Advising a Couple on Purchasing a House. Paper Example

A young couple that wants to buy their first home has a lot of things to consider. The first thing that they should pay the most attention to is the price of the house. The price of the house that they want to buy is determined by the amount of money that they are willing or capable of raising. A couple, or anyone else for that matter, should not buy a house that they cannot afford. In determining how much the couple can afford certain things like their total annual incomes, student loans, and any other outstanding debts are considered. The amount that the couple decides to invest in the house must be an amount that will not strain them when they start paying for it. They should choose a price range that will leave them with some money to engage in other things while paying the loan. Most lenders also want a potential home buyer to have a deposit in hand or in the custody of the lender which is called a down payment. The down payment is normally a percentage of the total price of the price that the house. The couple should choose a price range whose down payment they already have. If they choose a high-priced house whose down payment they do not already have then they cannot get a lender to finance their house. The price of the house will also determine the taxes that they pay.

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After purchasing a house the couple will be expected to pay for taxes and insurance. Taxes are for the benefit of the government while insurance is for the benefit of the house owner. The amount that is paid as tax and for insurance all depends on the value of the house. The higher the value of the house the higher the taxes that will be paid. The value of the house, in this case, is not the intrinsic value of the house but the fair market value. Fair market value is the value that a willing and knowledgeable buyer will purchase a house. It is also the amount that a willing and knowledgeable buyer will be willing to sell the house without being pressured. The buyer and the seller should be acting independently of each other. The amount of tax payable will be a product of the fair market value of the house, tax rate, and assessment value. The rate of taxation is determined by the local government but can be disputed or appealed by the owners of the property. The insurance that will be paid for the house will also depend on the fair market value of the house but unlike taxes, there are different packages where a customer will choose what he wants to be insured and what can remain without insurance. The couple will set up an escrow account in which they will deposit their annual taxes and insurance to be paid when they are due.

The couple will start paying taxes and insurance after purchasing the house and they can do it in two ways. The first is paying them individually such that each one of them pays their share of the bills depending on their ownership stake. Another way that they can pay the two bills is by paying them jointly as husband and wife. If they pay this way, the amount of tax that they pay will be lower than the amount that they would pay if they paid as individuals.

To help the couple purchase a house, they first have to decide what they want. By what they want, this paper the amount of money that they can raise and the area or neighborhood that they wish to purchase the house in. Different neighborhoods have houses that are sold for different price ranges depending on the level of income of the residents and the characteristics of the neighborhood. Neighborhoods where people who make a lot of money will tend to have a lot of basic ad luxury utilities because the residents can afford to pay for them. Houses and property in such neighborhoods will be priced higher than those that only have luxury utilities. To begin searching for a house, the price range that the couple has settled on will be used to qualify and disqualify neighborhoods. A knowledgeable real estate agent will use the price range to come up with a list of areas and neighborhoods where the couple can find a house. After the couple selects a neighborhood or an area or a city, the real estate agent can use several ways to identify the best house that suits the couple. There are several ways to find a house. The first one is using the contacts that a real estate agent has gathered over the time that he has been active. As a real estate agent, he will have information about many houses that are on sale by their owners or other agents. He can also use the internet to search for houses. Many companies and individuals like to post things that they are selling on the internet so that many people can see them.

After getting a house that meets the conditions set out by the couple, a real estate agent will find the value of the house. The value of the house does not include the intrinsic value of the house or the value that the owner attaches to the house. It is the fair market value. There are several ways of obtaining fair market value. The first one is using a home appraiser. Using this method will cost money because the appraiser will need an appraisal fee will depend on the size of the house. The second method of determining the fair market value of a house is by comparing it with the recently sold houses in the same area that have similar characteristics like size, age, and condition among others. The third way to estimate the value using the values of similar houses in the area. This will only provide an estimate of the likely value of the house. Another method for determining the fair market value of a house is using the tax that the government levies on the house and then working backward since tax is a function of the value of the house. For example, if a homeowner pays 10000 dollars in tax in an area where the rate of tax is 4per cent then the value of the house can be estimated to be 250 thousand dollars. This is not the actual value of the house but the assessment of the value by the local government.

