Should You Buy a Starter Home or Wait to Buy Your "Forever" Home?


Given the prices of homes these days, it’s no wonder many homebuyer hopefuls choose to get into the market by purchasing smaller, more modest homes that are on the affordable end of the spectrum. After a few years of building equity and allowing time to appreciate the value of the home, there will be a lot more capital available to put into purchasing a larger, more suitable “forever home.”

While this is certainly a viable option, there’s always the alternative to wait it out a little longer and continue to save up to eventually buy a home that is more suitable for long-term needs.

Of course, a decision like this is relative based on your particular situation and desires, but it’s worth weighing both options before deciding which one is best for you.

The Argument For Buying a Starter Home

There are plenty of reasons why you might want to get into the market sooner rather than later.

Current market conditions are favorable.

The housing market in California has been hot for a while now and isn’t showing signs of slowing down that much anytime soon. It’s true that housing prices across the Golden State are extremely high with a median single-family home priced at $550,200 – about twice what the national average is. But property values are continuing to rise quite rapidly, which means your starter home will be worth a lot more than you pay for it today. If you continue to wait and hold out to buy your forever home, it’s highly possible that prices will increase at a much faster pace compared to your savings.

Interest rates are still very low.

Since the housing crisis of 2008, interest rates have been hovering near historic lows. The rates that homeowners have been able to take advantage of over the past few years have made buying a home much more affordable. The rates are still very low today, making it a great time to get into the market and lock in at a low rate.

That said, rates are on the rise. Only time will tell how high they will be when you have saved up enough and are ready to buy the home you plan on living in for the long haul. By then, mortgage rates may bounce back to their norms, making home loans more expensive.


You can build equity sooner.

Owning a home is somewhat like having a built-in savings account. You’re obligated to pay your mortgage every month, and every payment you make puts more money in the pot. This is called ‘equity’, and it continues to build with each mortgage payment you make.

Not only that, appreciation over time also adds to your home equity, and any improvements you make will bump it up even more. By the time you’re ready to sell and trade your starter home in for your forever home, you might have a decent amount of money to help make purchasing your next home a lot more financially feasible.

Reap the tax benefits of homeownership.

Being a homeowner comes with several perks, including tax benefits. You are eligible to write off the interest portion of your monthly mortgage payment when it comes time to pay Uncle Sam. That can add up to a few thousand dollars in savings every year. If you’re currently renting, every penny you pay in rent goes straight to your landlord. In this sense, it might make sense to get into homeownership sooner.

The Argument For Waiting to Buy a Forever Home

Before you consider buying a starter home rather than waiting to buy, consider the following first.

Save on costs associated with owning a home.

While you can certainly save plenty of money from tax benefits and build up equity by purchasing a home today, it’s still important to consider some of the costs that come with homeownership. Your mortgage payment isn’t the only financial responsibility that comes with owning a home.

There are also property taxes, utilities, homeowner’s insurance, repairs and maintenance fees, updates, furniture, and other expenses that you will have to factor in and budget for that you wouldn’t have to worry about if you were still renting. Sometimes it may be better to continue to rent and save up for these expenses that will eventually come when you buy your forever home.

No need to worry about capital gains.

If you sell your starter home after owning for a very short period of time, you could get slapped with capital gains taxes on the proceeds of the sale. As per the IRS, you can avoid paying capital gains taxes on $250,000 as a single owner or $500,000 as a married couple as long as the home was used as your primary residence for a minimum of two out of the five years that you owned it before you sell.

Think long and hard about the how soon you may decide to sell your starter home to buy one that better suits your future needs. If you think you might sell shortly after, you may be better off waiting. Speak with a tax professional to find out how you could be affected.

Your down payment will be a lot bigger.

Obviously, the longer you are able to save money, the bigger your down payment would be. If you wait it out for your forever home, the odds of you having a bigger down payment are higher, as long as you use the time wisely and save accordingly. Of course, the down payment required will likely be higher compared to what a starter home would warrant, but you may also be enjoying a higher salary by then.

The Bottom Line

There really isn’t a right or wrong choice between buying a starter home versus waiting to buy your forever home. Both options come with their own set of advantages. At the end of the day, the decision you make should be based on your specific situation, both from a financial and lifestyle point of view.

What may work for one might not work for another. To help you make this decision, it doesn’t hurt to have a chat with your local real estate agent to get a feel for the current market in your area and where the housing market is expected to be in the years ahead. The answers you get just might sway you in one direction over the other.

6 Tips to Ensure a Prompt Closing


The entire homebuying process can take a long time. Imagine all the homes you have to look at before you find “the one.” Even after you’ve negotiated a deal and your offer is accepted, there’s still the escrow period to have to go through, which can be a lengthy process itself.

Many things can happen during this time that can delay closing, which can be incredibly frustrating for both you and the seller. That said, there are things you can do on your part to ensure there are no hiccups along the way so you can close the deal and finally get the keys to your new abode.

