Are you thinking of purchasing and contemplating whether to move to a home, condo or co-op or possibly a short or long-term rental, or possibly an independent, assisted living or nursing home facility? It really all depends on your financial constraints, lifestyle, health, and specific needs and wants.
You may have the money for the down payment. In some areas, 3 percent will work and the sellers will be agreeable, whereas in other situations, it couldn’t possibly be considered and only 10 to 20 percent would be doable, depending on your financial picture. Applying for a mortgage is easy, but the approval process requires a considerable amount of paperwork to show and prove to the lending institution that you are capable of paying the money back based on your income, credit scores, debt-to-income ratio and length of employment. If self-employed, you will need to have been in business for at least two years to qualify for a mortgage, unless another person (husband, wife or significant other) is capable of borrowing the money or a guarantor is involved, but every situation is different.
Just to explain when someone says “out of pocket,” it means all the money that you as the purchaser will be putting into your purchase and the bulk of the purchase price will be financed. So based on the latter variables, this will provide the type of choices you will have or only the specific one or maybe two possibilities of ownership, as to what you will be able to afford and what type of lifestyle you may have as a first-time buyer. A move-up buyer has a different profile and usually has built enough equity and has earned more and saved enough money over a certain time period to create a different lifestyle for his or her family. It truly is all about the money.
A single person or a couple may find a co-op more amenable and affordable, with less risk than a condo or a home. However, depending on whether the market is going up, softening or declining and as well as your income, debt-to-income ratio, and credit scores and what you qualify for as a mortgage, this will have an impact on your decision as to what to consider purchasing. Also, the length of time you anticipate living in whatever you purchase will also add to your decision-making to help you in your final determination of what and where to call home.
I had a couple, both doctors with one child, who had a long- term plan, whereby they would be moving to Texas in five years. I searched around for homes in various towns, at a certain price point and couldn’t find anything they were enamored with. But then I found them a perfect home in a town completely off the map, which worked for them, but where I would have never thought they would move but did! Since I have stayed in touch with them over the years and usually have lunch or dinner with them, I know in two more years they will be moving to Texas and will be able to buy a real mansion with the equity that they have built over the last three years. Had they rented in the beginning, which was one of their options, they would have lost a substantial sum of their wealth to their landlord, paying his or her mortgage, increasing his or her equity and having little say about the increase in rent or lastly the security of staying five years in the event a child or relative of the landlord was moving back into the space.
Maybe the end result as a short-term plan will be a rental for a year or two (but no more) to see if you like the town you have chosen or maybe at your stage of the game, your accountant advises you to stay liquid. Again, it all depends on where the market is heading since selling your home when the market is at a high point as it is currently and is obviously to your advantage. But it has softened a bit and in some areas has really declined due to the S.A.L.T tax and the decrease in your interest deduction on your taxes, which mostly affects the larger jumbo mortgages. But timing is everything and no one can ever really time the market. So if you’re considering downsizing, you must look at the current market, lifestyle, affordability, as well as your age and health, then decide whether you want to be liquid or still be in an ownership position. It may end up that renting, whether a luxury doorman building or a basic apartment will satisfy what, how and where you should live. Even your health will also be a factor, as to why and where you live, possibly in an independent or assisted-living environment or a nursing home as the answer of last resort.
Some of these crucial decisions may have to be made by your significant other or children. Many times your children want you to move closer to them so if situations arise, you will have the proper support as well as being near your grandchildren. On the other hand, you may prefer to own and not rent. I have read that this is the longest running bull market in history, but I beg to differ. As the Financial Industry Regulatory Authority has noted, the longest run belongs to the 12 1/2-year periods running from October 1987 through March 2000. The current bull market, which started in 2009, will need to run through 2021 to break that record. So with interest rates still historically low (lower than December 2018) and if you are in it for the long run, then this is an excellent time to purchase your starter home, trade up or build, or sell and downsize. But there are plenty of choices for those who qualify.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 Great Neck. He has earned designations as a Graduate of the Realtor Institute and a Certified International Property Specialist. Receive regular “free” updates of sold homes in your area and a “free” Comparative Market Analysis” of what your home would sell for in today’s market or search on: WWW.Li-RealEstate.Com If you would like to receive a digital copy or a printed copy of “Unlocking the Secrets of Real Estate’s New Market Reality Or “Our Seller’s Guide for “Things to Consider When Selling Your Home” just email or snail me (regular mail) with your name, email and cell number.
He can be reached by email, at:Phil@TurnKeyRealEstate.Com, or by cell: (516) 647-4289.