Home ownership offers tax benefits as
well as the freedom to make decisions about
your home. An advantage of renting is not
worrying about maintenance and other financial
obligations associated with owning property.
There
also are a number of economic considerations.
Unlike renters, home owners who secure
a fixed-rate loan can lock in their monthly
housing costs and make prudent investment
plans knowing these expenses will not
increase substantially.
Home
ownership is a highly leveraged investment
that can yield substantial profit on a
nominal front-end investment. However,
such returns depend on home-price appreciation.
Q:
What
are the pros and cons of adding on or buying
new?
A:
Before making a choice between adding
on to an existing home or buying a larger
one, consider these questions:
*
How much money is available, either from
cash reserves or through a home improvement
loan, to remodel the current house?
* How much additional space is required?
Would the foundation support a second
floor or does the lot have room to expand
on the ground level?
* What do local zoning and building ordinances
permit?
* How much equity already exists in the
property?
* Are there affordable properties for
sale that would satisfy housing needs?
Ultimately,
the decision should be based on individual
needs, the extent of work involved and
what will add the most value.
For
more information, check out "The
Do-able Renewable Home," a free booklet
available from the American Association
of Retired Persons, available online at
homemods.org.
Q:
What
do all of those real estate acronyms in
the ads mean?
A:
If you find yourself stumbling over weird
acronyms in a real estate listing, don't
be alarmed. There is method to the madness
of this shorthand (which is mostly adopted
by sellers to save money in advertising
charges). Here are some abbreviations and
the meaning of each, taken from a recent
newspaper classified section:
* assum. fin. --
assumable financing
* dk -- deck
* gar -- garage (garden is usually abbreviated
"gard")
* expansion pot'l -- may be extra space
on the lot, or possibly vertical potential
for a top floor or room addition. Verify
actual potential by checking local zoning
restrictions prior to purchase.
* fab pentrm -- fabulous pentroom, a room
on top, underneath the roof, that sometimes
has views
* FDR -- formal dining room (not the former
president)
* frplc, fplc, FP -- fireplace
* grmet kit -- gourmet kitchen
* HDW, HWF, Hdwd -- hardwood floors
* hi ceils -- high ceilings
* In-law potential -- potential for a
separate apartment. Sometimes, local zoning
codes restrict rentals of such units so
be sure the conversion is legal first.
* large E-2 plan -- this is one of several
floor plans available in a specific building
* lsd pkg. -- leased parking area, may
come with an additional cost
* lo dues -- find out just how low these
homeowner's dues are, and in comparison
to what?
* nr bst schls -- near the best schools
* pvt -- private
* pwdr rm -- powder room, or half-bath
* upr- upper floor
* vw, vu, vws, vus -- view(s)
* Wow! -- better check this one out.
Q:
Do
we dig deep and buy a dream home or settle
for a starter home?
A:
Choosing between a smaller house in an
affluent neighborhood, an older, bigger
house in a more working-class community
or a brand-new home is not easy. If you're
in this situation, start by examining your
priorities and asking the following questions:
*
Is the surrounding neighborhood or the
home itself the most important consideration?
* Is each of the neighborhoods safe?
* Is quality of the schools an issue?
* Do any of the areas seem to attract
more families with children or adult residents?
And where do you fit in?
As
for the return on your investment, home-price
appreciation is hard to predict. In the
late 1980s, the more expensive move-up
housing appreciated wildly. But during
the recession that followed, smaller homes
tended to hold their value better than
more expensive ones.
Q:
How
do I get the real scoop on homes I am looking
at?
A:
Home inspections, seller disclosure requirements
and the agent's experience will help. Disclosure
laws vary by state, but in some states,
the law requires the seller to complete
a real estate transfer disclosure statement.
Here is a summary of the things you could
expect to see in a disclosure form:
*
In the kitchen -- a range, oven, microwave,
dishwasher, garbage disposal, trash compactor.
* Safety features such as burglar and
fire alarms, smoke detectors, sprinklers,
security gate, window screens and intercom.
* The presence of a TV antenna or satellite
dish, carport or garage, automatic garage
door opener, rain gutters, sump pump.
* Amenities such as a pool or spa, patio
or deck, built-in barbeque and fireplaces.
* Type of heating, condition of electrical
wiring, gas supply and presence of any
external power source, such as solar panels.
* The type of water heater, water supply,
sewer system or septic tank also should
be disclosed.
Sellers
also are required to indicate any significant
defects or malfunctions existing in the
home's major systems. A checklist specifies
interior and exterior walls, ceilings,
roof, insulation, windows, fences, driveway,
sidewalks, floors, doors, foundation,
as well as the electrical and plumbing
systems.
The
form also asks sellers to note the presence
of environmental hazards, walls or fences
shared with adjoining landowners, any
encroachments or easements, room additions
or repairs made without the necessary
permits or not in compliance with building
codes, zoning violations, citations against
the property and lawsuits against the
seller affecting the property.
Also
look for, or ask about, settling, sliding
or soil problems, flooding or drainage
problems and any major damage resulting
from earthquakes, floods or landslides.
People
buying a condominium must be told about
covenants, codes and restrictions or other
deed restrictions.
It's
important to note that the simple idea
of disclosing defects has broadened significantly
in recent years. Many jurisdictions have
their own mandated disclosure forms as
do many brokers and agents. Also, the
home inspection and home warranty industries
have grown significantly to accommodate
increased demand from cautious buyers.
Be sure to ask questions about anything
that remains unclear or does not seem
to be properly addressed by the forms
provided to you.