1. Get Pre-Approved For a Mortgage

Sellers usually want to see that buyers are already pre-approved for a home loan before they even accept an offer. Before you even make an offer, make sure you get a mortgage pre-approval.

Getting pre-approved for a mortgage will not only help you find out what you can afford and show sellers that you are a serious buyer, it will also help you get your home loan application finalized faster compared to those who haven’t been pre-approved.

2. Be Cautious With Your Spending and Borrowing


Now is not the time to be making large purchases on credit. Once the mortgage approval process has started, you’d be well advised to keep your spending under wraps for the time being. Your lender is basing your mortgage approval on the information you’ve already provided, including the amount of debt that you currently carry.

If you add more debt to the books, your lender may have to backtrack the process, which can cause a delay in closing and possibly even result in a rejected application. Wait until after the deal closes to make any large purchases on credit.

3. Gather All Necessary Documents

You’re going to have to submit a number of documents before financing is approved. You’d be doing yourself a favor by getting all the necessary paperwork together even before you start looking for a home. While some documents may be quick and easy to obtain, others can take some time. Gather information such as your tax returns, pay stubs, bank statement, and a letter of employment.

The better prepared you are with this documentation, the faster your mortgage can get approved and processed. Your mortgage specialist will tell you what documents you will need before you even start the procedure. Many times closings get delayed simply because all the necessary information isn’t available if the buyer failed to submit it all in a timely fashion.

4. Understand All Documents That May Have to Be Signed


When buying a home, there will be a slew of documents that you will have to sign. You should take some time to get acquainted with this paperwork so you know what you’re signing.

Your real estate agent will be able to fill you in on the exact documents that you can expect to sign in your particular transaction, such as the loan documents, deed, title transfer documents, disclosures, affidavits, and so forth. Just be prepared to put your John Hancock on a lot of paperwork, as real estate transactions cover a lot of legal ground. Knowing what you’re signing can help avoid any unnecessary delays caused by confusion over the documentation associated with closing.

5. Ensure That You Have Enough Money to Cover All Closing Costs

The purchase price itself is a pretty hefty amount, but your expenditures regarding a home purchase don’t end there. You’ll be expected to dish out more money to cover all the closing costs associated with your transaction, such as loan origination fees, appraisals, title search fees, title insurance fees, underwriting fees, surveys, and so forth.

Generally speaking, buyers pay anywhere between 2% to 5% of the purchase price of their homes in closing costs. Clearly, that number can really add up, and you’ll want to make sure that you’ve accounted for these costs before the deal closes. Once you have an idea of how much you could be spending before the deal goes through, do your best to have this money easily accessible before closing day comes. If not, escrow may be delayed as you scramble to get access to the funds needed to cover your closing fees.

6. Schedule Your Final Walk-Through Appropriately


Buyers have the right to visit the property right before closing to make sure that it is in the same condition that it was in before they agreed to purchase it. If any damage has been done to the home or any fixtures have been removed, you can argue that before the seller is off the hook.

It’s a good idea to pencil in this final walk-through close enough to closing that it gives the sellers less time to make any changes, but far enough in advance to give you plenty of time to conduct a thorough inspection of the property and make any necessary complaints.

The Bottom Line

Nobody wants to experience a delay in closing. It’s costly, it’s time-consuming, and it’s downright frustrating. Having said that, there are a number of things that buyers can do to avoid any unnecessary delays in the closing process. Your real estate agent will have plenty of suggestions for you to ensure a streamlined escrow process, so be sure to heed this advice to stay on track to a quick closing.

7 Questions to Ask Yourself Before Buying a Vacation Property


Having the flexibility to head over to your very own retreat without having to find availability is fantastic. It’s like home away from home, a place that you can set up as you please and outfit with all the things you need when you’re away from your primary residence.

But even though owning a vacation property may offer some level of convenience and can be a sound investment, careful consideration is warranted. After all, buying property is a big deal, and an expensive one at that. As such, it’s not a decision that should be rushed into. Before you decide to buy a vacation home, make sure you’ve asked yourself the following questions first.

1. Can You Afford It?

It sounds pretty obvious, but crunching the numbers to verify whether or not a second home purchase is a financially viable and affordable option is critical. You might have a rough idea about what your finances are in terms of adding another property to the books, but it’s absolutely necessary to take the time to go over your financials with a fine-tooth comb.

For starters, you’ve got to figure out how much you’re mortgage will cost to make a vacation home purchase. In addition to the actual purchase price, there is also the interest portion of the principal to factor in, as well as the loan origination fees, private mortgage insurance, and other costs associated with a mortgage.

Then, of course, there are all the costs associated with carrying a home aside from the financing. You’re going to have to pay property taxes, homeowner’s insurance, utilities, maintenance and repairs, cleaning fees, and so forth. A general rule of thumb to follow is to budget for about 2% of the property’s value every year to make sure you’ve got an ample financial cushion to cover these ongoing costs.

