Sunday, December 27, 2009

Home Buying Advice - Investing in a New vs Existing Home

The purchase of a new home is always considered a rewarding experience by many Minnesota first time homebuyers not only because it allows couples or families to enjoy an entirely new space, but due to the convenience it provides particularly with the brand new amenities minus the hassles of maintenance during the first year.

On one side though, new properties can be more costly compared to an existing one, not to mention the level of uncertainty you might be facing as a newcomer in a whole new community.

Yet, you can gain and learn from this situation with sufficient know-how on the pros and cons of homebuying; below are some significant steps to follow as you begin scouting for your new home

1. To what extent would you be wanting to pay for your desired property? Because of its newness, all brand new homes in Minnesota are priced at a premium; this means that you will be the one to get a taste of everything it offers, from the moment you entered your new property.

2. Do you care for resale value? Acording to Ilyce Glink, author of '100 Questions Every First-Time Home Buyer Should Ask', Minnesota homes for sale that are newly constructed do have faster appreciation than existing ones. If you are planning on selling your home in the very near future, a brand new home may have a higher market value shortly after you move in, making it easier to sell the home for a profit.

3. Are you willing to adapt to the neighborhood? The construction of new homes rapidly increases at a certain time, thus, being a new homeowner in an area may require knowing more people in the neighborhood before having a full knowledge about the whole area.If you have family consisting of smaller children or elderly living with you, it can be great to factor in safety and security by finding out your options as far as making your property safe.

4. Do you want to invest time and money to renovate a home? Existing homes can appreciate tremendously in value if you have the time and resources to invest in renovations and maintenance. If you’re looking for a long-term investment that can generate a high profit in a short period of time, buying a ‘fixer upper’ may be your best home buying strategy.

5. Are you looking for an investment or a primary residence? Most beginning homebuyers want investment properties that they can soon turn into a profitable business. However, older and mature homebuyers prefer primary residence mainly for purposes of settling down or establishing themselves in the neighborhood. Identify your goals beforehand and decide what you think will give you more benefits.

Based from your goals (both longterm and short term) and the amount of money you are willing to shed off your pocket - thats when you decide to have either a new or existing home. Consider all of the above questions when you’re deciding between the two options so you can make the best investment with your resources.

Wednesday, November 25, 2009

Working With a Seller's Agent - What First Time Home Buyers Need to Know

Seller's agents, as the name suggests, are hired by home sellers to represent them in real estate transactions. They are paid a fixed fee or a commission and are primarily concerned with bringing the seller and a buyer to a deal. Homebuyers often end up transacting with seller's agents. As a homebuyer, it is important for you to understand the duties of a seller's agent.

Different states have varying regulations on the practice of seller's agents, but they have common responsibilities and restrictions as defined by national laws. According to Ilyce Glink, author of the book '100 Questions Every Home Buyer Should Ask', homebuyers should thoroughly review the agent disclosure form before signing under the services of an agent to understand the scope and limitations of the agent's work. Generally, a seller's agents' responsibilities and restrictions include:

A seller's agent can give you information regarding similar homes in the area. This information is called comparables or 'comps' and is a listing of Minnesota homes that have similar price, size and area, and age. Comps can include homes that were recently sold or are currently in the market. This information allows a homebuyer to have a basis of comparison to ascertain the value of a home.

Seller's agents cannot dictate, or otherwise pressure, home buyers into buying a home. The seller's agent's job is to facilitate the selling of a home but it doesn't mean that they can force homebuyers into buying a home. You might be in a situation wherein you are deciding between two homes that are handled by one subagent. In this case, the seller's agent cannot compel you to choose one home over the other.

The seller's agent cannot point out defects in the home. The seller broker cannot say anything that would influence your decision to purchase, or not purchase the property. Any material hidden defects can be disclosed, but you will need to conduct your own research to find out if the home is in good condition.

The seller's agent cannot provide tips regarding the best offer amount for a home. It would be beneficial for you as a buyer to get inside tips from the seller's agent but they are legally bound not to provide confidential information to buyers.

The seller's agent can ask you for referrals. Many seller's agents are independent business owners and always looking for new clients. They do have the right to ask you to refer them to friends or family members, and will do everything they can to make your home buying experience a good one.

When you are working with a seller's agent as a first time home buyer, it's important to remember that they are in the business to make the home buying process as easy as possible. This doesn't always mean that they have your best interests in mind, so it's important to do your own research about the property and work with a professional real estate agent in addition to the seller's agent.

Author and Realtor Alexandria P. Anderson helps clients to find and purchase Minneapolis Condos for sale as well as Condominiums in Minneapolis around the Twin Cities, Minnesota.

Sunday, October 18, 2009

How To Negotiate The Best Price For Your First Home

You submit an offer to buy a Minnesota home only after you've done your research about your prospective home and if you're already comfortable dealing with the seller. You still have to do some work after you've made your offer though. A seller can either accept or reject an offer. Be prepared to negotiate your way through in getting the price you want.

