Buy a House Fast

When housing prices collapsed, may people– in fact at least 25% of Americans – suddenly found themselves with mortgages that exceeded the current value of their home. This has been especially true when people bought with little money down and have no equity in their home.  As noted in previous blogs, this has encouraged some homeowners to walk away from their homes because they couldn’t pay and for others to strategically default because they didn’t think it was fair they had to.  The underlying assumption is that people bought a home they couldn’t afford.

So other taxpayers griped, “Why should they get help?”

The fact is many people who bought homes with payments they could handle have been caught in a negative equity situation when things changed.  The Wall Street Journal recently published an interesting case study that illustrates the problem.

A New Jersey couple with some real estate savvy and limited resources bought a modest home in 2004 when interest rates were low.  To avoid having to pay PMI, they also took out a second loan to increase the down payment.  At closing, the couple was surprised to learn that the second mortgage was actually a balloon loan due in 14 years.  They were taken aback but anticipated that within 14 years, they would have refinanced, plus they would be a two-income family.

By 2010, their $328,000 home is worth $270,000.  They are happy in the home and have no plans to abandon it or sell it at the moment—but they do feel trapped.  If they wanted to accept a job elsewhere, they couldn’t sell it now unless they wanted to take a loss and live under a bridge in their new city.  They can’t take out a home equity loan to put on an addition or make improvements, as they have no credit left on their home equity line.

What they are caught up in is what many responsible homeowners face.  They did not expect their home to be like a car that loses a big chunk of value once they drive it off the dealer’s lot.  Because the man has a steady job, they consider themselves “technically underwater but not drowning.”  They have negative financial equity alongside great “sentimental equity.”  However, they wish they had waited to buy.  The one baby they expected when they bought the home turned out to be triplets, so they are painfully aware that their lost value could have paid for a good chunk of the college education bills they will face shortly after their balloon payment is made.

Irresponsible homeowners have dominated the news in the mortgage crisis, but people like those described here are caught up in this mess too.  If this describes your state of affairs and you need to move, Express Realty Services may be able to help you.  We can help you sell your home quickly if you need to sell. In fact, we guarantee to sell your home in 60 days or less, or we’ll buy it. Through our sister company Express Homebuyers, we also buy homes for cash.

As a homeowner who just made one of the most expensive purchases in your life, you will be disappointed to know that you are pretty much on your own in meeting the challenges you face.  If a major system goes wrong, you may have recourse, especially if you have a homeowner’s warranty, but that’s only one of the challenges.

When you rented, whether the light in the hall went out or the furnace died, you called the landlord (You may have even muttered that the problem wouldn’t have happened if he had only done some preventative maintenance).  Now, you need to fix what’s broken and plan ahead.  Aside from anticipating possible repairs, you need to schedule time to mow the lawn, shovel the walks in the winter, and clean the gutters.  If you don’t have the time, money, or interest to do these things or hire them out, then perhaps a condo would have been a better choice for you.

If you are like most homeowners, you will want to make a million changes in your new home to make it yours.  These projects range from painting to an addition and everything in between.  If you are qualified to do these things, great. You can save some money.  If not, depending on how much is involved, you can learn to do many projects.  For major projects involving plumbing, electrical, or major remodels, you are better off hiring a licensed contractor.  It’s safer, often cheaper, and more likely to increase resale later in comparison to an amateur job.

You probably had to get homeowner’s insurance when you got your mortgage, but buying a home is a good time to reassess all of your insurance. The coverage on the home itself and on your possessions should include replacement value if you can get it, and should have high liability limits that can cover you if some litigation-happy person slips on your porch or is bitten by your dog.  You should also consider whether you have enough life and disability insurance to protect your partner and children in case of your death or illness or an accident that could limit your ability to work.  Even your car insurance deserves a look – minimum state limits won’t protect you enough if you are sued.

When you buy a home, your days of the form 1040EZ are probably over.  There are many deductions you can take as a homeowner, especially the first year; for other things, like improvements, there is no deduction until you sell.  Even if you usually do your taxes yourself, you might want to use a professional tax preparer the first year to make sure you take the deductions you are entitled to without over doing it. Make sure to keep all your receipts on anything you do in the house so you can take the proper credit later.

Buying a home can be daunting experience but at Express Realty Services, we soften the blow.  We don’t take the money and run after you get your keys.  We help you make the transition from renter to homeowner.  Check out our free Homebuyer’s Guide today.  If you are looking for a great home in DC, Maryland, or Virginia, we can offer you beautiful homes at a reasonable price.  Many are renovated and remodeled homes acquired by our sister company Express Homebuyers.com.