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Is Buying a Home A Good Financial Decision?

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Recent news of rising mortgage rates, low housing inventory, and an increase in property taxes may sound alarming and scary to prospective home owners.  It might even make them question whether or not buying a house is right for them.  Despite the ups and downs of rates, prices and taxes, owning a home still has many benefits.

A recent post in the Dragas Communities Blog shares the top five reasons to purchase a home, according to a Harvard University study.  The top reasons listed in the article detail the financial benefits of purchasing a home.

For example, owning a home can allow a homeowner to have a leveraged investment, meaning they are many times borrowing money and, over time the homeowner is seeing an appreciation in their investment.  Additionally, the dreaded property taxes and mortgage interest that homeowners have to pay, they are, in fact, tax deductible up to a specific dollar amount.  Further, capital gains up to a certain dollar amount, made on the sale of the home are excluded from income when filing taxes.

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Photo Credit: Brian Strevens

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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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Myth Busters: The Truths of Pricing and Selling Your Home

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One of the most important decisions a home owner who has decided to sell their home can make is what the list price of the home should be.  Emotions, financial strains, and decisions based on inaccurate or misunderstood information can lead to a disappointing and frustrating sales process.

In an article published by Realtor.com, Cathie Ericson helps debunk home pricing myths that might have home sellers hung up on their list price.   Reviewing these myths and understanding the truth about the pricing, listing and hopefully selling a home will help sellers start out on the right foot.

One myth sellers may believe that if a home is overpriced, it can just be lowered later without any negative effects.  As Ericson points out, lowering a price is not a quick and easy fix.  Many house hunters notice when a home has been on the market for a while and know when there have been numerous price reductions.   As she states,  “… buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.”

When deciding on a listing price, sellers may be turned off by the idea of pricing their home too low, assuming they will not make as much money in the sale.  However, low priced homes might just attract more buyers and the increased interest in the home might result in a bidding war.

The article details the truth behind other myths such as recouping 100% of the cost of home renovations, the real estate agent’s stake in the pricing strategy and the whether all home owners make money on the sale of their home.  Read the entire article.

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There are Twice as Many Vacant Foreclosures in the Chicago Area This Year, Find Out Why

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“A strong seller’s market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years,” Attom Senior Vice President Daren Blomquist said in a statement.3993310255_273389be94_o

As a result, the number of vacant bank-owned properties in the Chicago-land area has almost doubled since the third quarter of 2015; the number has increased from 1,245 in the third quarter of 2015 to 2,379 by the end of the second quarter of 2016.  The good news is, with an average market time of 92 days in the Chicago-land area, these foreclosures may not remain vacant for long.

According to an article written by Dennis Rodkin, published by Crain’s Chicago Business, another effect of the strong sellers’ market is a significant decrease in the number of “zombie foreclosures”.  Instead of delaying the foreclosure process longer, the banks are moving forward with seizing the property, and moving it through the pipeline.  Ultimately, a vacant foreclosure is more desirable than a zombie foreclosure.  “Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures,” he said.

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Photo Credit: BasicGov

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Three Reasons Now is the Time to Buy a Home

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This summer is the perfect time to consider purchasing a home.  An article published by RealtorMag details three reasons buyers should not delay a home purchase any longer.

To start, home prices are not expected to remain steady at current prices, let alone dip below current values.  In fact, home values have been increasing over the past twelve months and are expected to appreciate over the next five years at a rate of at least 3.2 percent a year.

8409972120_2f70f76af5_oFurthermore, mortgage rates are still hovering close to the record low, last week averaging 3.41 percent for a 30-year fixed rate mortgage.  However, it is predicted that these rates will rise soon.  In fact, it is expected that mortgage rates will rise an entire percentage point by next summer.

As a result, households currently renting instead of owning should consider moving forward with a home purchase.  As documented in a Harvard housing study, renting does not make financial sense for most households.  Renters miss out on not only the tax breaks that come with home ownership, but instead of paying down on their own investment, they are helping landlords pay off their investment plus a rate of return.

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Foreign Buyers’ Desire for U.S. Real Estate Continues to Grow

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Real Estate in the United States continues to be a choice investment for international buyers.  In fact, the number of homes purchased by foreign buyers rose 2.8 percent from April 2015 to March 2016.Business concept isolated on white

There has, however, been a shift in the types of properties and locations these buyers are opting to purchase.   Reported numbers reflect a decline in foreign non-resident investors, who typically purchase properties in expensive markets such as San Francisco and New York City.  Nevertheless, a rise in the number of recent immigrant foreigners purchasing homes helped to increase the overall dollar volume to the second highest in the past 7 years.  Both groups of foreign buyers, whether looking for an investment or for a home to live in, are opting for smaller properties in less expensive parts of the U.S.

More positive news for U.S. real estate is detailed in an article published by CNBC.com by Diana Olick.  With the recent global financial market instability, investors see real estate as very safe investment.  Lawrence Yun, chief economist of the National Association of Realtors (NAR), indicated, “… with economic instability and political turmoil outside of the U.S. likely to persist, the world view of American real estate as a safe investment should keep demand firm …”

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Photo Credit: Seneca Real Estate

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