Knowledge of the contract and devising a contingency plan are just some ways to ensure you get your dream home within your budget. Barron's 'Consumer's Guide to Home Buying' advises homebuyers to make a checklist of things to consider even before entering the negotiation process. Below are some of the things you need to pay attention to when negotiating:

1. Knowing who the decision-makers are in the transaction. Understanding who really calls the shots is a critical element in any negotiation. Is the seller working alone or do they involve their lawyers, accountants, agents or any other third parties in their transactions? You can adapt your negotiating approach and gauge the trustworthiness of the seller if you know who the decision makers behind the contract are.

2. Do you have a contingency plan? If the seller refuses all of your offers, do you have other options? It can be frustrating to not be able to get what you want from the negotiation, but you also need to know when to back off and pursue another direction. Outline exactly how high you are willing to bid for the home and don't go beyond your decision just to win.

3. Read the whole contract in detail. Know what you're getting into before you sign your name on the contract. Review the contract in detail and take note of any provisions that are not clear to you. It is best to clarify all terms in the contract with the seller than to assume the meaning of the terms yourself.

4. Are you comfortable with your realtor? Your realtor or buyer's agent can provide guidance and professional advice about the home negotiation process, but you need to feel like you can trust them. Make sure you have spent enough time with them to develop a positive relationship and share your thoughts or reservations about the home well before the negotiating process gets started so you can make the most informed decision.

5. Be prepared to handle negotiation setbacks. Poor communication happens in any negotiation often and you have to learn how to deal with it. There are other things as well that make negotiating difficult. It is important to remain impervious to negotiation setbacks but you have to know when to stop negotiating when you think the transaction is not going anywhere.

Author and Realtor Alexandria P. Anderson helps clients to find and purchase Real Estate in Minnesota and Minnesota properties in and around the Twin Cities.

Thursday, September 17, 2009

First Time Homebuyer's Guide To Self Inspections

All homebuyers are prone to overlook major problems during the buying process only to be surprised by them once they have already paid for the MN property. You can consider hiring a professional home inspector even before signing any contract to avoid any regrets and stress after buying a property.

Then again, official home inspections are only required after an initial contract is signed. It would be better for you to gather your own information about the house you are eyeing. You can go straight to the seller and ask him or her everything about the house. You can also ask for permission to conduct your own mini-inspection.

Most sellers will be open to having you inspect the home well before signing any type of contract, and this gives you some leverage when you are negotiating the final price. Barron's 'Smart Consumer's Guide to Home Buying' encourages all prospective homebuyers to prepare a checklist and note any problems and areas of concern as early as possible. The authors of the book explain that, "If you are thinking about buying a house that will need renovation or upgrading, the more value will be derived from your mini-inspection."

You need a checklist in inspecting the house to ensure that you cover all important aspects that you need to look at. The information you gather from this checklist can then be used to create a written report to help you in assessing the overall condition of the house. Here are some important matters to include in your checklist:

Know the age of the house - Know the exact date when the house was built. You must also check if there are any renovations or upgrades done on the home, when they took place and if the house's blueprints are still available.

Check the foundation for potential problems - are there any large cracks or noticeable water problems around the home or in the basement? Ask about flooding issues and weather-related problems that have taken their toll on the home in different seasons.

Check the interior for defects and potential problems - you'll want to make sure that all doors open and close easily and that all the walls are flat, even and free of cracks. Make a note of any visible cracks or deterioration and take pictures of anything that stands out. You'll also want to check for mold problems, odors and make sure all water entry areas are clear and functioning properly.

Inspect the exterior of the house - Check if all windows and doors move smoothly and if these are properly insulated. Inspect the sidings of the house. Look for signs of deterioration.

Review heating and air conditioning appliances - ask about the average heating and cooling costs each month, and find out how long the systems have been in place. In some cases, you may need to invest in a new water heater or air conditioning system.

Look at all your notes and create a written report about the condition of the house you just inspected. You may also consider using a digital camera or camcorder to take pictures and videos for a more detailed review in the future. This additional effort may give you an advantage over the seller come negotiation time.

Wednesday, August 5, 2009

Things To Consider in Buying a Home

Buying a home is a long-term investment. You'll probably live in a home for some time so you have to make sure that you really want the home you will purchase. It is best to be clear about what you want in a home before you start your search. While most Minnesota real estate agents can guide you in your search, the decision to purchase a home, and its implications, wholly rest unto you.

