1. Why should I buy instead of rent?
In my opinion, it's a "no-brainer". Why pay your landlord's mortgage payment when you can pay your own payment and have a house to sell some time in the future? Some of the reasons include:
1. Equity accumulation - every payment that is made contributes to the "equity" of your home. After several years of making mortgage payments your loan balance goes down and your equity grows. Equity is the difference between market value and the amount owed to the lender.
2. Appreciation - Historically, homes have appreciated in value. Example, a home purchased in the1980's in Victoria’s Hamlet Subdivision sold for $60,000. That same house today is selling for $120,000 which is 100% appreciation. If the homeowner had lived in that home and made the payments regularly, the mortgage would be paid up in 2010 and he would own the home free and clear. If the owner sold the property today, he would owe approximately $12,000. If the home sold for $110,000, after closing costs and fees, the owner would be paid approximately $85,000 at closing which he could either invest in another home or take the money and travel.
3. Pride of ownership – Areas that are made up mostly of rental homes are usually less attractive than an area made up mostly of homeowners. The lack of ownership and pride that accompanies renting ultimately causes a neighborhood to go down, as evidenced by lack of repair to homes, parked cars in yards, trash everywhere, etc.
2. What are "HUD" homes and are they a good deal?
HUD homes are those houses that were financed on an FHA loan and repossessed by the Federal Government because the owners did not make their payments. These homes are always offered for sale on an auction style venue which often requires a Realtor’s assistance. Very strict deadlines apply and there may be as many as 7-10 bidders on the same property.
People generally think they can “steal” these properties, however that is seldom the case. These homes, on the average, are in very poor condition and need a lot of work to be livable. Occasionally one happens to be ready for move in to, however that is rare. All HUD properties will need repairs and most will require major renovation.
Are they a good deal? Each house and situation needs to be looked at individually. In my opinion, the prices are usually bid up so that the price is no better than one you could find on the active real estate
Market, and often times, buyers end up paying too much because of the mistaken idea that they are getting a great deal. A working relationship with a REALTOR will allow you to look at everything on the market and make a buying decision and how much you should pay based on that search. You’ll be surprised that many similar properties, often in better condition than the HUD repossessed houses, are available for sale and can be purchased directly from the seller through a REALTOR rather than dealing with the hassle of government contracts and “iron clad” rules.
3. Can I become a homebuyer even if I have bad credit and don't have much down payment?
Lending guidelines have changed recently and the sub-prime loans (those to folks with bad credit) are not allowed any more. My advice to you is to visit a mortgage broker and get some counseling as to what you'll need to qualify for a loan. Then do what they say! In 6 months to a year, many people can clear up credit issues and be well on their way to homeownership.
4. What does a mortgage cover?
It covers the amount you owe to the bank for your home and is paid back to them in regular payments, usually monthly. This mortgage gives the bank or mortgage lender the right to repossess your house if you fail to comply with their requirements, i.e., make the payments on time, keep it insured, pay the taxes, etc.
5. How much money will I have to come up with to buy a house?
This depends on the price home you purchase. There are some 100% loans out there, however the borrower must have squeaky clean credit, a good steady job and not be heavily obligated with credit debt. Down payments can vary, but most lenders require 3% to 5% of the sales price to be paid at the time of closing, Of course, larger down payments are always allowed and could position the borrower for a better rate on the loan.
6. Besides my mortgage, what other costs should I consider?
There will always be closing costs and they vary from lender to lender. Some loans have as little as $2500 closings costs while other have as high as $5000. Calling around to several lenders will help you here. Ask for a "Good Faith Estimate" which will give you the total of expected closing costs as well as an estimated monthly payment. A buyer can “shop” various lenders to see which has the best rate and lowest closing costs.
Don’t forget that you’ll have utility bills, lawn care, maintenance expenses and possibly updating expenses that could effect your monthly obligation. Be sure to allow enough money in your budget to cover these items.
7. How can I find out about the school district in the area?
A call to the VISD main office will answer the question as to which school your child will attend if you purchase a home at a specific address.
If you're wondering about quality of schools, teachers, etc., I can't help you there. Your own research will serve you best.
8. How do property taxes vary?
Properties inside the city limits will have a little more tax obligation than those located out of the city limits. In 2008 the City of Victoria’s tax rate was 65 cents per $100,000 valuation. There are other taxing entities including VISD, Victoria County, Victoria College, and miscellaneous drainage, navigations, road & bridge and Ground Water District. If you would like a more comprehensive explanation of taxes you may call the Victoria County Appraisal District at 576-3621 or Victoria County Tax Assessor office at 576-3671—either of these offices can help answer more specific questions about valuations, exemptions and rates.
9.What should I look for when I’m walking through a home?
Floor plan—Does it have ease of access from one part of the house to the other? Do you have to walk through one room to get to another? Is the living area positioned where you would like it to be?
Structural integrity-- Look for signs of leaks, foundation movement, bowed walls or ceilings, etc. Also, is there any rotten wood? Are there any shingles missing on the roof? Other signs of neglect?
Size – Are the rooms large enough to accommodate your furniture and family? Is the lot what you’re looking for? Large, small, medium?
Location is very important —what does the neighborhood look like? Is the house located next to an industrial park, major thoroughfare, railroad or blighted area? Is it near schools and shopping?
Livability – Does it feel like you? Can you see yourself sitting on the back porch enjoying a beautiful sunset or sunrise?
Some people make buying decisions based on logic and some make them on emotion. In my opinion, a little of both is needed to find the perfect home for you and your family.
10.What’s the real estate market like in Victoria?
The national media has talked about how bad the real estate market is doing but they fail to say that the information is based on 5-6 states out of the 50. The states on the west coast and east coast are indeed having trouble because their prices went through the ceiling and continued to climb to unreasonable levels for years. They are having a natural adjustment which happens every few years. Victoria and most of Texas have escaped that same cycle.
Our market is very strong. Our inventory of homes is typically turning over every 60-90 days, depending on the condition and prices the sellers are asking for their properties. Victoria is in a “seller’s market” whereby the prices are fairly firm with very little room for negotiation.
A few buyers are seeing 2-3% reduction off the list price, but usually not more than 5%, at most. When someone comes to us thinking they will buy a $150,000 home for $120,000, they find very quickly that those “steals” just are not happening in the Victoria market. Often times, when a property is priced right and in good condition, there will be two or more offers during the first week on the market. When that happens, the sales price usually goes over list price.
For More Information; www.ronbrown.com or call 361-575-1446
www.coldwellbanker.com
By Shirley Buckert, CRS, CRB, GRI
Coldwell Banker The Ron Brown Co.