Many baby boomers that have retired are now investing in a vacation property in the US or want to live in a new environment. While it will be exciting to own a home in another place, there are still many traps/challenges that may turn this enjoyable experience into a problem-filled one. Prospective homebuyers need to do their homework when looking to buying a home in the US, for example, they need to research the market in which they’re considering purchasing a home, then recheck their finding as you’re about to place a deposit. A bad home purchase decision could result in the loss of tens, and in some cases, hundreds of thousands of dollars. Before you purchase a home in the US, here are some valuable tips that will assist you in making the decision:
Perspective Home Buyers: Do Your Homework:
1. Consider Purchasing a Smaller Space: When purchasing a home, it is not important to focus on how much you can afford, but the space of the home must also be considered. For example, if the housing market recovers, the $500,000 home your interested in is able to appreciate into $700,000. However, if your local housing market depreciates, than that home you are interested in could be worth $400,000 or less. This indicates that you’ll struggle to recover from your initial investment. Lesson: Consider taking on a smaller space in order to minimize your risk.
2. Research the Town/City/County: Have you researched and evaluated the local economy of the town, city, or county your prospective home is in? If the local economy you could potentially live in is strong, it is likely to experience job growth, which will benefit the value of your home. Research the local economy carefully. Determine what the major industries and their prospects are.
3. Don’t Buy the Best House in the Neighbourhood: Are you about to buy the best house or almost the best house in the neighbourhood? Today’s housing market allows you to choose everything you want and do it right from a home purchase research standpoint. One key research item is the value of your home, along with others on its street and in your potential neighbourhood. This is because a sub-par neighbourhood can decrease the value of your home and can also make it harder to sell in the future. Ideally, you want a house that is in the middle, value wise. Lesson: Evaluate two houses to the left, two houses to the right, and a few across the street. If most are in worse condition than the one you’re considering, skip it, and evaluate another house in a different neighbourhood.
4. Are You Prepared for an Interest Rate Negative Feedback Loop?: Before you make a deposit on the home you’re purchasing, make sure you re-research the neighbourhood/town/city, and market you’re interested in living in. This would apply if you’re purchasing a smaller home in an upper-income or luxury neighbourhood. Make sure the home and neighbourhood is not above the median price for single-family home. If the interest rates increase, this will affect the amount of finance it will take and how it will affect the value of your home. This is called the interest rate negative feedback loop, and it can quickly turn your $1 million home into a $750,00 one; or an $800,000 home into a $600,000 one. Point: There’s nothing wrong with buying a nice home, just make sure the neighbourhood you have chosen to liven in is not priced higher than the median home price.
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