The home buying process can be confusing to first time homebuyers simply because of the number of decisions a buyer has to make. A buyer first has to decide about the location of a home. The buyer is then confronted with other choices such as what type of home to buy, the condition of the home and the home's amenities. It would be better to create a criteria of a perfect home to judge all homes you encounter on your search easily. Create your criteria with these questions and considerations in mind:

1. What amenities do you want your home to have? Do you want to have a swimming pool, a garden, or a fireplace? Be clear with what you want so you can skip houses that don't meet your criteria.

2. Specify where you want to be located. The home's location is one of the most significant factors when considering different homes, according to author Ilyce Glink of '100 Questions Every First-Time Home Buyer Should Ask'. Your location will determine how far you'll live in relation to family and friends, your kid's school, your work, and shopping areas. Location also determines the time you'll spend traveling each day. Ask yourself if your home and location justify your travel time each day.

3. The size of your home. Specify how much space your family needs and if you are expecting any additions to your family in the near future. Your needs will determine the size of the home that you will purchase. If your family is growing, you might want to purchase a bigger home to accommodate your family three to five years in the future.

4. Do you want to buy a home that needs renovation? Are you willing to put in the time, effort and finances to renovate a home? How much are you willing to invest on repairs and modifications? Create a standard concerning renovations so you can remove certain homes from your search.

5. Do you value safety and security? This is an important issue for families with small children and individuals living alone. What are the things you will need in order to feel secure in a home and neighborhood? Eliminate homes that do not pass your safety and security guidelines.

Being specific about your home buying criteria will help you save time in searching for your home. It will also make your stay in your new home more enjoyable because your new home would match your needs and wants.

Sunday, July 5, 2009

Renting Or Buying Your First Home - What to Consider

Buying and renting a home each has its own benefits and drawbacks. We will discuss the issues surrounding both home ownership and renting to aid you in deciding which path to follow.

Many potential homeowners simply don't take the first step towards home ownership because of the responsibilities associated with buying and owning a home. When you buy a home, you'll be responsible for more than your mortgage payment each month; home ownership involves paying maintenance costs, applying for homeowner's insurance, and paying taxes and fees. If you're interested in buying a Minnesota condo, the process may be even more complicated. However,you can overcome this initial barrier that may be leaving you feeling overwhelmed - by understanding some basic principles of home buying.

The first thing you need to do is to list all payments attached to your prospective home. You can usually ask your realtor for information regarding average fees, maintenance costs and taxes. Place all information on a digital spreadsheet so you can compare costs for different homes quickly. Arranging all information you gathered in this way will also give you a precise calculation of a home's total purchase price and the monthly costs you have to pay.

Ilyce Glink, author of the book '100 Questions Every First-Time Home Buyer Should Ask' clarifies that buying a home also means you're investing in your local community because you have to pay local community taxes, and other services that you won't have to pay for if you are renting in the same locale.

Next, you'll need to do some extensive research about tax benefits. Home ownership usually does give you several tax advantages over renting, but this will vary significantly depending on your current income and the total amount of real estate property tax you will be paying each year.

If you can work out your tax benefits to include all of your deductions and current income level, you'll have a fairly accurate idea of what the total tax benefit of owning a home will be for your particular situation. It may be a good idea to work with an accountant or financial advisor for assistance in this area.

Owning a home must be seen vis-a-vis your long-term plan. You need to determine how long you intend to stay on one location. If you embrace a mobile lifestyle then you are better suited to rent a home instead of buying one. Renting allows anyone to move from one location to another easily. You can rent a home on a per year or even per month basis and be free to move as you please.

If you're not feeling settled in a particular city or neighborhood, buying a home may be causing a lot of anxiety. Make some solid decisions about where you want to settle and where you're willing to relocate to in the long-term so you can make the best decision about your new home.

Author and Realtor Alexandria P. Anderson helps clients to find and purchase Minneapolis Townhomes as well as Townhouses in Minneapolis in Minnesota.

Friday, May 29, 2009

How To Search For Your Ideal Home As A First Time Home Buyer

Finding the best when it comes to owning a house doesn't have to be that difficult a process as you can now search through online listings. Home search is made simpler with the advent of online resources because in just a few clicks of the mouse -you may choose the home with all your desired features and amenities.

Defining exactly what you want is another advantage that can be provided by online MN real estate listings. Most of the time, people are bothered by the fact that they are not sure what home styles or designs they want, but it may help you in determining what you need when you browse the Internet for online catalogues. First time homebuyers may begin their search by using accredited online listing services like, according to the authors of 'Questions Every First-Time Home Buyer Should Ask'. Narrowing down your search is easier since these websites have complete listings of neighborhoods and homes with pictures, video presentations, and many other visual aids.

In essence, you can have all the info you need and print them out for future reference. Another great resource are search engines and websites like the ones managed by several leading national chains namely Coldwell Banker, Re/Max and Century 21. You can also contact realtors whenever the need arises with individual offices regularly updating their databases of listings and contact information.

