Perfect New Year’s Resolution: Save for a House
For many Americans, the jump into the new year marks an important step forward toward achieving a New Year’s resolution, and saving for a down payment to buy a home may be among them.
Saving for a Down Payment:
But that goal can take some time, and lots of savings commitment. Thirty-seven percent of recent home buyers say it took them six months or less to save for a down payment to buy a home; 15 percent saved for six to 12 months; and 10 percent say they saved for 12 to 18 months for a down payment, according to the 2014 Profile of Home Buyers and Sellers survey, published by the National Association of REALTORS®.
Saving for home ownership often requires some sacrifices too, recent buyers reported. Seventy-two percent of home buyers say they cut spending on luxury or non-essential items in order to save for a down payment, 56 percent reduced their spending on entertainment, and 45 percent trimmed their clothing budget in order to save more.
Home Ownership in the New Year: 10 Reasons 2015 Will Rock for Real Estate
But there is hope: Many buyers often find out they may not need as much down payment as they originally thought to purchase a home. For first-time home buyers, the median down payment is 6 percent, and 13 percent for repeat buyers.
“There’s still misperception out there that a much higher down payment is needed, while that’s not the reality,” said Lawrence Yun, NAR’s chief economist, in a recent statement based on pending-home sales contracts inching up.
What’s more, for Americans who are able to save for a down payment to purchase a home, they often find meeting this New Year’s resolution has a big payoff in the end.
“Seventy-nine percent of recent buyers believe their home is a good financial investment, and many believe it is a better financial investment then stocks,” Yun notes about NAR’s survey findings at a recent blog post at NAR’s Economists’ Outlook blog. “Aside from the financial investment, buyers were able to successfully complete their goal which was just to own a home of their own.”
Source: “2015 Resolution: Save for a House?” National Association of REALTORS® Economists’ Outlook blog (Dec. 31, 2014)
You can download the homestead exemption form with the following link.
Download: Homestead Exemption form.
Who Qualifies for the Texas Homestead Exemption?
Texas homestead exemption applies to a homeowner if they:
- owned the property on January 1st
- occupied the property as their principal residence on January 1st
- the homeowner or their spouse have not claimed a residence homestead exemption on any other property
If the Texas homeowner temporarily moves away from their home, they still can qualify for a county appraisal district homestead exemption if they do not establish another principal residence and they intend to return in a period of less than two years. Texas homeowners in military service or in a facility providing services related to health, infirmity or aging may exceed the two year period.
How to file for the Homestead Exemption
A qualified Texas homeowner can file for the homestead exemption by filing the form that can be downloaded below. The typical deadline for filing a county appraisal district homestead exemption application is between January 1 and April 30. A Texas homeowner may file a late county appraisal district homestead exemption application if they file no later than one year after the date taxes become delinquent. The typical delinquency date is February 1.
RE/MAX agents dominated the competition in both per-agent transaction sides and sales volume in the annual survey.
How to Assess the Real Cost of a Fixer-Upper House
Published: August 24, 2010
When you buy a fixer-upper house, you can save a ton of money, or get yourself in a financial fix.
1. Decide what you can do yourself
TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you dont know how to do will take longer than you think and can lead to less-than-professional results that wont increase the value of your fixer-upper house.
- Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.
- Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?
2. Price the cost of repairs and remodeling before you make an offer
- Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks hes going to do.
- If youre doing the work yourself, price the supplies.
- Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.
3. Check permit costs
- Ask local officials if the work youre going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it'll cause problems when you resell your home.
- Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.
- Factor the time and aggravation of permits into your plans.
4. Doublecheck pricing on structural work
If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident youve uncovered and conservatively budgeted for the full extent of the problems.
Get written estimates for repairs before you commit to buying a home with structural issues.
Don't purchase a home that needs major structural work unless:
- Youre getting it at a steep discount
- Youre sure youve uncovered the extent of the problem
- You know the problem can be fixed
- You have a binding written estimate for the repairs
5. Check the cost of financing
Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.
If youre planning to fund the repairs with a home equity or home improvement loan:
- Get yourself pre-approved for both loans before you make an offer.
- Make the deal contingent on getting both the purchase money loan and the renovation money loan, so youre not forced to close the sale when you have no loan to fix the house.
- Consider the Federal Housing Administrations Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. Its a simpler process than obtaining the standard 203(k).
6. Calculate your fair purchase offer
Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.
For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.
Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.
The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.
