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Common Home-Buying Mistakes People Make at Every Age

(TNS)—No matter the age or life stage, everyone makes mistakes when it comes to home-buying.

Whether it’s picking the wrong location or buying more house than you can afford, the mistakes are often universal, says Ilyce Glink, author of “100 Questions Every First-Time Home Buyer Should Ask.”

“When you’re in your 20s, your life isn’t the same as when you’re retired, and yet you’re both going to make timing mistakes,” Glink says. “You may make location mistakes. You may not think about what you need for every stage of your life, so you buy the wrong size home or make a bad money decision.”

Even so, certain age groups are more susceptible to particular missteps than others. Here are common mistakes homeowners make at each age, and a few ways to avoid them.

20s: Getting the Wrong Type of Mortgage
People in their 20s are just starting their careers and usually have less money saved than older homebuyers. For these folks, paying less for a mortgage is not just a priority, but a necessity.

This can be a bad thing if buyers get into an adjustable-rate mortgage (ARM) thinking they will earn more money down the road, says Michael Corbett, host of Extra’s “Mansions and Millionaires” and author of “Find It, Fix It, Flip It.”

“Younger buyers might get an adjustable-rate mortgage because the rate is really low; it’s like a teaser rate, and they think, ‘I’m going to get it because I’m improving in my job situation or I’ll pay off my student loan’—but if that doesn’t happen then, when interest rates go up in five to seven years, they’re going to see their mortgage rates double or even triple,” Corbett says.

If the rates on ARMs increase dramatically, there’s a chance the borrower will no longer be able to afford their mortgage payment, which could put the house in jeopardy. Before leaping into an ARM with just a dream of a house and a hope for a bigger paycheck, consider other cost-saving alternatives.

Along with popular programs like FHA loans and VA loans, there are other lesser-known initiatives geared to homebuyers on a fixed income. The HUD-sponsored Good Neighbor Next Door program, for example, offers home-buying assistance for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th grade teachers.

Along with federal money, there are also state-sponsored grants for first-time homebuyers, which you can typically find on your state’s website.

30s: Not Thinking About the Future
Homebuyers in their 30s blunder by not considering a future family when they’re standing in the middle of downtown condo with gorgeous views and access to a rooftop pool. While snagging the ultimate bachelor or bachelorette pad might seem alluring, it can also cost you money down the road, Corbett says.

“What happens is they end up having to sell—maybe not at an appropriate time—the bachelor pad and get into another house,” says Corbett. “Now they’re doing it under duress instead of planning ahead the first time, so there’s a lot of money lost there.”

If you plan on having a family, it’s important to consider that when you’re home shopping, even if you’re currently single. Glink says to ask yourself these questions before buying a home:

  • Who do I imagine living with in the future?
  • Where do I imagine living?
  • How do I imagine living?

Those answers should be an integral part of what you look for in a home. For example, if you think you might want kids or even a dog, you’ll probably want to choose a home with a backyard versus one near a great nightlife.

40s-50s: Overestimating Your Budget
In your 40s and 50s, you tend to have more money, which can lead to overestimating your budget and buying a house you can’t afford. One way to avoid this is to figure out your lifestyle comfort level, Glink says.

“Just because you can afford a $500,000 home doesn’t mean you should buy one,” says Glink. “If you’re married and both you and your spouse are working, figure out whether or not you can afford the mortgage payment if one of you gets laid off.”

Figuring out your budget is a critical step for buyers of all ages. Even experienced homebuyers can make the mistake of spending at their limit, which can mean making sacrifices that they weren’t prepared to make. Use Bankrate’s home affordability calculator to determine how much you should spend.

The takeaway for buyers in their 40s and 50s is to leave room in the budget for things they aren’t willing to give up—for example, private school for the kids.

60s and up: Falling in Love With That Vacation Home
Many homeowners in their 60s are retired or getting ready to retire. Among the many decisions retirees make is where to live. While some choose to stay where they are, many plan on moving to warmer climates, or even another country.

A costly mistake retirees make, Glink says, is going on vacation, falling in love with the place and moving immediately. Relocating and buying a home is an expensive process, so retirees should be sure they familiarize themselves with a new place before buying.

“Too many retirees make the mistake of going on vacation, and they think, ‘Oh my god, this is great,’ and they go home immediately and they sell their house,” says Glink. “They get there and they hate it. They didn’t spend enough time there.”

