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Avoid Home Buying
Mob Mentality
Waiting for higher interest rates to depress prices may not be your best home-buying strategy.
That's because interest rates have become part of a vicious housing market cycle that's pushing prices up, not down, and more than ever conditions warrant a more holistic approach to buying a home.
This year, interest rates have been rising during the season when most buyers traditionally hit the market. That has swelled the ranks of seasonal buyers with an influx of buyers chasing interest rates.
The extra demand is contributing to higher prices.
As prices rise, yet another wave of
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buyers begin to chase rising prices.
If interest rates are your buying indicator, it's a cycle that may not end anytime soon.
During the mid- to late-1990s' technology-driven economic and housing
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How Property Owners Are Getting Wealthy
Four times a year the Federal Reserve publishes a scorecard of sorts which tells us how we're doing in the money department. This time around you'll be happy to learn that you're now much richer.
According to the latest stats, households and non-profit organizations now have a net worth of $45.907 trillion. Why the government mixes households with charities, frat houses and historic societies -- among other non-profit groups -- is unclear, but these are the best numbers we have and they are going up.
In the second quarter we had an outstanding net worth of $45.270 trillion, an increase of $637 billion or 1.4 percent over the first three months of the year. Given that we have about 294.3 million people, we each became wealthier by $2,164 in the quarter. Going further, that's $8,656 in just three months for a household with four people.
Should we believe that a typical person gained almost $2,200 in new-found wealth in the second quarter of this year? Not hardly. Instead, take a look at where the money is.
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Let Renters Buy Your Retirement Home
If you buy a second home now for retirement later, you could give yourself a hedge against home price hikes as well as a relatively low-cost retirement shelter with an equity cushion.
That assumes during ownership you can find tenants who'll pay enough rent to cover your investment costs. You'll also have to be able to actually use the property when you retire.
"Buying a retirement home while you're still employed is a wise investment, if you can keep it rented until you're ready to move in," says Valerie Patterson, senior producer of RealEstateJournal.com.
That means you'll have to find a property you can rent for an amount that will cover not only the principle and interest but also the bulk of property taxes, insurance, property management and maintenance costs, home owner association dues and any other costs, actual and estimated, associated with property ownership.
Patterson says if you can't secure a tenant, or if the rent you collect doesn't cover your monthly payments, even locking in a low interest rate now may not be wise unless you've got the extra income to cover the difference.
Don't forget to consider tax benefits that can help offset costs.
In addition to mortgage interest deductions on owned home values up to
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Title: Can't Own A
Home Without It
Did you know that Abraham Lincoln lost his house twice because of cloudy title? It's true. First American Corporation, which is one of the country's largest title insurance underwriters, reports about the losses on its website and in a promotional brochure about the dangers of not having a clear title to land.
When it comes time to finish the paperwork for your first piece of real estate (investment or otherwise) you're going to find out that many trees have lost their lives because of the paper shuffled back and forth to buy, sell, rent, insure, list, survey and record real estate.
There's a lot of paperwork required in real estate. You eventually need to understand what all these papers mean that you're signing. The most important
Daily News and Advice
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