Buying Your First Home

Published By Yahoo Finance

Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.

Topics

1.Buying Your First Home
2.How Much Mortgage Can You Afford?
3.Costs of Buying a Home
4.Ongoing Costs
5.Choosing a Neighborhood
6.Finding a Broker

1. Buying Your First Home. Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.

Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.

Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.

2. How Much Mortgage Can You Afford? Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.

The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28% of your monthly gross income.

The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36%.

Many home buyers choose to arrange financing before shopping for a home and most lenders will "prequalify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.

In addition to qualifying for a mortgage, you will probably need a down payment. The 28% to 36% debt ratios assume a 10% down payment. In practice, down payment requirements vary from more than 20% to as low as 0% for some Veterans Administration (VA) loans. Down payments greater than 20% generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.

How Much Home Can You Afford?

Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28% yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).

Their total debt ceiling of 36% is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.

3. Costs of Buying a Home. Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3% and 8% of your purchase price.

4. Ongoing Costs. In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.

Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.

5. Choosing a Neighborhood. Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.

Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.

6. Finding a Broker. If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.

Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5% to 7% and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.

Home Buying Costs

Down Payment 0% - 20% of purchase price

Home Inspection $200 - $500

Points $1,000 and up for 1% - 3%

Adjustments 3% - 8% of purchase price

Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.

Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.

Summary

Buying a home can mean building significant value through the years.

Prequalifying with your lender is a good way to determine how much house you can afford.

You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.

In addition to your mortgage payments, you will also need to consider the other costs of home ownership.

Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.

Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.

Remember to consider resalability when buying your home.

Are you a first time home buyer? If you need help finding your new home, call us at 972-772-7000 or email us at rockwall@kw.com.

Favorite Places - Living Areas

\Provided By Shelley Dudley
Source My Home Ideas

Living areas can be anywhere in the house and are usually distinguished by a favorite chair, a preferred reading nook or just a cozy place where family and friends congregate and come together.

Classic Western Look

If you're unsure where to go first in this Abilene, Texas, home, just follow the cat tracks. From the front door, tiny feline footprints lead toward the open living area. Guests frequently comment on them, not because the homeowners refuse to clean the floor, but because the footprints are the only reminder of a cat who long ago stepped across the terra-cotta tiles while they were drying in the sun in Mexico, leaving his mark forever.

Relaxed Living

A wash of pastels brings this coastal living room together. Promote conversation with four chairs instead of the traditional sofa, anchored by round ottoman.

Basics and Branches

Create this sweet spot in a living room or entryway with a few key furniture pieces and a bundle of pussy willow branches.

Exotic and Natural

Clean, modern lines and exotic accessories give this living room a Bali-inspired, open-air vibe.

Fabulous Focal Point

Even when it is too warm for a blazing fire, you can use your fireplace to create atmosphere by adding candles or even white sting lights. For an extra touch, lean a mirror against the back wall to add extra dimension.

Sunshine Day

Cheerful and energizing, yellow brings warmth to a room. It enhances and maximizes natural light and can brighten a space with few windows.

Reach The Sky

In this coastal family room, a vaulted, beaded-board ceiling makes the room feel incredibly spacious and open. Solid orange fabric brings out the orange tones in the natural stain of the wood and mixes flawlessly with a funky green print.

Mixed and Cozy

The mix of comfy slipcovered sofas with a 1940s French acrylic coffee table and antique Louis XVI armchairs infuses this room with a personality of its own.

Conversation Starter

Carol suggests creating a seating arrangement with a circle of chairs, rather than sofas positioned across from each other. "People sit more comfortably in their own chairs, and it's better for conversation," she says.

Living Large

Beach house style just got a lot more interesting. "Don't be afraid of color," says designer E. Dale Trice. He proves his fearlessness in the living room with a vivid sectional sofa, curtains the color of a Gulf sunset, and accents of ocean blue.

A long, narrow table against the wall of windows serves as a library table when not in use for dining. The mahogany trestle table base supports a wrapped aluminum top. Water hyacinth chairs are an economical alternative to wooden chairs and pick up the black tones of the photograph frames.

Looking for the perfect home to create your favorite place? Call us at 972-772-7000 or email us at rockwall@kw.com.

LOOK! UP IN THE SKY! IT'S A BIRD, IT'S A PLANE, IT'S A PARK!

Published By Dallas Morning News
Source Robert Miller

A deck park over Woodall Rogers Frwy. will bring more than five acres of green space to downtown Dallas’ arts district in early 2012.

The Woodall Rodgers Park, which will extend three blocks from St. Paul to Pearl Street, will have a performance pavilion, a restaurant, walking trails, a dog park, a children's discovery garden and playground, water features and an area for games.

The park was designed by landscape architect and designer Jim Burnett of Houston and Dan Biederman of New York.

The Woodall Rodgers Park Foundation needs to raise $27 million to meet the $110 million cost of the park.

Are you interested in owning a home near the Woodall Rogers Park? Give a call at 972-772-7000 or email us at rockwall@kw.com.

Which Backyard Features Add Value?

Provided By Yahoo Finance
Source Kiplinger.com

Turn Your Backyard Into Paradise

Even if you're not trying to sell your home, you can increase its value by landscaping your lawn and creating a retreat that you, your family and friends can enjoy. Americans spend billions of dollars each year creating outdoor living spaces with comfortable furniture, built-in grills or complete kitchens, fireplaces, televisions, pools and spas.

