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Tuesday, December 24, 2013

Home Buyer Tips: Control what you can, prepare for what you can't!

When buying a house or condominium there are few things you as a buyer can control.

First, what are some of the things a buyer can not really control?   Although not all inclusive remember these could include
  • Association Dues.  They may be set at the time of purchase but they can change.
  • Homeowner Insurance.  Storms, wild fires, sink holes or whatever.  When insurance companies payout, consumers end up paying in! 
  • Flood Insurance, if required.  If you buy in a flood zone you may have no choice.  Currently there is quite a bit of discussion ongoing about future increases in this insurance rate in Florida and across the entire country.
  • Taxes.  No explanation required here!
  • Special Assessments (governmental, association).  They happen.  It could be for the new roadway or drainage control.  Or it could by the association for pool repair, roof replacement or whatever.
So what can a buyer control?  
  • When.  Buyers decide when they are ready and able to buy a home.  No one will compel one to buy although the current tax policy favors a buyer's mortgage interest deduction.
  • How much.  Buyers can control how much they pay for a property.  The control may be in the way of a mortgage approval limit or just a personal comfort level.  Related to how much a buyer pays is also another factor - location. 
One last item a buyer can't control but do have a choice is interest rates.  This is related to the "when" above.  Some want to gamble on where the prices are going (currently upward).  Some want to gamble on interest rates.

Where are interest rates going?  Who knows for sure?  I asked a mortgage officer earlier this week for his opinion.  His response was pretty much what I hear everywhere else - up.

How does an increase in interest rates affect a buyer?  The monthly payment changes as well as possibly a reduction in mortgage approval amount.

For example on a $150,000 30 year mortgage.  The difference in payment from 4.5% to 5.5% is $122 per month ($760 to $852).   It is not Want to check how the rate changes affect a payment.... Just go here to a mortgage calculator from

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