Neptune’s Roost

Or, a Baby Boomer’s efforts to avoid being sucked into the vortex

Source: Neptune’s Roost

More Math! (quick and dirty calculation for rent vs. buy)

This is to show you what you LOSE by not buying.  And, with talk about recession, and the drop in interest rates, you need to pay attention to what inaction can cost you.  This is a two year scenario, and is a quick and dirty calculation that gives you a rough idea of what you stand to lose by staying in your rental. 

You rent now for $1000 per month.  In 24 months, you will have spent $24,000 in rent.  You are considering a home that is listed for $200,000.  Assuming a modest 3% appreciation annually, do the following calculation:

$1000 (monthly rent) x 24 months(two years)=$24,000 (rent payment over two years)

$200,000 x 1.03×1.03 =$21,218 (2-year appreciation)

$24,000 (2 years rent) + $21,218 (2-year appreciation)= $45,180 (lost money!) 

Nobody can afford to lose that much, no matter what the economy.  Remember that this does not include your tax deductions on the interest you pay, or the fact that the investment in your HOME is the only one that you can enjoy living in, improving on, and sharing with others.   What are you waiting for?!

WHAT IS YOUR RENT REALLY COSTING YOU?

WHAT IS YOUR RENT REALLY COSTING YOU?

                                                                             Rent Per Month
                              $600              $800          $1000           $1200          $1400         $1600
2 years             $14,400        $19,200       $24,000       $28,800       $33,600       $38,400
5 years            $36,000        $48,000       $60,000       $72,000       $84,000      $96,000
7 years            $50,400         $67,200       $84,000     $100,800     $117,600     $134,400
10 years          $72,000        $96,000     $120,000     $144,000     $168,000     $192,000
15 years        $108,000       $144,000    $180,000     $216,000     $252,000     $288,000

Renting is the same as throwing your money away.
Home ownership provides a valuable asset you can depend on.
Think about it!

Coco Bean is in Da House!

Coco Bean is our young miniature dachshund.  She comes into the office with me, and spreads joy literally wherever she goes.  She is a black and tan silver dapple mini, so she has expressive eyebrows like her black and tan cousins, but crazy spots all over on a silver coat.  She is a showstopper.  She loves to go for a walk in the Short North where she is known by local residents, and shopkeepers.  They greet her enthusiatically, and sometimes with a treat!  I so enjoy her company–she is happy, friendly, and has a really flexible personality, which makes taking her places easy and fun.  You can read more about her at her Dogster page:

http://www.dogster.com/dogs/581735

Property Virgins

  I watch HGTV real estate shows all the time.  You would think that given the fact that I am a buyer’s agent, I would have had enough of real estate by the end of the day!  No such luck.  I love the subject, and eat it up.  One of my favorite shows is Property Virgins.  I think that is because my favorite buyers are first time buyers.  They have so many questions, and are so excited by the prospect of finding home of their own.   Also, there is something so satisfying about helping someone find their first home, and keeping them from making some expensive first time home-buyer mistakes:

1.  NOT BUYING.  That is the single biggest mistake.  Don’t assume that you are paying less just because you are renting.  You may be surprised.  Look at this: http://www.realliving.com/RC/Buyer/RentingVsBuying.aspx

2.  NOT HIRING A BUYER”S AGENT.  Since you are not an expert, you need assistance from someone who is, and who can protect you from making expensive mistakes.  A buyer’s agent represents YOU, the buyer, and owes loyalty, fiduciary responsibility and confidentiality to YOU.  Even better, the seller pays for your buyer’s agent, so you get expert advice at no cost to you!  Read more about it: http://www.realliving.com/Agent/AgentProfile.aspx?id=117331  

3.  NOT UNDERSTANDING AGENCY LAW IN YOUR STATE.  Did you know that the agent you met at the open house on Sunday does not represent your interests in the sale if you buy the house you met them at?  Their loyalty is to the seller, even if you come to the table without representation.   Here is an explanation:  http://www.realliving.com/RC/Buyer/Representation.aspx

4.  NOT SHOPPING FOR THE BEST MORTGAGE.  There are lots and lots of mortgage lenders out there, and lots of mortgage products to choose from.  Shop at least three lenders for the best deal.  Be sure to ask about multiple financing options with each one, and above all, let them know you are shopping to make sure that they are offering you the best deal.  Here is some advice: http://www.realliving.com/RC/Finance/ShoppingForALoan.aspx

5. NOT GETTING PRE-APPROVED BY YOUR LENDER.  This is the reality check that you need to see what your credit score is, and how much you can afford.  This way, you are not looking at things that you cannot buy, and you have a leg up when it comes time to negotiate with the seller.  Here are some more reasons to get pre-approved: http://www.realliving.com/RC/Buyer/GetPreApproved.aspx

6.  SPENDING TOO MUCH Just because you have been pre-approved for up to a certain amount, doesn’t mean that you must spend it all on the purchase of your home.  Having a home, even a condo, requires some ready cash for decorating, entertaining, maintenance, and you still want to travel and go to the movies from time to time, don’t you?  Be sure that you understand what your budget is, and stick to it.  You won’t enjoy your home if you can’t afford to do anything but pay the mortgage.  Here are some more tidbits about being ‘house poor.’ http://www.investopedia.com/terms/h/housepoor.asp

7.  SPENDING TOO MUCH (revisited).  Your buyer’s agent should provide a comparables report for you so that you can see what the house you have fallen in love with is WORTH, regardless of what the seller is listing it at.  The last thing you want is for your lender not to be willing to lend the price you agreed to pay, or that you end up ‘upside down’ on the house when you go to sell it later. 

8.  NOT BEING OBJECTIVE  This is difficult–buying a home is an emotional process.  It is however, a time when you must try to distance yourself from making a decision based on how pretty the house is, or that it comes with a hot tub.  Make a list of the things that are a priority in the home you are looking for, and put them in order of importance.  This will help you stay focused on what you need and want.  Here’s how: http://www.realliving.com/RC/Buyer/WantsVsNeeds.aspx

9.  NOT GETTING A HOME INSPECTION  Never, EVER buy a previously owned home without a home inspection.   Even if you don’t care now how safe and solid the house is now, you will when the time comes to sell it.  You can be sure that your future buyer will.  You don’t want any surprises now or in the future.   Look here: http://www.realliving.com/RC/Buyer/HomeInspection.aspx

10.  NOT ASKING QUESTIONS  You’ve heard the old adage, “there are no  stupid questions, only stupid answers.”   This is especially true here.  Don’t be afraid to ask your agent or lender if there is something that you don’t understand.  This is likely to be the single most expensive investment in your life.  Don’t assume…uh, you know the rest. 

Now, if all my first time buyers did these 10 things, and if that agent on Property Virgins would just go in with her buyers when they first look at a house, (why does she do that?!) I will be able to relax a little bit!  🙂