, you may want to get the inside scoop, however that does not mean that you should interrogate anyone. Do not ask the neighbors personal questions. You can talk to the neighbors and give them a chance to open up, but do not push if they are not talkative. If you end up moving into the neighborhood, do you want the first impression they have of to be that of a spy or a pest?

7. “You will never get that price!”

Although you may be thinking that you would not give them an X amount for the home, as a buyer it is best for you to keep your opinions and thoughts to yourself. Even if the buyer thinks that the house is highly priced, it might be within range of similar houses in the neighborhood. This leads us to our next point….

8. “I will give you [a very lowball offer] for this home, whaddaya say?”

Do not ask your real estate agent to submit several lowball offers. You should take your real estate agent’s advice when it comes to the pricing- because it is never wise to insult the person whose house you are trying to purchase and you do not want to appear as a not so serious buyer.

Buying a house is a dream come true for most of us. It is a practical and a financially wise decision as well. No wonder the real estate market is ever buzzing with activity this year. However, as much as we love the idea of buying a house, the high amount of money involved can make some of us weary about the process. The most basic step in buying a house is planning your budget. Based on income and savings, one can get an estimate of the price of house they can afford. A majority of home buyers look for financial assistance from banks or other lending institutions to purchase their house. In such cases, along with Income and savings, credit scores also play a huge role in deciding whether a loan can be extended to an individual, as well as the amount of loan. Real estate agents can also help you decide the budget and find a property that fits within it.

Check your Scores

Credit scores are a way to measure the “credit-worthiness” of any individual i.e. whether the person will be able to pay back the loan on time. Your scores is based on your credit history, the number of credit lines and loans held by the individual, weather payments for those have been made on time, the amount of outstanding balance one is carrying on other loans and credit cards etc. So the first thing to know before you decide on a home is whether or not you have a good credit score. If you have been paying all your outstanding bills and installments on time then you most likely should. It’s still always good idea to check, never assume.

Identify your weak spots

There are three main credit Bureaus in the US – Experian, Equifax and TransUnion. While they have some differences in the parameters on which they base their scores, the scores from all three bureaus are typically pretty close. You can get your credit report from one or all of the bureaus by paying a small fee. Review your report well, especially the section that talks about adverse accounts. This section lists down the accounts where you may have missed payments, defaulted etc. If there is a specific credit card where you have missed a payment more often than others, make a note of it. Similarly, check your average outstanding balance against your credit limit. If the ratio is too high, make a note. Also, check if any of the entries don’t add up since sometimes, even the Bureau can get their information wrong.

Correct some mistakes, undo others

For the accounts identified where you have been missing timely payments, it is time to buckle up and make sure you begin paying your bills on time. As you get regular with your payments, your score will start improving over a period of few months. In case you have had one or two late payments, you can also call the company that has registered the late payment and request them to remove it from your credit record. Most companies willingly do this for those who missed the payment deadline once or at max, twice.Similarly, if you have too many open credit lines with small outstanding balances and can spare some money, then take the extra effort to pay all dues and close these credit lines.

Request a credit limit increase

If on some credit lines you have been regular with your payments but your ratio of outstanding balance to the credit limit is high, then a simple way to make this ratio look better is to request that your bank or financial institution increase your credit limit. However, remember that a credit limit increase only be accepted if you have displayed good payment behavior. Also, make sure to not exhaust the increased limit because remember, this limit extension is to reduce your ratio and increasing expenses will defeat the purpose.

Raise Disputes, if any

Lastly, if you have identified any entries that appear incorrect in your report, send a dispute letter to the bureau and provide them all information and documents to prove your case. This could take some time, but correcting records can help boost your score.

Improving scores can take some time and hence it is advisable to begin early. Even if you are not planning to buy a house right away, it is good to begin patiently working on your scores so that by the time you are ready, your scores are ready too.

 

When you’re ready to sell your house, you will need to get it in its best possible condition, especially in today’s competitive environment. An open house presents an opportunity to showcase the best features of your home and allows the potential buyers to get a feel for the property. If you ‘re a fist time home seller, you may think of the open house as the point at which your Realtor waits until you leave, turns into a magician and with a flick of his/her wrist, completely transforms your home into something out of Bravo’s Million Dollar Listing.