Is it worth it to spend as much money renovating a backyard as it costs to buy a small house? Depends on whom you ask. But if you're going to fork over the big bucks to revamp your yard -- or even if you're on a tight budget -- you should consider putting your dollars into features that add the most value to your property. Here's some advice from the pros:

Which features add value?

Jason Cupp, co-founder of design/build, landscape company Highland Outdoor, Olathe, Kan., says his clients frequently ask whether renovating their yards will add value to their property. If two similar neighboring houses were for sale and one had a great landscape design, that house would sell faster, he says.

However, he and other landscape designers agree that you probably won't get a return on your investment if your property is the only one in the neighborhood with the outdoor fireplace and kitchen, waterfall, custom-made pool and spa. That's why you should weigh your needs versus your desires when it comes to renovating your yard and deciding which features to add -- especially if you're on a tight budget. Even a little bit of money can go a long way if you prioritize and opt for features that are functional rather than purely aesthetic, says Brett Wendell, director of design build for HighGrove Partners in Austell, Ga.

Quality landscape design and installation will add value to your property and help it sell faster, landscape pros agree. If you're on a tight budget, hire a landscape architect or designer to create a design then install the landscaping yourself -- over time, if you have to. "Some advice is better than none," says Jeff Carbo, an award-winning landscape architect in Alexandria, La. A landscape architect charges $85 to $135, on average, to create a design plan, Wendell says, and could spend 12 to 18 hours creating that plan. A landscape designer typically charges $50 to $75 an hour. To find a designer or architect, talk with friends or family who have used one or check the American Society of Landscape Architect's FirmFinder and Association of Professional Landscape Designers' database of firms. Wendell recommends interviewing several pros, talking to their customers and checking out their projects. The designer or architect should ask you lifestyle questions (Do you like to garden? Will you maintain the landscaping or will someone else?) so he or she can give you what you need.

Also, if you make a significant investment in landscape, Cupp says, "it won't look as good if you don't have a proper irrigation system, and your investment will erode." Again, if you're on a budget, install the irrigation system before the landscaping, Cupp says. Expect to pay at least $3,000 to $4,000 for irrigation.

Outdoor living rooms, in particular, have been a growing trend over the last ten years, especially since the Sept. 11, 2001, terrorist attacks, Carbo says. In fact, designing and furnishing an outdoor room is the second most popular home remodeling project after remodeling kitchens, according to the Propane Education & Research Council. Homeowners spent $3.7 billion on patios and terraces in 2004 -- a 366% increase since 1994, according to the Census Bureau. The number of people who are complementing their patio with furniture and larger grills is growing (42% in 2005 versus 32% in 2003), according to a study by Hearth, Patio & Barbecue Association.

Outdoor living rooms often include a fireplace or firepit, cooking station and comfortable furniture. "We're finding that we have more and more clients spending money creating rooms outdoors," Cupp says. But this is an important area to decide whether you're spending money on something that's functional and will add value to your property versus something that is purely a luxury item.

Covered patio -- adds value. "There's no reason to have a great outdoors without an area to sit and enjoy it," Cupp says. For a patio to add value, though, it's got to be more than a concrete slab. He says 95% of the patios he installs are paver patios (brick-like material made of concrete that comes in a variety of styles and colors). The price of materials and installation runs from $12 to $15 a square foot up to $40 to $50 a square foot. And Carbo says patios should be covered to provide shade or protection from rain. Otherwise, you'd be wasting your money if you created a space without a cover to protect you from the elements.

Fireplaces -- luxury item only. The outdoor fireplace -- as well as the firepit -- is a relatively new trend and is growing in popularity, says Carol Kaplan of the Hearth, Patio and Barbecue Association. Portable firepits are a cheap way to create a cozy outdoor setting. The actual built-in fireplace, though, can cost $8,000 to $35,000, is beautiful to look at but isn't that functional, Wendell says. Because of the maintenance involved, outdoor fireplaces usually are used just during parties or when guests visit. So you probably won't get a return on your investment with this pricey feature, he says.

Kitchens -- add value. For anywhere from $15,000 to $100,000, you can have a refrigerator, grill and sink installed to cook and dine al fresco. "Why not have it all outside where cooking is part of the process of entertaining," Wendell says. He recommends getting a professional invovled to properly locate your outdoor kitchen so you can get the most out of it.

Television -- luxury item only. The cool factor is high here, but functionality is low because it's usually too bright during the day to watch outdoor TVs.

Swimming pools are one of those features that can be both functional and aesthetic and can add value -- or detract -- depending the type of pool and type of home buyer or owner. A 2004 National Association of Realtors study of home sales in the Philadelphia area from 1996 to 2003 found inground pools added 8% to sales price of home. However, all of the landscape designers we talked to said for a pool to add value to property, it has to be custom-made -- not a prefabricated pool that can be found in any backyard. A basic customized concrete pool can cost $60,000 to $80,000. Throw in a hot tub and water feature, such as a waterfall, and you could spend well into the six digits. The problem is, landscape designers say, some home buyers want nothing to do with a pool and will steer clear of houses with one -- regardless of whether it is custom-made or prefabricated. So a pool actually could lower the value of your property in some people's eyes.

Water features, such as a pond or waterfall, also are somewhat questionable as to whether they add value. Cupp says water features are popular and have a high level of value. Costs can range from $1,000 for a small pool of water to $25,000 or more for a pond with a waterfall. Wendell agrees water features are popular but are expensive to maintain. He says they usually aren't worth the money you have to put into them because 50% are abandoned or ignored after the first four years.


Need help selling your home? Call us at (972) 772-7000 or send us an email at rockwall@kw.com.