The considerations for buying homes
Wednesday, 12 November 2008
FE report
The annual fair of the Real Estate and Housing Association of Bangladesh began on Tuesday. Like previous years, the developers expect brisk business during the three-day fair despite the economic outlook in the country as well as the world.
They based their expectations out of predict this from their previous experience with the domestic market. And, of course, the market hardly favours the buyers. The buyers are left with little options to prove the sellers wrong.
The people naturally nurture the dream to own a shelter. Buying their first home is a big challenge. The buyers usually have to consider many things before finalising the purchase. Looking for right first home starts with the price range. They have to short list from what is on offer. They have to consider many other factors before investing in their shelter.
Experts suggest that first of all, do not forget the current household budget to evaluate one ability to make mortgage/loan payments. It is better to talk with family and friends about finding experts, like a lawyer and an inspector, who can help with the home buying process. Next is to think about lifestyle and how it might affect choice of a home or the neighborhood. Finally there is a need to do a little research on current home prices in different neighbourhoods where one plans to buy.
There is no doubt that buying a home is a good investment. Even if housing prices don't continue to increase at the torrid pace seen in many areas, buying a home can be a good financial investment. The consideration of mortgage payments forces people abroad to save to own a substantial asset that can be converted into cash to get the fund for retirement or a child's education. In some cases, there are tax benefits.
Though in other countries, real estate prices can fluctuate considerably like many other investments, it is however not the case in our country. So bargain and relationship with the developers are the best ways to deal the prices for the buyers.
According to experts, the housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, monthly housing cost should not exceed 28 per cent of monthly gross income of a person. They suggest that total monthly debt payments, including basic housing costs, should not exceed 36 percent. These are monthly payments on student loans, installment loans, and credit card balances.
Citing example of developed countries, they say that the 28 per cent to 36 per cent debt ratios assume a 10 per cent down payment. With down payments more than 20 per cent generally buy at better rates. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
Usually people get frustrated when they cannot meet the lenders qualifications. But it helps the people negotiate a lower purchase price in alternative location.
In addition to loan payments, there are other costs associated with home ownership. Utilities, property taxes, repairs, insurance, services and replacement of appliances are the major costs incurred.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Though theoretically many other suggestions may help a buyer to get a well managed home but they cannot go for it due to lack of proper housing market. The critics say that the price of housing rise without any solid ground mostly in the capital city. Price gaps between old and new homes are also very narrow. A neighbourhood with school and other services is more attractive than others. But crime rates, taxation, transportation facilities and town services can be major factors for selecting an area.
* Buying a home can mean building significant value through the years.
* Think carefully about how much you can afford to spend and consider borrowing guidelines.
* Pre-qualifying with your lender is a good way to determine how much house you can afford.
* You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly installment payment.
* In addition to your payments, need to consider the other costs of home ownership.
* Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
* Remember to consider resale value when buying your home.
The annual fair of the Real Estate and Housing Association of Bangladesh began on Tuesday. Like previous years, the developers expect brisk business during the three-day fair despite the economic outlook in the country as well as the world.
They based their expectations out of predict this from their previous experience with the domestic market. And, of course, the market hardly favours the buyers. The buyers are left with little options to prove the sellers wrong.
The people naturally nurture the dream to own a shelter. Buying their first home is a big challenge. The buyers usually have to consider many things before finalising the purchase. Looking for right first home starts with the price range. They have to short list from what is on offer. They have to consider many other factors before investing in their shelter.
Experts suggest that first of all, do not forget the current household budget to evaluate one ability to make mortgage/loan payments. It is better to talk with family and friends about finding experts, like a lawyer and an inspector, who can help with the home buying process. Next is to think about lifestyle and how it might affect choice of a home or the neighborhood. Finally there is a need to do a little research on current home prices in different neighbourhoods where one plans to buy.
There is no doubt that buying a home is a good investment. Even if housing prices don't continue to increase at the torrid pace seen in many areas, buying a home can be a good financial investment. The consideration of mortgage payments forces people abroad to save to own a substantial asset that can be converted into cash to get the fund for retirement or a child's education. In some cases, there are tax benefits.
Though in other countries, real estate prices can fluctuate considerably like many other investments, it is however not the case in our country. So bargain and relationship with the developers are the best ways to deal the prices for the buyers.
According to experts, the housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, monthly housing cost should not exceed 28 per cent of monthly gross income of a person. They suggest that total monthly debt payments, including basic housing costs, should not exceed 36 percent. These are monthly payments on student loans, installment loans, and credit card balances.
Citing example of developed countries, they say that the 28 per cent to 36 per cent debt ratios assume a 10 per cent down payment. With down payments more than 20 per cent generally buy at better rates. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
Usually people get frustrated when they cannot meet the lenders qualifications. But it helps the people negotiate a lower purchase price in alternative location.
In addition to loan payments, there are other costs associated with home ownership. Utilities, property taxes, repairs, insurance, services and replacement of appliances are the major costs incurred.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
Though theoretically many other suggestions may help a buyer to get a well managed home but they cannot go for it due to lack of proper housing market. The critics say that the price of housing rise without any solid ground mostly in the capital city. Price gaps between old and new homes are also very narrow. A neighbourhood with school and other services is more attractive than others. But crime rates, taxation, transportation facilities and town services can be major factors for selecting an area.
* Buying a home can mean building significant value through the years.
* Think carefully about how much you can afford to spend and consider borrowing guidelines.
* Pre-qualifying with your lender is a good way to determine how much house you can afford.
* You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly installment payment.
* In addition to your payments, need to consider the other costs of home ownership.
* Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
* Remember to consider resale value when buying your home.