But here is the truth of it

Your real estate agent is not practicing wizardry on the side. And you aren’t completely free of responsibility when it comes to the open house. In fact, although you aren’t present for the open house (and you never, ever should be, if you want to sell the home), there are still quite a few ways that you can mess it up and drive away potential buyers.

These eight things could very negatively impact your chances of having a successful open house—and, potentially, the house sale.

1. Leaving your pets at home

Pets bring a lot of joy into our lives. Nevertheless, they can be a real problem when you’re showing your home. This is true for several reasons. Logistically pets make things difficult because you will have to keep them separate from the potential buyers, who might not like pets and certainly cannot picture themselves living in a house that once housed cats or dogs. This means that you will have to block off areas of your home, a real no-no in an open house. Pets also behave unpredictably. The last thing you want is your pet leaving his/her “mark” on the floor right in front of the viewers or even scaring the potential buyers. Which could also prevent them from viewing rooms and prove to be a distraction overall.

Take your pets to a friend’s for the day when you’re showing your house. You should also do your best to eliminate any signs of pet habitation, including bedding, toys, smells and stains. Selling a house with pets takes extra consideration and care. There are some home buyers who will see any signs of pets as a complete turnoff. This is definitely one of the top open house mistakes you should avoid.

2. Ignoring your kitchen needs 

You may be surprised by how many home owners ignore their kitchens when selling their house. Putting the dirty dishes in the sink doesn’t make them invisible. Even if the rest of your house is staged to perfection, a repugnant kitchen will turn off the potential buyers—and that goes for the dishwasher too. The potential buyers will most likely want to investigate the fridge and open the dishwasher during the open house, hence it’s vital that you prepare your home accordingly: Clean and store the dishes, and remove any smelly food from your fridge. You should consider removing any kitchen appliance that can be neatly stored instead of being left on counter tops. The less clutter, the more spacious and inviting your kitchen will feel. If it’s an appliance that is used daily, such as a toaster or coffeepot, be sure to wipe it clean after each use.

You should also ensure that you check out and clean the other rooms in your home, even those that you think the potential buyers will not bother checking out, such as the closets garage or laundry room. Because guess what? They totally will.

You aren’t selling part of your home; you are selling your entire home, hence you should ensure that everything the potential buyers will see during the open house is in showcase condition.

3. Not hiding your dirty bath towels

Keeping the bath towels you have used (and intend to use again) tucked out of the way in a closet benefits you two-fold: Not only does it make the bathroom look well staged, but it also keeps them free of germs and dirt from the day’s parade of viewers. Instead, swap in a clean set of decorative hand and bath towels for each open house. You do not want (people) wiping their dirty hands on the bath towels you wipe your body with.

4. Cleaning solo

When you think about how much money a house actually costs, it’s easy to understand why people expect cleanliness in an open house. Surprisingly, not everybody meets the mark when it comes to a clean house. If you have to hire a cleaning service to get the job done, do so.

Professional cleaners will scrub all the “out of the way” spots you may miss (think switch plates and baseboards), they can also help eliminate messes and odors that go back years. Preparing for showings is particularly important when there are potentially a large number of visitors dropping by for a look. Showing dirty, messy homes to potential buyers is by far the greatest mistake most sellers make when holding an open house.

5. Not getting a second opinion

After you have cleaned and staged your house, a blunt tongued neighbor can be a blessing. Over time, you can easily get used to odors and smells that may linger in your home, even after a thorough cleaning. You need a neutral third party who’ll tell you like it’s, not what you would like to hear. So do not be offended if the third party tells you that your place stinks— literally or figuratively. You aren’t in a position to be all ego, you are trying to sell your home — and that is what you should focus on.

6. Not maintaining the yard

The front yard is the first thing the guests see, so ensure it is spotless. You want the potential buyers to focus on the curb appeal of your home — not your collection of yard tools. Additionally, objects strewed every which way can also be dangerous. You should also make sure that the grass is trimmed nicely and any bushes or flowers are in good shape. And unless it’s trash day, keep your bins out of sight. Nothing turns potential buyer off faster than a pile of trash and the thought of potential yard work.

7. Dirty exterior

Depending on where you live, the exterior of your house may gather a significant amount of grime as the seasons turn. You might not have noticed it if it occurred gradually, but visitors to the open house are sure to see the mildew and mold on the siding, the dingy windows and the clogged gutters. Like the home’s interior, the exterior should be fresh and clean looking if you want to impress the potential buyers.

