Should I bother with a “Starter Home”?
- When looking at the complicated process of purchasing a home, many young, would-be homeowners may become overwhelmed when they realize the home they can afford now may not be their ideal forever home. That two-bedroom may seem like enough space on your own or as a newlywed, but it’s easy to see how one may outgrow it as their family and housing needs expand. With that in mind, many wonder if it’s a better idea to purchase a starter home now and plan to move up down the road, or keep on squirreling away funds until you can afford the home of your dreams.
- “It can take a long time to save for that perfect dream home. “Meanwhile, the market has been flooded with some of the most favorable mortgage interest rates in years.” Low rates make housing more affordable, which is why so many buyers have jumped on the home-buying bandwagon.
- Home-price appreciation has also been strong, making very solid gains in communities across the country. It’s more important to pay attention to the market than to whether or not what you can afford right now is what you want long-term. When the market is in a great position, purchasing a home is a stable investment—one that will offer you a plethora of benefits, even if you decide to sell down the road.
Is there a way out, or am I stuck with this home?
- When you’re looking to purchase a home, it’s important to anticipate potential problems that may arise before closing. This is where contingencies come into play.
- “Contingencies in an offer protect against potential problems so that if something does go wrong, you can cancel the contract without penalty. Contingencies should be included in any offer you present to buy a home.
- Most offers include two standard contingencies, a financing contingency, which makes the sale dependent on your ability to obtain a loan commitment from a lender; and an inspection contingency, which allows you to have a professional inspect the property.
- Let’s say it’s the day before closing and your inspector finds fault in the home’s foundation that would take thousands and thousands of dollars to repair. With the proper contingency in place, buyers can decide if they want to move forward with the purchase, or back out due to the new issues unveiled.
- “Without contingencies, buyers could forfeit their deposit under certain circumstances if they back out of a deal. The purchase contract should also include the seller’s responsibilities, such as passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs.
Appraised Value vs Market Value
Appraised Value vs Market Value
There’s a long list of variables to wade through when buying or selling a home. One of the biggest and most important, however, is pricing. For a seller, figuring out the right price tag for your home could make or break the speed of your sale. For a buyer, offering too low can kill a deal before it even begins. When it comes to pricing, something that many buyers and sellers struggle to understand is the appraised value of a home versus the market value. Below are the differences between the two.
The appraised value of a home determines the exact value number of the property. This value is based on a variety of data, gathered by a professional appraiser, trained to provide the estimated value of a home.”The appraised value is based on comparable sales, the condition of the property, and several other factors.
The market value will vary more than your appraised value. This is because unlike the appraised value, buyers have influence over the market value of a property. Why? Because ultimately, a property is only worth what someone will pay for it. So in short, the market value is the price the house will bring at a given point in time, once the buyer and seller establish a “meeting of the minds” on price.
The main thing to remember about the difference between an appraised and market value of your home is that market values are consumer-driven, while appraised values are driven by experts.