Setting a Solid Financial Plan for Real Estate Purchase
Okay, just how big is real estate? It is obviously common sense that it is one of the biggest general consumer segments. Not only businesses, but also the average homeowner has to buy real estate investing hundreds of thousands, and sometimes even millions. So to say, a single deal significantly affects your bank account both in the short and long terms.
A basic idea of the costs
After making the initial down payment, you still have to keep paying the monthly mortgage installments. There are additional costs such as cost of moving into a new house, the fees of the real estate agent, payment of the attorney, property inspection costs, and expenditure of renovating or customizing your home.
The point is that you must have a solid financial plan taking both the near and the future into account. You will have to do your own research and then correlate the same when you discuss with the agent. Covering your primary research first is a good strategy as it also helps you to find a competent agent. You can easily find property price calculators and listings resources online.
Understanding real estate investment
An interesting trend of the property market is a steady rise in property costs (until the recession struck). The highly complex market has both pros and cons. The reality of foreclosures on non-payment of mortgages is totally undeniable. Again, peoples using their properties as a good investment vehicle is also another interconnected reality.
A look at the Government census data on property dealings confirms the steadily rising trend in property costs. Barring a drop in prices during the financial recessing caused by the infamous real estate bubble, the prices are always on the rise.
– Median property prices at US in 2008, 2009, and 2010 were $232,100, $216,700, $221,800 respectively.
– New home constructions contributed $775 billion to the GDP in 2005. Then, it fell to $338.7 billion in 2011. It is on a recovering mode as the GDP contribution of real estate in 2013 accounted to $489 billion. You can blame the drop on the popping of the inflated property bubble. These figures can definitely offer an oversight to property investors on their expectations from the real estate market.
For the average homeowner
For the average homeowner the costs come down to the mortgage amounts and rates primarily. Also, you may want to rent the house in part or full eventually. Start with an evaluation of your budget. You will also need a confirmed steady source of monthly income. Get your documents in a file and work on them to deduce the amount available for the purchase.
Also, count in the amount your must expend on maintenance, utility bills, and monthly mortgage installments. So, you need to set a bulk amount of the available money for the down payment, and ensure that a bulk is also available every month over the next few years (unless you fill in the mortgage). The professional agency can be of great help. They will help you determine the costs down to the details.