Twila E. Palmer's Blog
Making the transition from being a renter to a home owner is a life changing experience -- one which brings both rewards and new responsibilities.
Although you'll no longer have a landlord (on speed dial) to handle things like yard maintenance, noisy neighbors, and appliance repairs, you'll enjoy the satisfaction of being in control of your own living space, your property, and your level of privacy. With few exceptions, if you choose to erect fences, plant privacy hedges, or build a screened-in back porch, that's your prerogative.
In the not-so-distant past, you may have felt as if your privacy was not as absolute as you might have preferred. Even though landlords and apartment managers are usually required by state law to give tenants 24 to 48 hours notice before entering the premises for an inspection or maintenance visit, some are not aware of their obligation. Unfortunately, there are also inconsiderate landlords who don't want to be bothered with things like advance notice requirements. That potential problem can be even more of an issue if the landlord happens to live downstairs or next door!
When you're a renter, landlords do generally have a right of entry, which, according to rental agreements, can be for repairs, alterations, improvements or "any reasonable purpose." If the end of your lease is approaching, your landlord may also appear at your door to show your rental unit to prospective tenants, real estate agents, appraisers, and others. Although many tenants do not encounter problems with landlords, the fact that they do have a right to access to your apartment, condo, or rented house is enough to make you feel uneasy!
The minute you become a homeowner, however, those uncomfortable privacy issues become a thing of the past. You no longer have to answer to a landlord, and -- unless there are restrictive zoning laws or Home Owner Association (HOA) rules -- you and your spouse are the ones who call the shots. While it's wise to be considerate of your neighbors and aware of local ordinances, you are free to own pets, throw parties, sleep on waterbeds, have long-term guests, and make changes to your house, your yard, and your property, as you see fit.
While pets are okay, farm animals may not be so acceptable! If your goal is to raise chickens, goats, or horses on your property, you might encounter some potential stumbling blocks. It does depend on a number of factors, such as whether you're in a rural area and if the land is agriculturally zoned. Your real estate agent, attorney, or town clerk would probably be the best sources of information when it comes to questions like that.
Generally speaking, however, property owners do have a lot of leeway on how they can use their property, as long as they observe local laws, be respectful of their neighbors, keep noise levels down to "a dull roar," and maintain a semblance of order in their front yard!
You know when you buy a home that your credit score matters, but do you see all of the numbers that matter to your financial picture when you’re buying a home? Your debt-to-income ratio is one of the most critical figures that will influence if you can get a mortgage and what type of rate you can get.
What Is A Debt-To-Income Ratio?
This number is exactly what it states: the ratio of debt divided by your gross monthly income. Your credit report doesn't include any of this income information. This number is actually the best way to see if you’re living within your means or not. This way, your lender will know your monthly debt payments along with your monthly income.
If your ratio of debt is high, you may not get a loan or get less desirable interest rates than if you had lower amounts of debt. Even if you have a high credit score, your debt-to-income ratio could affect these things. In reality, a higher debt ratio will make it harder for you to pay back your debt, so it’s important to you.
How It’s Calculated
You can use an online tool to help you calculate your debt-to-income ratio. You can also use a simple formula if you’re up for doing some math yourself:
Divide your monthly debt payments by your monthly gross income then multiply that number by 100. For example:
Student loans: $400
Car loan: $300
1400/4000= 0.35 x 100= 35%
You should also be aware of something called your household ratio. The household is the amount of home-related expenses which includes property taxes, prospective mortgage, home insurance, and more. These costs are divided by your monthly income to get this ratio as well. Obviously, your household debt adds to your financial commitments and is also put into consideration by your lender.
What’s A Good Debt-To-Income Ratio?
It’s ideal that you keep your ratio less than 36%. Your household ratio should be even lower than this. It’s great to be debt free, but in the real world, that’s not always possible. Your best bet is to be responsible with your finances and work on paying your debt down as much as you can. Then, little by little all of the critical numbers that are required to get a mortgage will fall into place.
Although it may seem like putting the cart before the horse, a strong case can be made for purchasing your retirement home before your golden years. In fact, with some deft financial planning, it may be worthwhile to buy your retirement home decades in advance. That may seem counterintuitive, but maybe other folks have been doing it backward. Whether you are a Millennial, Gen Xer, or Baby Boomer, the best time to plan ahead is right now. Consider these strategies.