8. Photos, religious art, drugs and politics need to go

When the potential buyers walk into your home, they should picture their family living in the house, not yours. They do not need to see your family photos or be able to tell your religious or political views as they walk through the house.

There is a reason stagers depersonalize your house. Certainly, they want the buyers to visualize themselves living within its walls—but they also want to remove any ammunition that may be used against you during the negotiating process. One of the places to look is the medicine cabinet, which should be emptied during the open house.

The same goes for family photos and things such as canes and walkers: For instance, if you are elderly, they may consider underbid your price under the assumption that you can no longer be able to take care of your house. Keeping the potential buyers from learning your personal details is not just good staging

Owning a home is a great achievement but at the same time, it comes with responsibilities. Repairs & regular maintenance are some of the things that you will now have to deal with as a home owner. However, many first time home owners are not always prepared for some of the issues they may run into with their utilities or even housing structure. For example you could wake up one morning to find out that your water heater has broken down and it’s 32 degrees outside. Everything in your house has a life cycle so its good to be prepared when things need fixing or even replacing.

What do you do when such things happen?

Many homeowners may not have the experience necessary to do small repairs, especially when they come at unexpected times. Some individuals may be lucky enough to have a nearby family member who is knowledgeable in these sort of incidence. Others may know an electrician or a plumber but the whole process of getting bids and figuring out what the real cause of the problem is, let alone getting it solved, takes a lot of time. The best thing to do as a new home owner is to have a home warranty.

What is a home warranty?

A home warranty works almost like an extended warranty or insurance policy you would buy for your flat screen TV or Smartphone. It covers the costs for replacing or repairing almost anything that may at some point cease functioning in your home. Typically, payment plans range from $300 to $900 per year.

The only thing that you will have to do is contact your home warranty provider either by phone or by submitting a ticket online. The warranty provider will then contact the company or contractor they have a contract with. The company will then send someone to solve the problem by either fixing it or replacing the malfunctioning item all together. All the repair or replacement costs will be covered by your home warranty premium and you will only be required to make a co-payment for every incident.

Who should buy a home warranty?

Home warranties are especially good for first time Millennial and Gen X/Y home buyers who are usually accustom to renting. These former renters may often be so inclined to call the landlord every time a problem arises. Your new home warranty provider will essentially take over the role of your former landlord. These home owners often work for long hours and may not have the time or energy to call around and find an electrician or a plumber to get appropriate estimates from. Having to wait through the 12-4pm window for the repair person to come to your house may also not be so appealing.

Repairs whether expected or unexpected may be too costly and you may have to go through a rather lengthy process before you get the problem resolved. You can avoid having to deal with this process on your own by setting up a home warranty.

Home warranties are not limited to only Gen X/Y and other first time home owners. Any home owner at any age can buy a home warranty any time. So there is some flexibility when it comes to purchasing your own home warranty.

If your home has been inspected, then you know the life expectancy & the condition of most of your utilities. Generally, most appliances break down after around 15 or 20 years and you don’t want to deal with several malfunctioning things at the same time.

Before you do purchase a home warranty however, it is advisable to shop around and compare the various premiums & coverage plans valuable to make sure that you get a good deal. Remember that an older home will definitely need more coverage.

Investors who may not want to be doing repairs for their tenants should also consider home warranties. This should especially be considered by real estate investors who are not as experienced with the typical amount of upkeep a property will require. A warranty will also prove very useful if you don’t have a network of repair people available to help make the repairs. A home warranty will keep both you and your tenants satisfied and happy.

While renting a home might seem the easiest way to manage your finances, actually owning the property is much more beneficial. The initial outlay is going to be quite steep, but the guarantee of ROI over the years will help validate such a steep investment. Being a renter means that you have to cope with bills that are not contributing to ownership in any way, shape or form. Living in a place you call yours allows you to lock in expenses related to housing and set yourself up for a comfortable future over time. However,the big question is, how do you get it done?

A tough scenario for renters

In the recent past, experts have pointed out the development of some are referring to as “the rent affordability crisis”. It is essentially a situation where there are lower vacancies for renters currently available. This is compounded by the fact that developers are not constructing as many new rental properties as they used to. This of course correlates to a rising demand, and a scramble for what is out there. This increase in demand coupled with reduced availability will also result in an increase in rates over time. In the next several years, rent appreciation rates will trump home appreciation rates.