Moreover, online resources like has up to date MLS listings and provides street views of homes. Listings can be located by city and state, zip code or MLS number. If you need more data on home sales prices, crime rate, commuting, or weather in your desired location - you can check their 'Local Community Information' bulletin.

Websites like the ones previously mentioned makes your exploratory research less daunting, and allows you to you find the best deals or be updated with the current listings. You are having an essential information with you aside from the Minnesota real estate agent that you will consult with eventually. In addition, your area's local library is a good place to search for listings on real estate. It's even better if the local library has its online counterpart where you can practically log for your search, anytime, anywhere. However, if there is no available online listing, you can take your time browsing the in-house database of the library. But you have to be cautious when using this because you might be searching for data or information that are no longer updated or relevant.

Despite the fact that the Internet or online resources have become a big help in home searching, you still need the assistance of a real estate agent when actual visit to the property commences. Drilling down local listings and defining your home preference according to your style and personality are major benefits in using online searches. And finally, you can benefit from all these if you use regularly updated resources in your searches.

Thursday, May 7, 2009

Key Things To Consider With New And Existing Homes

Buying a brand new Minnesota home as a first time home buyer is an attractive proposition for most; you get to move into a completely new living space with brand new amenities and don't have to worry about maintenance and renovations for at least the first year.

However, a brand new home can be significantly more expensive than an existing home and you don't always know what to expect if you're one of the few homes in a growing neighborhood.

Comparing the strengths and limitations of each scenario helps in coming up with the best decision for your home buying; the following are questions you must keep in mind when you begin finding your new home.

1. How much extra are you willing to pay for a new home? A brand new home is priced at a premium because of the 'newness' factor; you'll be the first person to use the bathroom and kitchen appliances, will be walking into freshly carpeted rooms, and making the most of the freshly painted walls.

2. Do you care for resale value? Existing homes can have slower appreciation than newly-constructed ones, as explicated by Ilyce Glink (writer of the book '100 Questions Every First-Time Home Buyer Should Ask'). When you have plans of selling your home in the near future, it may be a good idea to have a brand new home because it's market value is higher and you can profit at a larger scale from it.

3. Are you the type of person who can adapt well? The construction of new homes rapidly increases at a certain time, thus, being a new homeowner in an area may require knowing more people in the neighborhood before having a full knowledge about the whole area. Two important factors necessary in a household of small children or elderly are safety and security, you can discover your options to ensure that your house is safe and secure all the time.

4. Do you want to invest time and money to renovate a home? Existing homes can appreciate tremendously in value if you have the time and resources to invest in renovations and maintenance. If you're looking for a long-term investment that can generate a high profit in a short period of time, buying a 'fixer upper' may be your best home buying strategy.

5. Which do you prefer, a primary residence or an investment? Many younger MN first time home buyers are looking for investment properties that they can fix up and sell quickly to turn a profit. Mature home buyers are more likely to be in the market for a primary residence since they want to settle down and establish themselves in the neighborhood. Identify your goals beforehand and decide what you think will give you more benefits.

Once you have decided and thought about the amount you are willing to spend for your new home, its about time to choose between an existing or a new home. These questions may all be helpful as you pick the best option suited to your budget and future plan.

Wednesday, April 15, 2009

Get Your Loan Pre-approved And Pre-qualified With These Simple Steps

One of the most important steps to home buying involves getting the right loan amount for your ideal  MN property. There are several ways you can get prequalified to purchase a home and preapproved for a home loan, and it's generally a good idea to check your credit report before approaching this step. A prospective lender will be reviewing your credit report and other financial details in great detail as you set the prequalification or preapproval process in motion, and you can obtain a free credit report from any of the three major credit bureaus to check it for errors.

Have your credit records immediately cleared if you notice any discrepancies in it and ensure that you keep intact all proof of communication with the credit institution. When all these have been settled, it's now easier to proceed with your homebuying experience; the following tips are important in the prequalification and preapproval of your loan:

1. Do a research on various mortgage program via the Internet. There are many online resources where you can actually see the lists of current interest rates for various loan packages such as and An initial step would be to look at some options or better yet, submit your personal information for sample or preliminary review. In just a few days, a loan representative may communicate with you and guide you along the way.

2. Approach your area bank. Most people turn to a mortgage loan officer at their bank to obtain a prequalification letter or preapproval status in person. Ilyce Glink, author of '100 Questions Every First Time Home Buyer Should Ask' explains that this process can actually take longer than the online process. However, some people prefer the face-to-face communication and will be more comfortable going to the bank in order to get things started. However, you will be receiving the same type of service either way.

3. Dial the telephone. Another option you may try is transact your loan prequalification over the telephone, instead of online or bank methods. Some lenders offer this kind of service and all you have to do is ask the local bank for the number so you can give or submit your personal details through the phone.