2. Will You Be Renting it Out?


Many people who purchase vacation homes decide to rent it out when they are not occupying it, especially if they are only able to visit for a few short weeks per year. For the remainder of the year, they may choose to rent it out to help offset any costs associated with carrying the property.

Renting the place out when you’re not there may be a great idea as it can help you build even more equity in the home as you continue to pay down the mortgage and pay it off that much faster.

3. How Will Your Taxes Be Affected?

Being a homeowner means you will be responsible for paying taxes every year, and not only does this apply to your primary residence, it’s also relevant to a vacation home. As such, you’d be well advised to have a chat with your tax advisor to see how owning a second home will affect your taxes, as there may be some differences.

For instance, if you plan on renting out the home for a short period of time throughout the year (usually less than 15 days), the IRS may deem the vacation property to be a personal-use home. In this case, you may not have to report any rent as income, but you’ll also be unable to report any deductions.

On the other hand, if you rent the place out for more than 15 days a year, there’s a lot more paperwork associated with your tax reporting. You will need to submit your rent receipts to the IRS.

On the up side, you will be permitted to claim deductions against the rental income, including utilities, maintenance, repairs, property insurance, property management fees, and sometimes travel expenses. These deductions can be allocated based on the number of days that the home is rented out compared to the number of days it is occupied for your personal use.

If you ever sell the vacation home at some point in the future, any profits from the sale will be subject to capital gains taxes. That said, you might be able to avoid paying these taxes if you move into the home and consider it a primary residence for a minimum of two years before you sell it.

4. How Easy is it to Get There?


You may have found a fantastic place to buy a vacation home, but how far is it from your primary residence? More importantly, how easy is it to get to? If you’re planning on visiting it just a couple of times a year, then it may be perfectly fine to buy something that may require a plane ride to visit. On the other hand, if you’re planning on escaping on a regular basis, you might want to consider finding a place that’s an easy drive away.

5. Will the Home Suit Your Lifestyle Down the Road?

Real property increases in value over the long haul, but there are likely going to be little dips along the way. If you’re planning a long-term investment, a vacation home can be a smart move if you’ve done your due diligence when it comes to the location. You really can’t go wrong with certain spots, such as near water bodies, mountains, and other natural wonders.

But aside from property values, you need to think about how the property and its surroundings will suit your lifestyle well into the future. Will that party atmosphere start to become more of a nuisance when you get older? What about all those stairs to the second level? Would the area and the home be something you can see yourself living in twenty years from now?

Of course, you can always sell, but you’ll want to ensure that you get the highest return possible at that point, which means a little investigating of the location is warranted before making that purchasing decision.

6. Who Will Watch Your Home When You’re Not There?


If you’re going to be visiting your vacation home almost every weekend, then you’ll be there often enough to maintain and monitor the property yourself. However, if you won’t be making your way to your vacation home often enough, you will need to consider having the place managed by a third party, and that will cost you money in management fees. But that money will be well worth it knowing that the home will be supervised and cared for while you’re away.

7. Have You Visited the Area Before?

Before you even think of buying a vacation home, make sure you’ve spent enough time in the area to get a clear idea of what life would be like vacationing there. Even if you’re only planning on spending a couple of days at a time there, you want to know that it’s a place that you will enjoy.

As such, make sure you spend some time getting to know the area before you decide to buy. This is not a hotel: you won’t have the luxury of switching locations the next time around if you decide the place isn’t for you.

The Bottom Line

Buying a vacation home can be a great investment and can offer you a great deal of freedom and flexibility when you feel the need to get away. But this type of investment is not necessarily right for everyone. Make sure you’ve done your homework on your finances, current and future needs, and the cost and work involved in carrying another property. Consider all potential scenarios – both positive and negative – before you decide to buy. And if you do, make sure you’ve got a solid plan going into it.

How Different Type of Loans Can Impact Your Ability to Secure a Mortgage


One of the more important factors that lenders look at when assessing whether or not to approve you for a mortgage is your credit score. This important little number plays a key role in your mortgage application, and several things affect it, including various loan debt.

Depending on how you manage your loans, they can either make or break your credit score. Before you set out to apply for a mortgage, it’s helpful to look at how your existing loan debt impacts your rating.

Here are some of the more common consumer loans that play a key role in determining your credit score, and therefore your ability to secure a mortgage.

Student Loans

Among all household debt in the U.S., student loan debt is rising very quickly. In fact, more Americans are taking out student loans today, and they’re borrowing a higher amount as a result of skyrocketing tuition fees. Student loan debt is almost three times what it was a decade ago, and has reached the $1.3 million mark.

All that debt is possibly putting a damper on obtaining homeownership status. About one-third of Americans in their 20s owned a home in 2007, but that number has significantly dropped down to 21% as of 2016. If anything, student debt can at least explain a big part of this decline.