Ask your real estate agent if its a good idea to share your cost estimates with the sellers, to prove your offer is fair.
7. Include inspection contingencies in your offer
Dont rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:
- Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.
- Radon, mold, lead-based paint
Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you dont want to deal with.
If that happens, this isnt the right fixer-upper house for you. Go back to the top of this list and start again.
More from HouseLogic
What you need to know about foundation repairs
Budgeting for a home remodel
Tips on hiring a contractor
Other web resources
This Old House remodeling cost estimates
G.M. Filisko is an attorney and award-winning writer whose parents bought and renovated a fixer-upper when she was a teen. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
8 Tips for Finding Your New Home
Published: February 10, 2010
A solid game plan can help you narrow your homebuying search to find the best home for you.
1. Know thyself
Understand the type of home that suits your personality. Do you prefer a new or existing home? A ranch or a multistory home? If youre leaning toward a fixer-upper, are you truly handy, or will you need to budget for contractors?
2. Research before you look
List the features you most want in a home and identify which are necessities and which are extras. Identify three to four neighborhoods youd like to live in based on commute time, schools, recreation, crime, and price. Then hop onto REALTOR.com to get a feel for the homes available in your price range in your favorite neighborhoods. Use the results to prioritize your wants and needs so you can add in and weed out properties from the inventory youd like to view.
3. Get your finances in order
Generally, lenders say you can afford a home priced two to three times your gross income. Create a budget so you know how much youre comfortable spending each month on housing. Dont wait until youve found a home and made an offer to investigate financing.
Gather your financial records and meet with a lender to get a prequalification letter spelling out how much youre eligible to borrow. The lender wont necessarily consider the extra fees youll pay when you purchase or your plans to begin a family or purchase a new car, so shop in a price range youre comfortable with. Also, presenting an offer contingent on financing will make your bid less attractive to sellers.
4. Set a moving timeline
Do you have blemishes on your credit that will take time to clear up? If you already own, have you sold your current home? If not, youll need to factor in the time needed to sell. If you rent, when is your lease up? Do you expect interest rates to jump anytime soon? All these factors will affect your buying, closing, and moving timelines.
5. Think long term
Your future plans may dictate the type of home youll buy. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in the home for five to 10 years? With a starter, you may need to adjust your expectations. If you plan to nest, be sure your priority list helps you identify a home youll still love years from now.
6. Work with a REALTOR®
Ask people you trust for referrals to a real estate professional they trust. Interview agents to determine which have expertise in the neighborhoods and type of homes youre interested in. Because homebuying triggers many emotions, consider whether an agents style meshes with your personality.
Also ask if the agent specializes in buyer representation. Unlike listing agents, whose first duty is to the seller, buyers reps work only for you even though theyre typically paid by the seller. Finally, check whether agents are REALTORS®, which means theyre members of the NATIONAL ASSOCIATION OF REALTORS®. NAR has been a champion of homeownership rights for more than a century.
7. Be realistic
Its OK to be picky about the home and neighborhood you want, but dont be close-minded, unrealistic, or blinded by minor imperfections. If you insist on living in a cul-de-sac, you may miss out on great homes on streets that are just as quiet and secluded.
On the flip side, dont be so swayed by a wow feature that you forget about other issueslike noise levelsthat can have a big impact on your quality of life. Use your priority list to evaluate each property, remembering theres no such thing as the perfect home.
8. Limit the opinions you solicit
Its natural to seek reassurance when making a big financial decision. But you know that saying about too many cooks in the kitchen. If you need a second opinion, select one or two people. But remain true to your list of wants and needs so the final decision is based on criteria youve identified as important.
More from HouseLogic
HOAs: What You Need to Know About Rules
A Financial Plan for Your Home
When It Pays to Do It Yourself
G.M. Filisko is an attorney and award-winning writer who has found happiness in a brownstone in a historic Chicago neighborhood. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
10 Ways to Prepare for Homeownership
1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
2. Develop your home wish list. Then, prioritize the features on your list.
3. Select where you want to live. Compile a list of three or four neighborhoods youd like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.
4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, dont forget to factor in closing costs. Closing costs including taxes, attorneys fee, and transfer fees average between 2 and 7 percent of the home price.
5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.
6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options such as 30-year or 15-year fixed mortgages or ARMs and decide whats best for you.
7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money youve saved to buy your fist home without paying a penalty for early withdrawal.
9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.
10. Contact a REALTOR®. An experienced REALTOR® who can help guide you through the process.