Maximize Your Hard-Earned Dollars When Buying Real Estate

With the high prices of real estate today, you may become discouraged as a buyer. Don’t give up on finding a great property, though. If you need to find the right property to purchase for you and/or your family, this article will shine a light on some great tips you can use as a real estate buyer in any market.

Know your budget before you start shopping for a home. Experts recommend that housing costs not exceed 30% of monthly income. Be sure that you have plenty of room in your budget for unexpected expenses such as repairs or remodeling before committing to a loan. If it seems like too much of a stretch, it is probably too expensive.

Consider using a buying agent. Estate agents always act in the interest of the seller, because the more money they get for a property, the higher their commission payment. A buying agent can act on your behalf and make sure that you acquire your dream property for the cheapest possible price.

Before purchasing a house, look for any problems you can find. Try and get the seller to fix as many as these problems as you can before you purchase the house. The more the seller fixes, the less you have to fix. If you’re trying to flip the house, that means less money that you need to put into it.

First Time Home Buyer, Things To Think About

If you are a first time home buyer, then it would be a good idea for you to contact a real estate attorney and have your paperwork reviewed. Since you are new to this, there may be some information that you do not understand, and they will clear it up.

If you are looking for ways to come up with a down payment for your first home purchase, you can consider borrowing against your retirement accounts. You can take out up to $10,000, penalty free, from your IRA to use towards your purchase if you are a first-time home buyer.

If you are a first time home buyer, it is a good idea to not see more then six or seven homes at a time. It might be tempting to try to see more at once, however, if you do see to many then it will make it tough for you to take it all in. It will also make it to hard to remember everything.

Yes, the prices are still very high on a lot of properties out there, and purchasing real estate can still be quite risky. By reading this article, however, you have taken your first real steps to becoming well informed and ultimately making the best purchasing decision for you and your loved ones.

A short lease on your property may reduce its value.

A short lease can seriously affect the value of your property
Your lease is slowly losing value (relative to an equivalent Freehold property) as the years remaining on the lease tick down. Properties that have a lease term shorter than 80 years will reduce in value even faster, and the cost to extend your lease will increase. The shorter the lease the less it is worth and the more it will cost to extend the lease. Qualifying leaseholders have the right to extend the lease for an additional 90 years under the 1993 Leasehold Reform act.

If the unexpired lease term falls below 80 years, the cost of extending can increase dramatically as Leaseholders will have to pay ‘marriage value’ to the freeholder.
An extended lease has roughly the same value as a freehold
It is generally considered that a property with in excess of 100 years unexpired lease term is worth roughly the same as a Freehold equivalent property. With an additional 90 years added to all but the shortest lease, the property as a lease purchase will be worth the same as a freehold purchase for decades to come.

Properties with short leases are harder to sell than freehold properties-so given the choice, and the available funds, a decision to buy freehold rather than leasehold would seem to be a wise one.
Many Lenders will not lend on a short lease
The definition of a short lease varies by lender, but lenders start to get nervous at around 70 years. This could be a problem when you come to sell or remortgage your flat as it will be effectively unmortgageable. You may have no immediate plan to sell but when you do your buyer will have to wait 2 years before they can exercise the right to a lease extension.
Once you extend a lease – no more ground rent!
Once you’ve extended the lease for 90 years then your ground rent will be effectively free (technically known as a ‘peppercorn rent’). Your extended lease will stipulate this Peppercorn Rent but it means that there is no ground rent to pay for the period of the lease extension.