People with plenty of student debt will certainly be examined by mortgage lenders during the application process. Student loans – like other loan types like credit cards or car loans – will be assessed by lenders as a measure of the ability of a borrower to repay the mortgage. Like other forms of consumer debt, student loans can decrease the ability of an individual to borrow funds to finance a home because they shrink income.

Student loans are reported to the credit bureaus like many other loan types. They’re unsecured debt, which means they are not backed by any collateral. That said, they don’t necessarily have a negative effect on your credit score – that is, unless you fail to make your payments on time. And if these loans are allowed to linger on for years or even decades, they may make it harder to get approved for a mortgage.

Not only that, student loans will be factored into your debt-to-income ratio (DTI), so a massive student loan amount could affect your ability to be eligible for a mortgage.

Auto Loans

Unlike student loans, auto loans are a type of secured debt, which means they are protected by collateral – namely, the vehicles that these loans are designed to finance. Sometimes having an auto loan on your debt portfolio can actually increase your credit score by diversifying the various debt types that you may have, as long payments are made on time and in full each month. If not, auto loan debt will have the opposite effect on your credit rating.

Personal Loans

Sometimes a personal loan is needed to cover the cost of surprise expenses, such as paying for a car repair or a last-minute unexpected bill. Mortgage lenders must consider all of the monthly debt that people have. If they have personal loans added to the mix, that monthly payment will reduce the loan amount that would otherwise be qualified for when it comes to obtaining a mortgage. Essentially, having personal loan debt will affect how much a person would be able to qualify for. 

A personal loan will essentially affect your debt-to-income ratio, which is a critical factor that lenders look at when assessing whether or not you would be eligible for mortgage approval. Basically, a DTI will provide some insight as to how likely you would be to default on your home loan payments.

Like other loan types, how you manage this added debt will have an impact on your credit score, which is a crucial factor that lenders will look at not just for determining whether mortgage approval would be granted, but also the type of interest rate you would be given. Basically, the better the credit score, the lower the rate.

If you’ve been making all your payments on time, that will have a positive effect on your credit score, and vice versa.

Payday Loans

Payday loans aren’t typically reported to the credit bureaus, and as such, they likely won’t show up on your credit report. However, if you don’t make good on your payments, it will certainly be reported and could very well pull down your credit rating.

Many lenders view payday loans in a negative light because they suggest that you may have some potentially serious financial issues that would prompt you to borrow small amounts of funds at exorbitantly high interest rates. As such, this could be indicative of your inability to pay off a mortgage.

Existing Mortgages

If you’ve already got a home loan and are looking to obtain a second one, your new lender will take a close look at your debt-to-income ratio to make sure you’ll be able to comfortably afford both mortgages each month. You will need to prove your ability to pay a second mortgage by supplying supporting documentation of income from various sources, including from your job, investment dividends, or rental income.

The Bottom Line

Having an active loan that you’re regularly paying down each month without missing a deadline can actually be a good thing for your credit. It shows potential lenders that you’re financially responsible and are fully capable of keeping up with your loan payments to stay on track to pay off the loan at some point. However, certain loans can do a disservice to your credit rating if you don’t manage them properly. Before you submit a mortgage application and begin your home search, make sure your debt situation is stable first.

Important Deadlines in Real Estate Contracts That Can’t Be Missed


A real estate contract can be confusing for both buyers and sellers, especially for first-timers. Not only is there plenty of jargon that many may not be familiar with, there are also many deadlines stipulated that must be met. Failure for these deadlines to be satisfied can result in a dead deal, which is why it’s essential that all necessary parties do their due diligence to meet these milestones.

Although there are dozens of potential deadlines in a real estate contract, most of the time they’re not all used. The following are some of the more common deadlines that will be stipulated in a real estate contract that both buyers and sellers need to stick to.

Deposit Deadline

If the buyer does not submit the earnest deposit check with the offer, there will be a certain timeframe within which it will need to be handed in. Usually, this deadline would be anywhere between 24 hours to a few days after offer acceptance.

Title Evidence

The seller is obligated to submit the existing title insurance policy or title abstract within two to three weeks after the date of the real estate contract and before closing. If not, the seller will be obligated to issue a credit to the buyer.


Real estate contracts can come with any number of contingencies, depending on what the buyer or seller agree to. That said, the more common contingencies tend to be for financing, home inspections, and appraisals. These contingencies need to be either fulfilled or waived before a specific date, or the deal can fall through. In addition to specifying the contingencies in the offer, the contract will also stipulate specific deadlines for each.

For instance, the default home inspection contingency deadline for the buyer in California is 17 days, which is when the inspection will need to be completed and the contingency waived. However, the buyer can specify another date in which the inspection will be completed by. 

HOA Disclosure Summary

If the property in question is run by a homeowner’s association, then the HOA documents need to be delivered by the seller to the buyer within a certain timeframe. This will provide the buyer with enough time to review the documents to ensure they are satisfactory. Usually, the deadline for the seller to deliver the HOA documents is 7 days after offer acceptance.