Before buying a new house in your vacation paradise, be sure to visit the area in every climate. For example, Florida is great in the winter, but many people might not be comfortable in the humid summer months. The same goes for Northern areas—what’s blissful in one season can be awful in another.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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How the On-Demand Consumer Has Changed the Real Estate Industry

Over the last decade, homebuyers have become more tech-savvy, beginning with a simple shift of traditional in-store shopping and REALTOR® office visits to Cyber Monday shopping and searching for house listings online. As the real estate industry continues to grow, consumers have come to adopt, and expect, a self-sufficient, on-demand technology experience, where they have control over the process.

For the Buyer
Having absolute transparency to browsing house listings online has done numerous things for the real estate consumer, including increasing their overall knowledge and convenience, and making it a much more simpler process to buy a home. Consumers can educate themselves on real estate trends and changes in the industry. Rather than waiting on a third party, or real estate agent, to send them a list of houses, the consumer has the freedom to browse online from the comfort of their home.

Outside of the online experience, companies such as OfferPad allow buyers to browse their homes on their own and during their own timeframe. If interested in touring a home, the customer can simply send a text message and instantly gain access to the home. There is no need for an agent to be on-site, and the pressure is removed from the buyer. If the customer is interested in making a purchase offer, they are free to directly work with OfferPad.

For the Seller
Very similar to a buyer, a homeowner selling their home has more transparency into the market, as well. They have a better insight to what the buyer may be looking for, and possibly an inkling of what they think their home may be worth. Those who have sold a house before through the traditional process know that it can be a long and stressful event. Everything from determining what renovations need to be done to the home, keeping it clutter-free for when strangers want to tour it, worrying about how long the home may be on the market, and expenses that come along with each day, then hoping the right buyer doesn’t fall through…the process can be time-consuming.

Recent real estate industry changes have welcomed technology and alternate ways to buy and sell a house. Emerging companies like OfferPad offer a new way for people to move freely. Those who are looking for a more seamless way to sell their home that offers certainty, and removes much of the pain points, are selecting companies to directly buy their home.

With nearly every industry making great strides to support the on-demand consumer, real estate will need to evolve, and continue bringing innovative ideas and solutions to the homebuyer and seller. For those interested in using OfferPad as a different, hassle-free way to move freely, visit offerpad.com, and type in your address and property information. The company will contact you within 24 hours to provide an offer.

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How to Avoid a Low Home Appraisal

(TNS)—Even when a seller and buyer agree on a price for a home, the deal can collapse if the property appraises for less than that price.

For example, let’s say a seller lists his house for $325,000, the buyer offers $275,000, but they settle on $300,000. A week before closing, the appraisal comes in at $265,000. That’s the maximum price for which the lender is willing to offer a mortgage.

Who’s going to make up the $35,000 difference?

In this case, the seller has already come down on the price and doesn’t want to lower it again, and the buyer may not have enough cash to cover the shortfall, or does not want to pay more for the house than its appraised value.

As a result, the deal falls through.

What Causes a Low Appraisal
Short appraisals are common in declining housing markets because the lack of recent comparable home sales in the area, or “comps,” make it hard for appraisers to determine the current market value of a property.

When home sales slow down, good comps “age” quickly. Add foreclosures and short sales to the mix and appraisals can run all over the map.

The Home Valuation Code of Conduct, or HVCC, which went into effect in May 2009, compounded the problem. The HVCC prohibits Fannie Mae and Freddie Mac lenders from having direct contact with appraisers.

As a result, most lenders work through appraisal management companies, or AMCs, whose pool of residential appraisers includes those with limited training or little familiarity with the geographic area being appraised.

Know How to Protect Yourself
You can protect yourself from low appraisals. Here are some suggestions for buyers and sellers.

If you’re a buyer:

  • Tell your lender to find an appraiser who comes from your county, or perhaps a neighboring county. After all, you’re paying for the appraisal.
  • Ask that the appraiser have a residential appraiser certification and a professional designation. Examples include the Appraisal Institute’s Senior Residential Appraiser, or SRA, or member of the Appraisal Institute, or MAI, designations.
  • Meet the appraiser when he inspects the home and share your knowledge of recent short sales and foreclosures that could skew the comps. You can speak with your appraiser; the prohibition applies only to your lender.

If you’re a seller:

  • Get an appraisal before you list a home. Search for a qualified appraiser in your area on the Appraisal Institute site.
  • Use the appraisal to set a realistic listing price for your home.
  • Give a copy of your prelisting appraisal to the buyer’s appraiser.
  • Question a low appraisal. There’s always a chance the appraiser or a supervisor will take into account new or overlooked information.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post How to Avoid a Low Home Appraisal appeared first on RISMedia.