Ha! Do you enjoy that title? I'm putting on my teacher hat for a second here! I feel so wise in my 24 years of life that I feel the need to share my home buying/selling tips that I have learned over my nearly two years of home ownership. I'm obviously not TOO incredibly smart since I have tips to share - tips that I have learned the hard way. Many of you probably don't feel you need to hear these tips...but maybe you need to be reminded...and maybe there's a good moral to the story too!
Tip #1
Do not purchase a home until you are SURE you will be in the area for at least 7-10 years.
Obviously, I have learned this one! First off, it protects you from losing money. It also saves you the hassle of selling a house quickly after purchase. With the economy like it is now, you can't afford to make hasty $100,000 decisions! As for our story, we received the First Time Homebuyers Tax Credit in 2009. Man, that was wonderful when we got it! I paid off my student loans with that money! However, we either weren't told or didn't pay attention when we were told that you must pay back the credit if the home is no longer your primary residence within 3 years of the purchase. This includes selling, renting, vacation homes, etc. Therefore (and I'll just be honest here), we received $8,000 on our 2009 tax return...and the government will get that $8,000 back on our 2011 tax return. Even without the tax return, it's important to remember that home loans are generally 30 years long. With a loan of that length, you don't make headway on the principal quickly...at all. Values of homes are dropping and banks aren't handing out loans like they used to. You don't want to risk losing money because you still owe the same amount you bought the house for! So, wait until you are settled and you know you'll be in that home for many years to come before purchasing.
Tip #2
Start saving NOW!
The recommended amount of money down on a home is 20% of the purchase price. Many banks will no longer give loans for the entire purchase price (oh, but ours did!). And this tip helps to save you heartache from loss of money when you decide to resell. It may take a long time to save up this much, but it's totally worth it! The loan amount will be lower, which also results in lower payments - or you can afford to purchase a more expensive home. Be firm with yourself and don't allow anything to happen until you have that money. Now, obviously 20% will change with each house you look at. So set a purchase price range for yourself and work on saving up 20% of the highest possible purchase price. Then you may even have extra!
Tip #3
Your monthly mortgage payment should never be more than 25% of your monthly income.
I can thank my dear Daddy for this one! He told me this once and I haven't forgotten it. Obviously, this one is common sense - live within your means people! What fun is a great house if you don't have any money left over to pay the electricity to heat the thing?! Oh, and I didn't have to learn this one the hard way - I followed it! But I think it's a valuable thing to know!
Tip #4
Put your faith in Jesus.
Aha! The moral of the story! Seriously, selling our house has been such a huge stress. I walked into it thinking everything would work out so quickly, someone would come along and make an offer that was our asking price and everything would be hunky dory! Eh, not so much. But, if that would have happened, I would not have learned tips 1 & 2 for future reference! The past few weeks I wrestled with burying St. Joseph in my yard. Now, I don't think that would have hurt anything...but putting my trust in that statue, in the for sale sign in the yard, in my realtor...anything but Jesus is a huge mistake. Do I not remember that He has the power to do anything? Do I not recall the moment I felt complete peace about our move and knew God would provide? John 16:33 doesn't say - This world has trouble but don't worry, since you are a Christian you are exempt! No...I believe it says - "In this world YOU will have trouble. But take heart! I have overcome the world." Oh, and thank goodness He did because I'm pretty sure I couldn't handle it without Him! God doesn't say that we'll learn lessons the easy way...sometimes it's the hard way. Because, well, who remembers the lessons they learned the easy way? Not me, for sure! And through it all, God still managed to protect us throughout this process, provide great buyers for our home AND give us the smarts for next time!
Tip #1
Do not purchase a home until you are SURE you will be in the area for at least 7-10 years.
Obviously, I have learned this one! First off, it protects you from losing money. It also saves you the hassle of selling a house quickly after purchase. With the economy like it is now, you can't afford to make hasty $100,000 decisions! As for our story, we received the First Time Homebuyers Tax Credit in 2009. Man, that was wonderful when we got it! I paid off my student loans with that money! However, we either weren't told or didn't pay attention when we were told that you must pay back the credit if the home is no longer your primary residence within 3 years of the purchase. This includes selling, renting, vacation homes, etc. Therefore (and I'll just be honest here), we received $8,000 on our 2009 tax return...and the government will get that $8,000 back on our 2011 tax return. Even without the tax return, it's important to remember that home loans are generally 30 years long. With a loan of that length, you don't make headway on the principal quickly...at all. Values of homes are dropping and banks aren't handing out loans like they used to. You don't want to risk losing money because you still owe the same amount you bought the house for! So, wait until you are settled and you know you'll be in that home for many years to come before purchasing.
Tip #2
Start saving NOW!
The recommended amount of money down on a home is 20% of the purchase price. Many banks will no longer give loans for the entire purchase price (oh, but ours did!). And this tip helps to save you heartache from loss of money when you decide to resell. It may take a long time to save up this much, but it's totally worth it! The loan amount will be lower, which also results in lower payments - or you can afford to purchase a more expensive home. Be firm with yourself and don't allow anything to happen until you have that money. Now, obviously 20% will change with each house you look at. So set a purchase price range for yourself and work on saving up 20% of the highest possible purchase price. Then you may even have extra!
Tip #3
Your monthly mortgage payment should never be more than 25% of your monthly income.
I can thank my dear Daddy for this one! He told me this once and I haven't forgotten it. Obviously, this one is common sense - live within your means people! What fun is a great house if you don't have any money left over to pay the electricity to heat the thing?! Oh, and I didn't have to learn this one the hard way - I followed it! But I think it's a valuable thing to know!
Tip #4
Put your faith in Jesus.
Aha! The moral of the story! Seriously, selling our house has been such a huge stress. I walked into it thinking everything would work out so quickly, someone would come along and make an offer that was our asking price and everything would be hunky dory! Eh, not so much. But, if that would have happened, I would not have learned tips 1 & 2 for future reference! The past few weeks I wrestled with burying St. Joseph in my yard. Now, I don't think that would have hurt anything...but putting my trust in that statue, in the for sale sign in the yard, in my realtor...anything but Jesus is a huge mistake. Do I not remember that He has the power to do anything? Do I not recall the moment I felt complete peace about our move and knew God would provide? John 16:33 doesn't say - This world has trouble but don't worry, since you are a Christian you are exempt! No...I believe it says - "In this world YOU will have trouble. But take heart! I have overcome the world." Oh, and thank goodness He did because I'm pretty sure I couldn't handle it without Him! God doesn't say that we'll learn lessons the easy way...sometimes it's the hard way. Because, well, who remembers the lessons they learned the easy way? Not me, for sure! And through it all, God still managed to protect us throughout this process, provide great buyers for our home AND give us the smarts for next time!
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