The real estate contract also requires the seller to request these documents from the HOA within 3 days following offer acceptance. By default, the buyer has 17 days from acceptance to waive the HOA disclosure contingency, or cancel the contract altogether.


The buyer may obtain any survey of the property to identify if there are any setback violations or encroachments on the property. The seller will have a deadline to deliver the survey, after which the buyer has a certain amount of time to review the survey and notify the seller of any issues before the contract closing date.

If the buyer does not obtain a survey from the seller or communicate any grievances within the time frame specified in the contract, the buyer can no longer make any objections to issues that probably would have been evident in a survey.

Offer Acceptance

When the buyer initially submits an offer, the seller will have a certain amount of time to either accept or counter it. Usually, the deadline to communicate offer acceptance or a counter offer is 11:59 pm of the same day, or even a day or two later. If the offer is accepted within the time frame specified, the contract now enters an escrow period.

If acceptance or a counter is not communicated within this timeframe, the contract is null and void. If the seller counters the offer, a new deadline is established.

Closing Date

This is the date that title is transferred from the seller to the buyer and the keys are handed over. If either party does not successfully close on the specified closing date, that party is considered to be in default of the contract. At this point, the other party may choose to seek out legal options. If the buyer defaults, the earnest deposit may be forfeited to the seller. If the seller defaults, the buyer may sue for damages.

The Bottom Line

While the standard Residential Purchase Agreement in California will include deadline suggestions for various components, these deadlines can be negotiated between the buyer and seller. That said, it’s important to consider what would be an appropriate amount of time needed to ensure each deadline is comfortably met without each party having to either be rushed to meet these dates or have to wait an unnecessarily long time. Once deadlines are inserted in the contract, both parties should do their best to make sure they’re met, or else the contract could be either delayed or killed altogether.

6 Things That Buyers Should Never Compromise in a Home Purchase


Buying a home is a big deal. It’s a huge financial investment and therefore one that should be made with careful consideration.

But let’s face it: if you’re sticking to a specific budget, the odds of checking off absolutely every little item on your list are pretty high, especially if those things are more on the “want” side versus the “need” side. Buying the perfect home is not easy, and you’ll probably find yourself making certain compromises while honing in on a short list of properties.

That said, there are certain things that you should never compromise on when buying a home, including the following.

1. Location

You can change many things about a house, but you can’t change its location. In fact, when it comes to buying a home, location is the number one factor to consider. Not only does it impact your enjoyment of your home, it also plays a significant role in the future value of your investment.

For starters, consider how close the location of a home is in relation to work. The ease and convenience of your morning and evening commute will rely heavily on where your home is relative to where your place of work is located.

Ease of commute  is a critical component to think about when buying a home. While some people don’t mind a long ride into work, others might wince at the thought. Regardless of the distance from home to work, other factors come into play when it comes to commuting to and from work, including proximity to freeways and public transit.

Of course, there are plenty of other factors that go into location. An area’s school district, crime rate, and greenspace will also impact the desirability of a specific neighborhood. Close proximity to important amenities is also a factor to consider, such as groceries, eateries, and shops.

It’s important to have a clear idea about all of the above factors before beginning the search for a home. And if you’re not keen on a far commute to work or want to be in an area with good schools and a low crime rate, then location is definitely something that should not be compromised.

2. Structural Integrity

Unless you’re buying with the intention of completely tearing down a home and building a new one, then the strength of a home’s structure should be carefully considered. If it’s in rough shape, you could very well find yourself with a money pit.

The costs associated with repairing structural issues can be astronomical. That’s why it’s important for buyers to focus on homes with solid construction quality in order to avoid getting stuck with a property that will require a ton of work – and money – to bring up to par.

3. Number of Bedrooms

The size of your family will dictate the number of bedrooms you’ll need in the new home you purchase. Ideally, everyone will be able to have their own bedroom to call their own, though it’s not uncommon for siblings to share rooms with each other, at least for a few years.

That said, if there is a specific number of bedrooms that your family absolutely requires, this is one trait that you probably should not sacrifice when shopping for a new home. Even one less bedroom can make life uncomfortable and inconvenient.

If there are no kids in the picture right now but you plan on adding them some time soon, you’ll need to take this fact into account when searching for a new home. Being prepared with more space when you really need it can avoid having to search for another home too soon.


4. Size

Nobody wants to be cramped in their own home, so if a certain amount of space is needed to ensure that you and your family are comfortable, then don’t compromise on square footage. This is especially true if you’ve got little kids running around or pets that need some freedom to roam.

While a couple hundred square feet might not necessarily make a huge difference, cutting back on any more than that can compromise the enjoyment of your home. Determine the optimal size of a home you plan to purchase and try not to stray too far from that ideal.