When buying becomes cheaper than renting

Jonathan Smoke of Realtor.com argues that housing is a core element of how well we live and what our levels of satisfaction are. Having a home impacts your general state of well being. Home ownership correlates very positively with outlook, and quality of living. As the cost of rent goes up year after year, those who are dreaming of one day owning a homes may actually end up trapped in a difficult position.

While you choose to rent you are minimizing your possible contribution to a longterm investment. You’ll encounter minimal opportunity for saving to purchase a home of your own.

Currently, 85% of the American renters consider themselves to have a “huge rent bill”. However, what is even more interesting is that people in over 75% of the country can certainly buy at an overall cheaper rate than they can rent for. At this point, the most obvious question, of course, is; why aren’t these frustrated renters buying?

What options do you have?

The problem in the current market is lack of information regarding just how much enough is in terms of down payments and credit scores. If you take time to inspect the factors that enable individuals to purchase a home, you’ll realize there are a lot more people who are actually qualified to buy a home, they just don’t know it.

An example of something that may prevent someone from looking into homeownership is the down payment. A large number of people don’t know just how much of a down payment is required to actually own a home. According to recent statistics, it is actually very easy to save up to the 3% required in most areas. This only takes a maximum of two years under a structured and disciplined saving plan. Turns out you might have already saved enough for your next home without even knowing it!

Saving for your next home may not be as difficult as you think. Sure, identifying a good mortgage plan is strenuous for all of us but when you know what to look for, things can turn out smoother than you expected. You are going to be thinking about your down payment all the time, so there is a need to draw out a plan according to your level of income and the percentage you can save off of that. Keep in mind that the percentages you might need to put down typically vary across the board, depending on your approach and the type of mortgage you are looking for.

Do not allow rising rent rates to postpone your plan to buy a home. If you are having a difficult time doing the required research, talk to an agent and have them help you. Real estate agents can help you understand the rates available in your market, as well as offer you first hand experience relating to the way things may eventually pan out for you. Always be on the lookout for attractive deals and make your move at the right time, with the right information.

2015 is behind us now, but there are trends we saw develop in the real estate industry, that certainly reflect key focus points for 2016. One of these key areas of conversation is relocation, where people moved within the united states. So who moved? Where did they move to? How much money did they pay to facilitate this moves and what motivated their decision to relocate? What were the general patterns in terms of distances covered?

Why Americans moved in 2015

People moved away from existing homes because they were looking for cheaper options, convenient locations and new environments. There were also those who moved because they wanted better quality housing even if it meant having to pay more. Reports also indicate that some Americans left rentals in the search of locations where they could buy their own homes. Thats one of the more significant trends to focus on now that we’re in 2016.

Some people chose to move in order to start their own households. This includes those who got married and young people who wanted to leave their parents’ homes in the pursuit of independence and privacy.

In other instances, people secured jobs away from their homes and chose to relocate to be closer to their new areas of work. The jobs included new challenges or transfers within the same line of work. Most of the movement in this category involved those taking new jobs altogether.

There were other less common reasons for relocation, and these included the search for new environments or better schools and colleges.

What were the patterns of movement?

The West and Southern areas of the country had more destinations than any other area, with an interesting 3 out of the 5 routes of movement ending in California. Florida and Texas rounded off the remaining available routes.

States to which most people moved

California topped this list, followed by Texas, Washington, North Carolina, with Colorado coming fifth. Others in the top 10 include Oregon, Arizona, Georgia, South Carolina and Nevada in that order.

Where did most moves emanate from?

New York, Illinois, New Jersey, Massachusetts, Pennsylvania took a huge hit in terms of movements to the outside, with other states in the top 10 being Connecticut, Maryland, Michigan, Virginia and Ohio.

Who moved within their own states?