4. Try a national lender. National lending companies such as Countrywide home loans and Bank of America also offer online services and over-the-phone prequalification and preapprovals, giving you more options for your future loan. Visit these lending companies' websites to learn more about current rates and send in your information to become prequalified for your loan.

5. Use an aggregator website. This is helpful especially when you need a website that has rates and services from different lending institutions yet requires you to send your info only once, or if you experience difficulty choosing between banks and financial institutions. You have the freedom to select from a number of packages once you have sent in your personal details.

Ultimately, homebuyers need to get prequalified and preapproved for a home loan first before the actual process is done. The abovementioned resources are helpful tools in finding the best deal for your mortgage and getting started.

About the Author: Alexandria P. Anderson is a Lake Minnetonka real estate agent that helps people to find and purchase Lake Minnetonka homes and properties for sale in the Twin Cities of Minnesota.

Wednesday, March 25, 2009

Things To Know About Working With A Seller's Agent

Buying a MN home for the first time involves collaborating with a seller's agent or subagent. It is crucial that you understand how things will work between you and the subagent because these people act as representatives to the seller and are therefore expected to bring you to the deal. As a seller's agent, they are entitled to a commission and have certain duties and obligations.

Regulations vary from state to state, but there are certain things they cannot do according to national law. The author of '100 Questions Every Home Buyer Should Ask' encourages all buyers to review the agent's forms and disclosures thoroughly to understand exactly what types of services they will be offering; if you do not understand anything, do not sign the form. It's also important to understand the key things that a seller's agent can and cannot do for you:

The seller's agent cannot disclose the list of comparable home's prices in the area. Often referred to as 'comps', a compilation of similar homes in the area will be given to you. Comps usually consist of listing information and list prices. This is necessary to ensure that an unreasonable price is avoided once negotiation takes place.

The seller's agent cannot tell you which home to choose when you are still deciding. Even though it's the seller's agent's job to sell you the home they are commissioned to sell, they do not have a right to 'push' their home over another in question. If you like two homes and the broker is working with both sellers, they cannot persuade you to purchase one over the other; the decision is ultimately yours to make.

The seller's agent cannot discuss the home's defects or flaws. In purchasing a property, the seller broker has no right to mention anything that would have a bearing on your choice or decision. Any material flaws or defects can be discussed but you will still need to find out for yourself if the property is really the best option.

The best offer for the home cannot be hashed out in detail. Most first time homebuyers would normally ask for the actual price to be paid in getting the property. However, this information cannot be legally offered since the seller broker has duties to the seller and any such act can affect the partnership.

The seller's agent can ask you for referrals. Many seller's agents are independent business owners and always looking for new clients. They do have the right to ask you to refer them to friends or family members, and will do everything they can to make your home buying experience a good one.

When you are working with a seller's agent as a first time home buyer, it's important to remember that they are in the business to make the home buying process as easy as possible. This doesn't always mean that they have your best interests in mind, so it's important to do your own research about the property and work with a professional real estate agent in addition to the seller's agent.

About the Author: Alexandria P. Anderson is a St. Louis Park real estate agent that helps people to find and purchase St. Louis Park Homes and properties in the Twin Cities of Minnesota.

Tuesday, March 3, 2009

Protect Your Money With Real Estate

Do you have jitters about putting your money towards MN real estate? After-all, the media LOVES to talk about what tumultuous times we're in right now. Home prices falling! Buyers beware! Protect yourself!

Never believe anyone that tells you an investment is 100% safe and smart. EVERYTHING that you do with your money has a certain amount of risk involved with it, even if it's just putting bills under your mattress; speaking of which, let's talk about what happens if you do NOTHING with the money you save (e.g., putting it under your mattress). That wouldn't be very smart--fire, flood, theft, etc. could make your money disappear very quickly with no hope for return.

What if you are the type who'd rather keep your hard-earned money in a safety deposit bank? Well, consider the fact that inflation reduces your money's buying power. More concretely, this means that your bills are only worth the currency's present value. Over time, you will find out that you have wasted an opportunity to expand its value.

In the US, the annual rate of inflation is about 3 percent that translates to commodities increasing by almost 3 percent every year. In other words, your money is worth 3 percent less if it is being kept inside a safety box. Would you still perceive of it as "saving" when obviously your money's purchasing power is gradually vanishing?

Let us also look into savings account. Those with this mode of saving are lucky because the FDIC or the Federal Deposit Insurance Corporation protects them. The risk involved is minimal as far as losing money is concerned. However, there is such a thing called inflation that even the best savings account in the world will have a hard time counteracting. Inflation can also negatively affect your savings account interest earnings.

How about stocks? I like to think of investing in stocks as investing in an "idea". You don't hold claim to any tangible item. You only "own" the fact that you have contributed funds to the "idea" that the entity you contributed your money to will somehow add value to itself and subsequently add a gain to the money you started out with.

