Equity is the most important thing a home buyer or seller can have. Equity is basically your interests in a property after your obligations are deducted. If you purchased a $100,000 home with 20% down that means your equity is $20,000 dollars. It is a sad commentary in this current real estate market that most agents and home owners do not heed this!
A home is something that is a long term plan, not a fix for the short term. Over the past few years all the fundamentals of home ownership have been thrown out he window and trampled underfoot. From what I see, buyers overpaid for junk, did not ask any questions, and got themselves into really hot water! Equity begins by buying right! When a builder offers you closing costs, upgrades, bonuses for your agent and other major incentives up front...the home is overpriced! The incentives are meant to hold their price so you will feel guilty to ask for more! It is a game that most new agents do not understand, because they have never lived through a real esate downturn before! The best advice that I could give anyone that is considering buying a home in the near future is:
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Make sure the agent that represents you has extensive experience selling many homes.
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Ask your agent for testimonials and references.
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Do not become emotional on any home you are considering buying - you'll lose your objectivity.
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Make sure you are purchasing a home that has value.
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Never pay full price! Never! Not even new!
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Ask the seller to pay uyour closing costs - If you do not ask, you will not get!
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Be prepared to walk away if you do not get what you want!
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Remember everything is negotiable!
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Make your agent demostrate with a CMA why this purchase is a great deal!
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View your purchase as a long term hold.
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Never buy a home without an inspection - needed work eats away at your equity position.
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Negotiate teh seller doing the repairs on their home. Otherwise move on to the next property!
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Aggressively negotiate the purchase of the home with a seasoned and experienced agent! Buy it right!
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Save up 20% down payment and closing costs.
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Get fixed rate financing 15 or 30 year term with a fixed mortgage rate
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Pre-pay your mortgage principle - increase your equity, and shorten the term owed.
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Do not use your home as an ATM! Do not borrow against the equity!
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Avoid getting a second mortgage.
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Do not borrow against your home value to purchase a car or to fund a vacation
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Maintain the goal to pay off your mortgage totally. This will fund your retirement!
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