Those who relocated within cities and towns in the same states did so out of a need to find better places without having to move too far away from home. Below is a look at the states affected, in descending order:

• California
• Florida
• Texas
• New Jersey
• New York
• Illinois
• Michigan
• Georgia
• Massachusetts
• Ohio

Here is a look at the cities individuals moved to, from the ones that received the most people to the ones that took in the least:

• Denver
• Seattle
• Portland, Oregon
• Houston
• San Francisco
• Dallas
• Atlanta
• Austin
• Las Vegas
• Los Angeles

And below is a ranking of the cities from which people moved, from the most affected to the least:

• New York City
• Chicago
• Washington, D.C.
• Pittsburgh
• Milwaukee
• Baltimore
• Philadelphia
• Arlington, Virginia
• Minneapolis
• Columbus, Ohio

Additional facts

• Professionals in teaching, business, health and the military moved the most in 2015.
• The average moving costs ranged from $2600 to $4400
• June was by far the busiest month of the year in terms of movement.
• A huge chunk of people (60.6%) moved out of state.
• July 31 was the most packed day of the year, where people moved the most compared to any other date.
• Only a paltry 9.6% of those who relocated made use of vehicles.
• Most people chose to move either on Friday or Saturday.
• Those living in units with one or two bedrooms moved most, some in search of bigger houses and compounds.
• Among the areas from which people moved, the Midwest was the most affected as people sought better working places and cheaper residential areas.
• While there was plenty of movement in many areas Across the US, the only significant increase in general population resulting from relocation was the south.

The statistics above show a growing pattern when it comes to movement in the population,with people choosing different parts of the country for general reasons like the cost of real estate and standards of living. Other decisions were made based purely on individual preferences among different age groups.

 

According to builder.com, first time home buyers in the United States take nearly eight years to save for a down payment for their dream home. The time frame is derived by factoring in the amount a renter pays for housing in each state and the required 10% down payment. Under this approach, buyers in South Dakota state take around 3.5 years to save for a down payment, which is the shortest compared to other states.

Another study by Realty Trac shows that it takes an average of 12.5 years for a new buyer in the United State to save for a 20% down payment. The study is based on a personal saving rate of 5.6% and the current home median home prices. Given that most first time home buyers are young adults with earnings below the national median salary, they would have to wait until they are 42 to afford a home.

However, the same savings can be made within two years in the Freddie Mac and Fannie Mae 3% down payment plan. Under this program, it takes buyers in states such as North Dakota as little as one year to save for the down payment. The Freddie and Fannie plan is geared towards enabling first-time home buyers and low-income borrowers with little savings to afford the down payment.

To qualify for this program, you’ll need a credit rating of at least 620 and offer a full documentation of their assets, income, and job status. Also, the prospective first time home buyers must participate in borrower education programs and have a private mortgage insurance plan to qualify for the loan. A buyer can take advantage of the Home Possible Advantage plan provided that the co-borrower is a new buyer.

How a real estate agent can help 

With the assistance of a real estate agent, first time home buyers can negotiate having the seller fully or partly cover the closing costs. Given their years of experience in the market, the real estate agents can identify hidden costs and advise on the best options for home financing.

Here are some of the ways first time home buyers can boost their down payment savings.

Clear the credit card debt 

For home buyers with credit card debt, making monthly interest payments on the debt and setting aside some funds for the down payment can be a hassle. Clearing any credit card debts will enable you to increase your saving portion and reduce the amount of time it takes to make the down payment.

Squeeze your budget 

Keeping track of your spending habits will enable you minimize unnecessary spending and increase your savings. With a goal in your mind, you will be able to track your finances and increase the down payment savings.

Consider a tax free saving account 

A tax-free saving account will enable you to enjoy tax benefits on your down payment savings, you’ll then be able to make payments within the shortest time. A consultation with a financial advisor will enable you to identify the best saving account for your down payment plan.

Be aware of your priorities

Being aware of your priorities means being able to forego instant gratification for a more satisfying future reward. Saving for a down payment will require you to cut spending on your wants. If you are used to expensive vacations, you have them to let them go to be able to save for your down payment. Even under the Fannie and Freddie Home Possible Advantage plan, you will still need to make sacrifices to be able to service your loan.

Save automatically

Creating an automatic saving account will ensure that you do not spend your down payment savings on other things. With an automatic saving account, a portion of your direct deposits will automatically be transferred to your saving account without missing.

Final thoughts? 

With proper planning and consultation, first time home buyers will be able to maximize their opportunity and make down payments within the shortest time possible. Learning about the different the ways to boost your savings and getting professional help from a real estate agent, will enable you to attain your dream home within the shortest time possible. Before you jump into a home buying program, always ensure that you have enough information about the deal and other offers in the market.