How much control do you have over this "idea"? ALMOST NONE! The only thing you can do is research the track record of the entity and the people close to it (e.g., the CEO, CFO, etc.) to guess whether or not the "idea" will work out in the way you hope it will, but it's very difficult to know ALL the factors that will come into play. My opinion is that unless you invest in the stock market as a profession or spend a great deal of your time researching companies, investing in stocks is very distant from your personal interests and can be of great risk. That is why I, and many others, have chosen the last option we'll talk about: real estate.

What primarily distinguishes real estate from the ones mentioned above is its being "tangible" (this presupposes that you can experience it with all your senses: you can see it, touch it, and even improve it.) Likewise, the risk involved as far as losing the physical asset is concerned seemed distant. If it does, there's a wonderful thing called insurance! Can you apply the same in the case of stocks? Your property's value also grows with inflation unlike paper currency so you do not have to worry about your investment losing its purchasing power every year.

The bottom line: real estate gives you surprising benefits in numerous ways that includes huge tax breaks, gained equity through renter-paid deduction, equity gained through improvements, and appreciation. As I have mentioned previously in this article, any investment is not 100 percent safe. But it is in real estate where I am sure that with some forethought, you will find the most satisfaction, security, and enjoyment with your money!

Wednesday, February 18, 2009

First Home Buyers' Guide To Choosing The Right Mortgage

Selecting the right mortgage package as a Minnesota first time home buyer can be a confusing process, and working with a mortgage loan officer isn't always the best way to get the mortgage loan that you can afford. One of the biggest mistakes that first time is to sign on the loan that they qualify for, instead of taking a smaller loan that they can actually afford.

How does this happen? Loan officers will qualify you for a loan based on your income ratio and not necessarily how much you're prepaid to pay in housing payments each month. If you borrow the entire loan amount that you "qualify" for, it's likely that your monthly payment will be pushing your monthly budget to the max.

Setting your own limits for the loan will help you resist the temptation to just borrow up to the limit that your loan officers offer s and help you stay within a comfortable housing expense range based on your income level. Here are some more tips for selecting the mortgage for your new home purchase:

1. Consider the tax benefits. Some mortgages are 'interest only' loans which means you can deduct the entire payment on your taxes for that year. However, loans that are designed with a negative amortization scale won't allow you to deduct interest from your monthly payment.

2. Evaluate the long-term advantages. Whether you're planning to live in your home for 30 years and more or not, it is still advisable to know the pros and cons of your mortgage package. A fixed interest rate loan is somewhat higher in amount but unlike ARM and other loan products, it can safeguard you from changing market conditions. But a fixed interest loan also has its limitations. Smart Consumer's Guide to Home Buying's author, Barron, proposes that the fixed interest rate may increase your payments because of the demands of the escrow account linked with it.

3. Inquire about flexible payment options. Some home mortgage loans allow you to make extra payments towards the principal balance without paying a penalty, which means you can start paying down your mortgage when you have extra funds at your disposal. Find out if your loan products offer this type of flexibility so you can start paying down and be free of debt sooner than later.

4. Look for ways to keep payments low. Even when the lender offers you a large loan, consider cutting back on the loan amount so that you can keep the payments within an affordable range. A low interest rate, long loan term, and the ability to make interest-only payments are a few ways to keep payments as low as possible and within your budget range.

5. Apply for mortgage insurance. Most first time home buyers do not have a lot of money available for the down payment, which can make a big difference to the loan amount and monthly payments. Mortgage insurance can provide for your down payment, or in some cases, allow you to apply for an attractive loan product without having to make any type of down payment.

Wednesday, February 11, 2009

Cashflow Versus Appreciation

You want to invest in Minnesota real estate. What's the best way to use your money? The use of leverage and OPM (other people's money) is what makes real estate such a powerful investment tool. Different people have distinct viewpoints regarding how much leverage and OPM is good.

First of all, always make a qualified mortgage professional part of your team of experts; the examples that follow may not be appropriate or even possible for your particular situation. Some people have the goal of receiving cashflow every month to supplement their incomes while others want long-term financial success through investment appreciation.

To vitalize your financial goal, look closely into your options. What's amazing in the real estate market is the assurance that you are in control. For instance, you have $20,000 to start with. With this amount, you can have either a 10 percent down payment on a $20,000 worth of property or a 20 percent down payment on a $10,000 property. Of course, you will be the one to decide which is better.

There is no right or wrong answer; again, it depends on your goals, but let's look at the differences. Whenever you make a large down payment it is more likely that you will be able to get cashflow because your mortgage payments will be lower and at the 20% mark you do not need mortgage insurance. So if cashflow is what you desire, larger down payments help you achieve that.

Assuming that for the $100,000 and $200,000 properties, the appreciation is set at 6 percent (Please note that the appreciation rate actually varies depending on their locations, type of property, etc..but for this article, you can well disregard these differences). That translates to these figures: the $100,000 will be worth $106,000 after a year of appreciation and the $200,000 becomes $212,000.