When purchasing a house or property it is always the responsibility of the seller to declare all the problems that the house has. This is a requirement in many states in the US. However, some sellers may not adhere to it and end up selling houses with problems that soon need repair thus increasing the overall cost of the house. To ensure that a house is in the way the seller claims it is, the couple can seek the services of a house inspector. A house inspector will check for faults in such things as plumbing, electrical connections, paint, water drainage, attic, roof and foundation among others. Such an inspection may cost money but may help in deciding whether to buy a house or not.

If the couple decides to look at the houses that are "for sale" by the owners, then a real estate agent will come in handy to help to identify the house. Some homeowners display a sign that alerts the public that the house is for sale. There are, however, some homeowners that do not display signs to alert interested buyers of the sale of the house but depend on the word of mouth by neighbors and friends. In such situations, a real estate agent will have such information and may direct the couple to their desired house. A real estate agent will also help the couple to get services like appraisal and inspection at reasonable fees. A house that is sold by the owner will be cheaper because there will be no commission fees for the person that helps in selling it.

The couple needs to inspect the house, raise the amount of money required and find a lawyer. They also need to identify a house that is good for them. These steps, however, need to be carried out in a specific order. First of all, the couple should calculate the amount of money that they can afford and are willing to spend on a house. This will be done by considering their total annual earnings, debts and other sources of income among others. Most money lenders advice that people should get a house that is between three and five times their annual income. The next step is to determine if they are preapproved by lending facilities and if not getting the preapproval. To get preapproved, the couple will provide their financial statements outlining their incomings and expenditures to the bank. This will help the bank or the lender to decide if the amount that the couple can be prequalified for. The next step is finding a real estate agent. They can do this by inquiring from family and friends. They can also do this through the Internet where real agents post their services on the internet. Real estate agents are useful because they help with the identification of the best house and also handle most of the negotiation. The next step is shopping for a house. This is where the services of a real estate agent are most needed. Since they have specialized in the field, they have a lot of knowledge and experience in dealing with the market. They know which houses are good and which ones are not so good. They have contacts who include other real estate agents and homeowners looking to sells their homes. While shopping for a home, the couple should ensure that it meets their requirements and not be pressured into buying something that they do not want. The next step is to get a home inspector to check if the integrity of the house. A house inspection will check such things as roof, foundations, cabling, air conditioner, automation, and aesthetics among other things. The next step is working with a banker to choose the best mortgage considering the current state of the couple. The house is then appraised after which the paperwork is done and the sale closed.

If the couple decides to purchase a home then they will be required to avail the money before signing the papers associated with the house and the transfer. The first step of purchasing a home is determining the amount that the couple can afford. This will take between one and two weeks. The next step is identifying a house, a process that can take up to eight weeks. The next step is securing the money by getting a mortgage and then conducting inspection and appraisal steps which take up to six weeks. The final step is underwriting and closing the purchase of the house which can take to weeks. The length of time that they may be required to pay their mortgage may vary between ten years and thirty years depending on the income of the couple and the price of the house that they settle for.

Before and during the process of buying a home, some of the fees that the couple may be required to pay include state recording fees, property taxes, pest and mold inspection fees, survey fees, document preparation fees, credit report fees, points or origination fees, escrow fees, and appraisal fees among others. Appraisal fees are fees that are paid to the appraiser. The appraiser evaluates the house to come up with the fair market value of the house. This value is important because it helps to make decisions regarding the house such as the taxes and the insurance to be paid. An escrow account is an account that is used by both the seller and the buyer. It is used to hold the buyer's money before the process is finalized. The fees that are paid to maintain such an account is called escrow fees. An escrow account is also used to pay for taxes and insurances. This means that every month, the homeowner as part of his or her money sent to this account to cover the taxes and insurance. A point fee is a service fee that is fees that a borrower of mortgages pays to his or her bank or lender for creating the loan. A point is one percent of the total amount of the money borrowed. To make the process of borrowing easy, this fee is always worked into the whole amount. Credit report fees are used to get the credit rating of a person. Many lenders require this information before providing any loans.