5. Price

Getting pre-approved for a mortgage is an absolute must before house hunting, and will provide you with a limit of how much you could potentially be approved for to finance a new home purchase. But that doesn’t mean you should buy a home that maxes out that limit. While you might be able to get approved for a certain home loan amount, that could also mean that a much larger portion of your income will have to go towards paying your mortgage.

Being “house poor” is no fun. Not only does it restrict your leisurely spending, it can also impede on your ability to contribute to your savings or retirement accounts. In addition, it’ll take you a lot longer to pay off your mortgage if your loan amount is sky high.

Obviously, buying a home is a major financial investment that requires discipline to pay off on a regular basis, but you should never compromise the ability to funnel your funds to other important things in the name of buying a much more expensive home.

6. Working With an Agent

There’s absolutely no reason for buyers to go it alone when it comes to finding and purchasing a home. After all, sellers generally cover the costs associated with paying for realtor commissions. The services and expertise that agents can offer their clients are invaluable.

These professionals can help zero in on homes that match buyers’ criteria, negotiate a fair price, and tackle the complex paperwork that often accompanies a real estate deal. For this reason, buyers should never compromise the assistance of a seasoned real estate professional in the most important financial investment decisions they’ll ever make.

The Bottom Line

Before you find the perfect home that fits your budget and your lifestyle, you’ll likely have to check out several properties first. The odds of finding your dream home on the first visit are pretty low, especially if you’re sticking to a specific budget. However, the more homes you see, the better idea you’ll have of exactly what you can get for the money you’re able and willing to spend.

Of course, you’ll have your own specific preferences and requirements. That’s why it’s helpful to start your home search armed with a list of components that you’re willing to sacrifice and list of items that are absolute must-haves, and be sure to put in an offer only on a property that checks off all items on the latter.

6 Reasons to Consider Buying an Old House


When it comes to buying a home, you’ve got options; namely, should you buy new construction, or an older home?

The pros of buying new construction are obvious: brand new appliances and systems that are less likely to break down any time soon, finishes that you can pick out yourself before you move in, higher energy efficiency, and little to do except move in. 

But there’s something to be said about older homes, which is why you might want to keep them on your radar when searching for a new home to purchase. Older homes come with their own slew of advantages, which just might be precisely what you’re looking for in a home.

1. More Character 

Newer homes simply don’t have that old-world charm that older homes have, especially those that were built more than 50 years ago. Arched doorways, herringbone-patterned wood flooring, decorative crown molding, stained glass windows, classic fireplaces, and hand-carved staircases are things that you typically wouldn’t find in newer home construction.

While architects and designers may work their magic to mimic these features, they’re just not the same as the authentic, real deal. There’s simply a certain level of character that old homes have that you just don’t find in more modern cookie-cutter subdivision homes.

2. Solid Construction Home

Sure, newly built homes may not require much maintenance right now, but the materials and method of construction pale in comparison to that of turn-of-the-century homes. Older homes typically feature thicker, sturdier walls made of plaster or even concrete, compared gypsum board that’s typically used in modern home construction.

They’re also framed with the wood of much older, more established trees that have been left alone to grow for as long as a few hundred years before being cut down for lumber. This makes the wood much less susceptible to rotting and warping compared to much younger wood. Even the interior and exterior doors tend to be made of solid wood that’s built to last.

3. Established Locations

The home itself is obviously an important component, but the neighborhood itself is just as important, if not more so. Older homes tend to be located in much more established communities that are loaded with mature trees and other greenery that you simply will not find in newer areas. Many homeowners spend a ton of money and time planting trees and bushes to create a greenspace around their homes that mimic what homes in established neighborhoods already have.

Not only that, the neighborhoods that older homes are often located in are typically urban hubs that are much closer to city centers and public transportation, which means commuting to the downtown area is usually a lot quicker and more convenient.

4. Bigger Lot Size


Lot sizes seem to get smaller and smaller with each new subdivision built. Homebuyers pay a premium for larger lot sizes when buying new homes. In fact, new construction is typically characterized by larger houses with smaller properties.

Land values tend to increase at a faster pace as home prices appreciate, which makes home construction even more expensive. As such, home builders have increasingly preferred to build on smaller lots to cut down on cost. If buyers want the larger piece of property, they’ll have to pay for it, and they’re not exactly easy to come by with newer homes.

Instead, older homes often sit on much larger lot sizes in comparison, so if a large property is what you’re after, you’ll probably be more likely to find it with an older home.

5. Cheaper Price

Depending on the specific location and overall condition, older homes typically cost less that newer, more modern homes of similar sizes. New construction sells for anywhere between 10% to 20% more than older homes that have been updated, on average. Newer home construction uses much more energy-efficient building materials which boost the cost of construction.

Of course, it’s important to take into consideration the fact that newer homes usually don’t require any updating, while older homes will usually need much more maintenance in comparison.

6. Tax Breaks

An older home may qualify for certain tax breaks, depending on the exact location and age of the home. These tax abatement programs basically lower or even completely waive property taxes over a certain time frame.