Why Buying Now Saves Retirement Dollars
The Gen X crowd was born between 1965-1979, making them 40- and 50-somethings. Those are generally prime financial years. In many cases, they’re nearing the end of a mortgage and are probably enjoying the fruits of many years of savings. This means having equity and resources at their disposal to make a move on a property now.
The argument for paying off an existing home loan or doubling-up if it’s reasonably low rests on data that the home values continue to rise. Consider these incremental increases in median home sales pricing.
The median price routinely topped $300,000 in 2019, and the robust economy, coupled with an inventory shortfall, is expected to drive prices upward. If you were to have purchased your retirement home just 10 years ago, your savings would have amounted to nearly $100,000, plus lower interest payments. Those are real retirement dollars.
Why Buying Your Retirement Home First Makes Sense
One of the strategies savvy Millennials are employing is to purchase an “investment property” rather than a primary residence first. That may seem like thinking way outside the box, but the math and lifestyle considerations can make it a smart play.
This demographic runs between 23 and 38 years old, and they have grown up in a vastly different culture than their predecessors. Some are straight out of college struggling with student loan debt, and even the top end of the age bracket has members still evolving their careers in many cases. These factors tend to position Millennials for ongoing relocation as they take advantage of emerging opportunities. Rather than be burdened with buying and selling a home, it’s easier to rent.
Financially sharp Millennials, among others, have purchased properties in culturally rich areas that lend themselves to college students and tourism. The strategy is to enlist the help of a real estate professional who oversees renting, upkeep, and allow the asset to pay for itself. In many cases, it may even yield a profit. When retirement age arrives, there can be ample revenue to do a full remodel and just pay the taxes while you collect a pension or social security.
Although buying a retirement home prior to punching out for the last time may seem odd at first, it’s in your best interest to run the numbers both ways. Consider all the moving parts and detailed costs to make an informed decision about your best time to but a retirement home.
Ready to enjoy a successful homebuying experience? Ultimately, becoming a resourceful homebuyer will make it easy to transform your homeownership dream into a reality.
A resourceful homebuyer possesses the skills and know-how needed to streamline the property buying cycle. Plus, this homebuyer will be better equipped than others to maximize the time and resources at his or her disposal and speed up the process of going from homebuyer to homeowner.
Now, let's take a look at three tips that you can use to become a resourceful homebuyer.
1. Know What You Want from a Home
You know that you'd like to own a house, but what are you looking for in your dream residence? As a resourceful homebuyer, you'll know exactly what you'd like to find in the perfect home. That way, you can narrow your home search.
Creating a checklist of dream home "must-haves" usually is a great starting point for a resourceful homebuyer. This checklist will enable you to determine what features you want in your ideal residence.
In addition, keep in mind that every house has its pros and cons. And if you set realistic homebuying expectations from the get-go, you'll be able to boost your chances of finding a home that can serve you well for years to come.
2. Take Advantage of Housing Market Data
There is no shortage of housing market data available. With this information in hand, you should have no trouble entering the housing market with the resources that you need to succeed.
Examine the prices of available houses in cities or towns where you'd like to live. By doing so, you can better understand how much it will cost to acquire your dream residence.
Also, check out the prices of recently sold houses in areas that you're considering. This housing market data will help you differentiate between a buyer's market and a seller's one and ensure you can map out your homebuying journey accordingly.
3. Collaborate with a Real Estate Agent
Even a resourceful homebuyer knows his or her limitations. Luckily, real estate agents are available nationwide, and these housing market experts can help homebuyers fill in the gaps along the property buying journey.
A real estate agent understands the ins and outs of purchasing a great home at an affordable price. This housing market professional will set up home showings for you, keep you up to date about new residences as they become available and negotiate with property sellers on your behalf. Furthermore, he or she is happy to respond to any homebuying concerns and questions at any time.
Let's not forget about the confidence that a real estate agent provides to a homebuyer, either. A real estate agent will help you seamlessly navigate the property buying journey. Thus, he or she will simplify the process of acquiring a top-notch residence that matches or exceeds your expectations.
Start your homebuying journey today – use these tips, and you can become a resourceful property buyer.