You will have made double the amount of appreciation with the 10% down payment on $200K option, but you didn't have to spend one penny more! This effect will compound year after year and after awhile the difference will staggering.

Greater appreciation values mean a shorter time until you have enough to pull out some equity and use it to buy ANOTHER property and then have two properties working for you, again compounding the effects of appreciation. What are you sacrificing? Since you paid a lower percentage down payment, the cashflow might not be there on the $200K home, and maybe there are even months where you have to pay some maintenance expenses out of pocket, but look at the long term gain advantages.

Moreover, you get more advantage since debt payments and maintenance costs are tax deductions (using leverage or OPM and getting less monthly cashflow) unlike cashflow that is taxable. In the case of some people who needed monthly cashflow - the solution is simple, your approach can be modified to get what you really wanted. Besides, most people would agree that extra payment every month realizes wealth building benefits in the future!

Your choice to effectively use your money is important. Start now by building your team of experts and hit your mark!

Tuesday, February 3, 2009

In Today's Economy Is It Better To Rent Or Buy A Home?

Again we find ourselves facing another financial dilemma: should I rent or should I buy? And just like many other financial quandaries, we have seen the example of our parents and perhaps friends but have little true professional knowledge to base our decisions on. We get a lot of advice from those around us, which is VERY tempting to listen to, but should we? For me the answer is "Don't ask a butcher how to bake a loaf of bread!" It's a good idea to listen to everyone you meet in your life, but it's an even better idea to consider who is giving the advice when you're faced with a decision.

A good adviser takes into account several factors to help you come up with sound financial decision. One, he must consider your individual situation; and two, he must be experienced enough to back his claims with solid evidence. Since no two people have exactly the same predicament and your case is unique from the others - it is crucial to weigh the costs and benefits of buying versus renting. As the co - author of the book Equity Happens (Russell Gray) puts it, "Do the math!"

With that being said, I'm not going to try and tell you which option to choose. I cannot possibly do that because I don't know your particular situation. I will tell you some numbers to think about and I will say that for many people, right now is an amazing time to purchase a home. You can start with monthly expenses. In the case of renting, add up your rent plus any additional fees and the utilities you must pay.

For ownership expenses it's a little trickier. You must add together more items and might need the help of professionals to determine what the expenses will be. The main expenses are commonly abbreviated with the acronym PITI. This stands for Principal (the amount of money you pay toward the principal of your loan), Interest (the amount you pay toward the interest of the loan), Taxes (property taxes you must pay), and Insurance (both property insurance and mortgage insurance, if applicable).

Owning a home also covers utility expenses plus other maintenance outlay aside from the PITI. In the case of renting, while it is compelling that you only pay the same amount on a monthly basis; you can go back and determine what your previous payments could buy you a home for. Monthly monetary costs are important aspects in deciding what to choose between owning and renting but it is also equally significant to look at the long-term benefits.

The majority of these long-term benefits often lie on the side of ownership. After many years of renting you will still have title to nothing and you will continually be paying higher rents. After owning for many years your payments will remain basically the same as when you first purchased the home (except some costs like utilities, insurance, etc. that rise with inflation, your main costs will not change). And, what's even better, you will have the wonderful thing called equity from all the payments you've made towards owning the home. If you choose wisely in an appreciating market (not hard to do!) you will also gain the value of appreciation of your's like free equity!

There is a good chance your choice shifts according to your personal feelings and opinion. Simply put, making the best decision towards renting or owning a home involves your subjective feeling. What can be more fun than having a house you can call your own, and enjoying the independence in creating changes with it however you like it! On one hand, you might favor the side of renting if you will give emphasis on other concerns such as having no lawn to mow, or other maintenance issues.

Often, financial consideration plays a big role but also brings into mind subjective feelings over the argument: to buy or to rent a house? To be more specific, purchasing expensive appliances no longer bothers you when you have huge savings from renting instead of owning. Or maybe, the freedom to do whatever you want with your own house appears inconsequential if you will note the massive expenses you shed off just to purchase your home. Either way, the dictum "numbers do not lie" proves that the former is still weightier than the other.

Concisely, this article wants to present two major points: always consult a professional in weighing out your options and calculating your expenses; and look beyond the immediate gains of ownership or renting. The benefits from both sides will not be evident unless we set our eyes on the long range that will not be apparent on a monthly cost comparison. In a buyers market that we are in, ownership is favored over renting.

Alexandria P. Anderson is a licensed Minnesota Realtor that helps people to find and purchase Plymouth Townhomes as well as Plymouth Lofts in the Twin Cities of Minnesota.

