Many of you email me asking really great questions and thought I would share my answers with all of you....I have heard the MARKET is changing and that BORROWING is harder...though I feel owning is better than renting. Any suggestions? Great question- and such a hot topic!
1-Buy a property you can see yourself living in at least 10-15 years- if the market changes,
this gives you plenty of time to hold out until it corrects.
2-Do not get an ARM(adjustable rate mortgage)- even though the low monthly costs and rates
are attractive, the costs to refi are high and the additional monthly costs when it resets may
force you to sell- a bad idea if the market changes.
3-Buy the best condition you can afford and get it inspected- since home equity lines of credit are
tougher to get, if the property is in excellent condition, chances are there won't be a huge repair
or replacement in the next several years. Would you rather borrow the money and pay a small
amount monthly or get hit where the out of pocket cost is thousands or tens of thousands?
We all know when it rains, it pours- how would you feel if there were several large repairs- like
boilers or roofs at one time? OUCH!
4-Research Area- Make sure there aren't any future changes that could affect the value of your
property- zoning, schools etc etc. can maintain or improve the area. Sometimes a shopping center
can attract a bad element-or a really good one! Google neighborhood blogs and community boards
to see what the latest talk of the town is!
I have an ARM- should I refinance? My friend Ezra Tawil of Apple Mortgage in NYC can answer this....YES- Many of us have heard about the current sub-prime mess & credit crunch. Let's suppose that real estate appreciation & interest rates simply revert to the levels they have averaged since the Great Depression. If appreciation reverts to 2-3% per year, and rates on a 30 year fixed mortgage return to 9.5% - where will that put you? While no one can predict the future, shouldn't we all take steps now to protect our assets in case of such a reality? Don't leave your home- one of your biggest assets-to chance! If you plan on being in the property for any extended period -OR don't want to risk drastically increased payments, or even worse have to sell in an unpredictable market-YES the smart and safest move is to refi to a 30 year fixed loan and protect yourself. For refi call him directly at etawil@applemortgagecorp.com
Does it really matter when you put your property on the market?
Yes- of course! Historically, the largest market increases have been recorded in the spring-summer months. Don't you want to take advantage of that too? Many of my customers ask me what their property value is ...and we discuss condition, timing and planning which factor in the value- and the ones who really listen and treat their home as the magnanimous asset it is WIN! You can too. If you start planning in the winter months by painting, cleaning and being emotionally ready to move, by the time the spring rolls around you will be READY! Hands down spring and summer months are the best to sell. That means you should contact me in February and get your checklist started, as most properties need paint, a handyman, clutter removal and some TLC...this takes time- especially if you have children, so plan accordingly. Your pocketbook and family will thank you!
I have 20k saved to buy a property...where do I begin? Since NYC and Brooklyn usually have 10% contract deposits, the closing costs on condo's are approximately 5% of the purchase price and the prices for a studio are 400's and up....try outside areas! Buying is the first step towards independence from your landlord and there are plenty of options out there that do take 5 percent down, and New Jersey does not have mortgage tax- which cuts down the closing costs by almost 2%. Call a mortgage broker to see how much banks will lend you, get PRE APPROVED and start the search!
My market is depressed in my area and I am having problems selling my home-what are some other solutions? Great question! This may seem like a bad thing BUT you actually have several options- my favorite is to lease the property! Have someone else pay the remainder of the mortgage and hold on to it as an asset- you never know...it may pay for your kids' college! Don't want to be a landlord? A smart solution-especially for new landlords is to hire a managing agent. Their role is to hedge your risk and educate you on what to do-and not do. Need cash? Prior to putting the property on the market, call a mortgage broker and either refinance or open up a home equity loan or home equity line of credit.
Well, I hope you have enjoyed these tips and welcome any questions you may have. Email me to join my elist AND to receive a copy of "How to Enhance the Value of Your Home in One Weekend".
