January 21, 2022
  • January 21, 2022

Buy a house | Tacoma Daily Index

By on November 30, 2021 0

By Morf Morford

Tacoma Daily Index

On the long and steadily growing list of how things have changed over the past couple of years, place real estate at the top of this list.

As with all markets, from cars to breakfast cereals, supply chain issues, resource costs, labor shortages and changing consumer demand have pushed and pulled this which had been, for decades, a remarkably stable economic landscape.

Housing, for most of us our most important investment, has changed, if not distorted with the rest of the economy – if not more.

My wife and I sold two houses and bought three without a real estate agent.

For the most part, these deals worked, but in the intense, if not complicated, real estate market of the early 2020s, I wouldn’t recommend it.

Some aspects of buying a home haven’t changed, but others have changed dramatically.

Find a reliable guide

Professional advice is essential in these uncharted waters.

So that would be my first rule: find a reliable and trustworthy real estate agent.

Get referrals from family, friends, or anyone you work with or know.

My second rule would be to pencil in your finances.

Interest rates are at record highs, but so are stocks.

Even when the many variables of buying a home are stable – like zoning, interest rates, availability of contractors, and a hundred more, once you start to factor in changes in n Any, if not all of these areas can get much more complicated than you might think. for.

Calculate how much you can afford

Know your Debt Ratio (DTI) – that is, what you owe each month as a percentage of what you earn. Most lenders recommend that your DTI be no more than 43%. About 30% would be much better.

Determine your down payment. Lowering 20% ​​of the price of the house will save you from paying additional monthly fees for private mortgage insurance (PMI).

Use an online housing affordability calculator, which takes into account your annual income, monthly debt, down payment, credit rating, location, and more.

Your projected house payments won’t be all you pay for that new home – be sure to factor in any additional costs associated with homeownership like property taxes, maintenance fees, and maintenance fees. homeowners association or condominium, home insurance and, of course, closing costs.

Focus on what you want

Keep tabs on your favorite location and neighborhood.

Make a list of home features that are must-haves, along with a wishlist of the ones you might like.

And how are you going to pay it

Long before you start serious research, make sure you get a mortgage pre-approved.

This will allow you to move forward (relatively) quickly once more important aspects of your research start to come together.

Your lender will perform a credit check and ask for documents to verify your income, employment, assets, and debts.

Get these documents in place before you need them!

Search!

Searching for a home to buy is not for the faint of heart.

Finding a home is unlike any other experience; the stakes are high and the prospects for disappointment and discouragement are great.

As exhausting (and exhilarating) as the search for accommodation can be, nothing can replace it.

Be flexible

You never know what you might see, or encounter, or learn.

During a recent home search, for example, I ran into a guy (with a lot more capital than I had) who was preparing to buy a house blind – for real money.

He invited me to verify his planned purchase.

The crawl space under the house had housed raccoons (and probably other creatures) for some time. It was a rental but had been vacant for several months.

The officer asked if he wanted to look under the house to check the floor joists and insulation.

The buyer didn’t even want to see it. His philosophy was to take the worst and pay for it to be repaired or rebuilt, no matter what it looked like.

Also, he told me later, he would probably take the house up five or six feet and add either full size living space or parking.

I mention this because in this housing market some of the binge eating is from hedge fund investors, some is from buyers looking for a second (or third) home.

Traditional first-time buyers are at the top of the game.

Each of these categories of buyers drives up prices.

And each category has its own set of problems; some may have tight deadlines, others are looking for immediate employment, others see it as a long-term investment. Everyone has different concerns, priorities and disruptors.

Expect the unexpected

In this seller’s market, sellers can set the rules – or change them.

Some sellers ask (or allow) potential buyers to write a letter detailing how they would use, enjoy, or make improvements to the home.

To say this is entering difficult legal territory would be an understatement.

Home estimate and inspection

Don’t neglect the home appraisal and inspection!

Carpets and clever marketing can hide a multitude of problems.

Buying a home is an emotional, analytical and financial experience. Proceed carefully as you work your way through each of these new and difficult areas.


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