Sunday, January 25, 2009

The Easy Path To Property Investing Success

Many people think that real estate investment is beyond them. It has such a mysterious sound. Surely, successful Minnesota real estate investors like Donald Trump were born with a tip sheet in their hand and prospects in the back pocket of their baby jumpers. But the fact is, even those who were born into families of real estate moguls had to start from scratch to learn the family business. They just got an early start.

You can start now.

Willingness to learn is the other key to success when it comes to real estate investing. In truth, it's just like any other specialized task you must become familiar with in order to perform well at, but that anybody who is ready to devote time and mental energy can become proficient at. A good example is that of piloting an airplane; the process seems complex, but as long as your eyesight is decent and you don't have an insurmountable fear of heights, you could learn to pilot an aircraft, and, given time, you could probably develop the skills necessary to work for a commercial airline.

Just like all the flashing lights and mysterious devices in an airplane's cockpit seem absolutely mystifying to the beginner, most have absolutely no idea where to start when it comes to learning the real estate business. Just like a pilot, a prospective property investor must start out by sitting down at the metaphorical cockpit and become familiar with what each little switch and lever does.

If you start investing in properties, and do it wisely (by learning as you go and by getting advice from the experts) you will soon find yourself making a little bit of money at it. Then you will find yourself making more money at it. Eventually you will make a lot of money from it and wonder when exactly you stopped being a novice and started being an expert. It is a gradual process, like anything else.

The Rich Dad, Poor Dad books by Robert Kiyosaki are a great starting point for those who want to learn more about just how easy it can be to break into the business of investing. In addition, 'The ABCs of Real Estate Investing,' by Ken McElroy do a great job of laying the process out in a logical, easy-to-understand manner.

At the end of the day, becoming a successful real estate investor is only difficult if you're unwilling to try, or if you insist on throwing your money at wild guesses (that's gambling, not investing). The one critical fact that you must remember about investing is that in order to succeed, you must constantly be learning; if one becomes complacent, or acts as if he or she is a born investor, a rude awakening is sure to come.

After all, you wouldn't want to climb into the cockpit of an airplane, fire it up and hope for the best, would you? Of course not. That would be suicide. On the other hand, you would expect to become a good pilot if you went through a prescribed program and logged enough hours behind the wheel. Approach real estate investing in the same way and the sky's the limit.

Sunday, January 11, 2009

Real Estate: The Secret Weapon of the Rich

Taxes are a necessary evil in our society, and for many it seems natural to grouse about having to pay a large percentage of our earnings to the government while those who have more money seem to be bearing less of the burden than they ought. It's certainly disheartening that it works this way - as the fortunate shirk their obligations through legal loopholes, the rest have to pick up their slack. It's frustrating and unfair, and there's no question that many of the complaints against the upper class are quite legitimate.

Unfortunately, simply recognizing injustices and complaining about them isn't sufficient to change the ways of the world. The rich will inevitably have money and therefore power, and they will use this power to stack the deck in their favor, particularly when it comes to using tax breaks to keep their money. They will claim that there simply isn't enough money for everyone to get what they need, all the while cutting corners and keeping their spoils for themselves. This extends to elected officials as well - how many poor politicians have you heard of?

That's why you are going to have to take action. Don't be one of the downtrodden masses. If you want more money, you are going to have to go get it yourself. And yes, you too can get more money in the form of tax breaks.

Robert Kiyosaki, author of the "Rich Dad, Poor Dad" books, makes the sensible suggestion that those who are not rich but would like to be should watch what the rich do, and then do the same. You don't really need to watch too closely, however, to learn the open secret of the wealthy- that secret is real estate.

"One of the reasons I chose to work predominantly in the B and I quadrants are the tax advantages," he says in his book, "Cash Flow Quadrant." The cash flow quadrant, after which he named the book, is his rich dad's diagram of the four different kinds of people, with respect to where they get their money and their philosophy about procuring money which, oddly enough, match up. In other words, people who are Employees have one set of values while the people who are Self-employed have another.

According to Robert Kiyosaki, the real money is in the business and investment quadrants of the Cash Flow Quadrant.

As they say, if you can't beat 'em, you've got to join 'em. This is doubly true when you're talking about the wealthy. With this mindset, you'll realize that tax breaks for the rich aren't really so bad, since you can take advantage of them when you become rich.

The path to riches is actually very simple; all you've got to do is start investing, or join the 'I' quadrant. If you have a high-paying job, you may be able to do this without leaving the 'E' (employee) or 'S' (self-employed) quadrants, but Robert Kiyosaki advises that you move into the 'B' or business quadrant, devising a system that will make you money regardless of whether you are putting time into it or not.

So, invest - invest in apartments, condos, vacation homes, whatever suits your fancy. This is the true, time-tested road to wealth.

Author: Alexandria P. Anderson specializes helping people to find and purchase Golden Valley MN Homes, as well as Golden Valley property for her Minnesota realty clients.