The Bottom Line

There’s no need to rule out newer homes, but there’s also no reason to discount older homes either. The latter comes with a host of benefits that may entice you to consider an older property to put an offer on. While you can certainly try to mimic the kind of character that older homes often feature, the lot size, location, and maturity of the surrounding greenery would definitely be tough to mimic with a new build.

7 Rookie Seller Mistakes That Can Prevent a Successful Sale


Your home is a huge investment, so you obviously want the sale to be as successful as it can be. Unfortunately, many newbie sellers can actually sabotage their own sales without even realizing it. If you want to give yourself the highest odds of selling your home quickly and for the highest sale price possible, make sure you avoid making these rookie home selling mistakes.

1. Overpricing

Every seller wants to get the highest price possible for their homes when they sell, so it’s not hard to see why they may want to list high. However, overpricing a home can have big consequences, including bypassing plenty of qualified buyers and ending up with a stale listing. Lots of homeowners place more value on their homes compared to what the actual market dictates, and rookie sellers will often throw a big price tag out there to see if they can get any bites.

The fact of the matter is, one of the biggest reasons why homes don’t sell is because of their listing price. And the longer the home sits on the market without any action, the more buyers will think there’s a problem with it. Once the listing becomes stale, the odds of a price drop become imminent.

The best way to go about pricing a home is to list at current market value, which can be determined by your real estate agent through a comparative market analysis.

2. Failing to Stage the Home

Selling a home is already a big expenditure, so the idea of having to spend even more to have a home professionally staged can be daunting for many sellers, especially first-timers. However, not prepping a home for the market can be a big mistake.

Buyers often have a hard time visualizing what a home can look like if it’s filled with clutter and personal artifacts and is decorated in dated decor. While staging doesn’t necessarily have to be done by a professional, it should still be attempted even on a DIY level.

At the very least, a home on the market should be de-cluttered and thoroughly cleaned from top to bottom. It should also be de-personalized, which means taking down family photos and religious posters. It also means neutralizing, which means repainting the walls and decorating with more neutral colors like taupe or gray.

The whole point of staging is to help buyers become attracted to your home and develop an emotional connection to it. If you can make it easier for buyers to fall in love with your home and see themselves living there, you’ll be a lot closer to getting a solid offer and closing a deal.

3. Not Willing to Negotiate

Many sellers set a price point and refuse to budge from it. If it’s a sizzling hot seller’s market, perhaps this might be fine. But in a neutral market, rejecting every offer that doesn’t quite meet the seller’s expectations can drag out the listing.

If the offer price – or anything else in the contract – isn’t exactly what you had hoped for, be flexible and open to negotiating. A little bit of bantering is typical in a real estate deal, so at least consider countering the offer with some modifications to the price, deposit amount, closing date, or any other component of the offer to see how the buyer responds.


4. Lingering Around at the Open House

Nobody wants to have the owners breathing down their necks when they’re touring a home during an open house. It makes them feel uncomfortable and doesn’t allow them the freedom to peer through closets or make comments without fearing judgment from the seller. Prospective buyers like to have the liberty of going through all drawers and speaking openly about the home without knowing that the owner is lurking.

During an open house, the best thing a seller can do is spend those couple of hours outside of the home while their agent handles the visitors.

5. Being Inflexible With Showings

When a home is on the market, one of the best things a seller can do is make it easy to show the home. Only allowing visits on weekdays from 10am to 5pm and no showings on weekends, for instance, severely limits when prospective buyers can come and visit the home for a showing. This, in turn, shrinks your pool of buyers, which makes it tougher to find an interested buyer.

When selling, it’s important to be open to putting up with a little inconvenience of having strangers trek through your home during times that you’d rather be left alone. It’s also important to be flexible with short-notice showings. While you don’t have to let people in at 10 at night or accept a last-minute booking just 5 minutes before buyers show up, just keep in mind that the easier you make it for buyers to book a viewing, the easier it will be to find an interested buyer.

6. Not Emotionally Detaching From the Home

It’s tough for homeowners to let go of their homes, especially if they’ve been there for years and have raised a family with them. Such an emotional attachment is normal, but it can prove to be an obstacle when it comes time to sell. Unfortunately, many sellers allow their failure to emotionally detach from their homes get in the way of a successful sale. They may become offended by certain demands that buyers make or can become agitated when an offer comes in that’s lower than what the seller believes the home is worth.

When selling, it’s important to keep in mind that the property may be a ‘home’ to you, but it’s just another ‘house’ to the buyer. Maintain your composure throughout the process and understand the buyer’s shoes in order to increase the chances of a meeting of the minds, and therefore a successful sale.

7. Going the FSBO Route

There are plenty of sellers who try to sell their own home without the help of a professional real estate agent in an effort to save money on commissions. But while their services typically come with a high price tag, the potential to pocket more money when all is said and done by working with a real estate professional makes this expense all worth it.

