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Q: My wife and I have been wanting to buy our first house, but with all the negative news about foreclosures and bad loans, we are nervous. We have a good down payment saved and we are planning on a 15 year fixed rate loan. What other pointers can you give us?
A: Good job with the down payment and fixed rate loan! You are already on track for a wise purchase. Hopefully, these tips will be helpful:
Update: Buying your first home has even more benefits right now. If you are new buyer, you may qualify for the first time home buyer credit that was recently put into action. Not to mention that the low interest rate environment makes a 30 year fixed conventional loan a pretty sweet deal. Be sure to check with a tax and banking professional to see how you the first time home buyer tax credit can benefit you.
1. Title Insurance
Get title insurance to protect you from an unclean or disputed title. If you close on your dream home and the previous owner’s Aunt Matilda shows up claiming the home was left to her in a will, you won’t have to worry. The title company will deal with Aunt Matilda because they have insured a clean title.
2. Consider a Survey
Unless you are getting a standard subdivision lot, get the property surveyed. 2.3 acres on the deed may actually be 1.5 acres when surveyed.
3. Home Inspector is a Must
Hire a certified home inspector. You need to know before you buy if there are structural or mechanical problems. Make sure you understand the report. It might be suggested to be there with the home inspector so they can explain what they find.
4. Diamond In The Rough
Look for a home that is in a nice neighborhood, but toward the bottom of the price range for that neighborhood. Any improvements you make will have a better chance of increasing the value of the house by bringing it closer to neighboring houses.
5. Bypass the Mess
Overlook clutter, bad landscaping or outdated carpet. These are issues that can be inexpensively fixed and may help you get a great deal.
6. Eyes Wide Open
Don’t overlook a bad floor plan. This will take major money to fix and, if not fixed, will make the home more difficult to resell.
7. Plan to live in the home at least two years.
Why? Because after two years, all of the gain when you sell (up to $500,000 for a married couple) is absolutely tax free!
Go for it! A home, when bought properly, is still the great American Dream.
Securities offered through LPL Financial, Member FINRA/SIPC
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