Agents are seasoned professionals who have plenty of experience selling homes. They’re well aware of the precise tactics that need to be implemented to ensure a successful transaction. They’re able to price appropriately in order to ensure a higher sale price, and they’re well versed in negotiating to bring more money to the table.

The mistakes that rookie sellers who take the FSBO route make can actually cost them money at the end of the day. Hiring a real estate agent, which does come with a price tag, can often mean more money in your wallet when the deal is done.

The Bottom Line

There are plenty of things that are out of your control when selling, including the current market and the type of buyers who are presently searching for a home. However, there are lots of things that you can control that will have a direct impact on how long it will take for you to sell your home, as well as the final sale price. If you’re new to the home selling process, be sure to avoid the above blunders, and follow the guidance of your real estate professional.

How the Mortgage Process Works When Buying a Home


When it comes to buying a home, a mortgage is almost always a part of the process. But as common as they are, mortgages can often be highly confusing. That said, it’s in your best interests to become familiar with the mortgage process, regardless of whether you’re a first-time buyer or have bought and sold many times in the past.

Get Pre-Approved

The first thing to do to solidify a mortgage is submit an application with your lender to get pre-approved for a home loan. This pre-approval is based on your credit score, so your lender will pull your credit report to check out your financial history and see if there are any issues that would stand in the way of mortgage approval. While lenders each have their own unique set of required qualifications, the majority will want to make sure borrowers have a score of at least 660 or higher.

Your lender will verify all the requested documents, which typically include paystubs, bank statements, an employment letter, and W2’s, among others. It’s recommended that you submit all these documents along with your application to help speed up the home loan process.

If all goes well, you should be granted a mortgage pre-approval, which is basically a letter that details the type of mortgage that you’re qualified for and the amount you are eligible to borrow. This will help you narrow down the price range of homes to look at, and will also come in handy when it comes time to submit an offer to a seller.

It should be noted that a pre-approval is not the same as approval for a mortgage. The mortgage approval process can only take place after your offer on a home has been accepted by the seller. A pre-approval does not guarantee that you will be approved for a mortgage, though it is certainly a step in the right direction. 

Lock in Your Mortgage Rate

Obviously, the lower the interest rate, the more affordable your home loan will be. Ideally, you’ll want to lock in a rate when it’s low, as the rate can fluctuate from one day to the next. Just because you are quoted a specific interest rate one day doesn’t necessarily mean that it won’t change by the time you are approved for a mortgage.

To make that you get the rate you were quoted, you can lock it in. Of course, if you think the rate will go down by the time your mortgage is approved, you can choose not to lock it in and wait it out.

Apply For Your Mortgage After Offer Acceptance

Once your offer has been accepted by the seller, the real mortgage approval process begins. This is much more involved and detailed than the pre-approval. The mortgage application form requires details about you and the home you agreed to purchase, and also requires personal finance documentation.

Your lender will carefully assess your finances to verify your employment status, income, assets, and debt. The home itself will also be evaluated, and an appraisal will be ordered by your lender to make sure that it’s market value is eligible to be financed. Appraisals are performed by an appointed real estate appraiser who is qualified to conduct such evaluations.

Ideally, the home should be appraised at around the price you agreed to pay for it in order to secure financing. Should it come in low, your lender may not agree to approve you for the loan amount you originally requested. In this case, you can either renegotiate with the seller for a lower price or try to come up with the liquid cash to bridge the gap.

Your Debt-to-Income Ratio Plays a Key Role

During the mortgage approval process, your lender will carefully assess your debt-to-income ratio, which compares how much debt you have to your income. This number is a critical measure of your ability to make your mortgage payments in full and on time each month, and ideally shouldn’t be any higher than 36%. If it’s any more than that, it will be hard for you to keep up with your mortgage payments – as well as all your other debt obligations. Not only is this risky for you, it’s risky for your lender too.

Final Mortgage Approval

After your home loan is approved, you will typically be issued a conditional approval which outlines any conditions that you need to meet before receiving an actual loan commitment, such as a home inspection report. 

You’ll be given a Loan Estimate (LE) during the application process that details the closing costs associated with the mortgage. Your lender is legally required to provide the Loan Estimate within 3 business days of your home loan application submission to give you enough time to review the document and approve it.

The mortgage documents are then sent to a title company’s office for you and the seller to sign, and your closing costs and down payment will be due at this time. After all necessary funds have been collected and the seller receives the appropriate proceeds from the sale, the title of the property is then transferred to you and you’ll now be a new a homeowner!

The Bottom Line

As you can see, there are plenty of steps that go on behind the scenes after you’ve submitted all the necessary paperwork to get the mortgage process ball rolling. Luckily, your mortgage broker and real estate agent will be there every step of the way filling you in on the process and guiding you in terms of the next steps to take. Once the process has been completed, it’s time to celebrate! Finding the home of your dreams is one thing, but finally getting mortgage approval is another huge milestone. When it’s all said and done, you can finally start enjoying life in your new home.