Q-My bedmate and I alone acquire about $4,000 downpayment to buy a home. We apperceive that isn`t enough, but we go to Realtor accessible houses every weekend anyway. Last anniversary we met a nice abettor who appropriate we buy a abode on a charter with advantage to purchase. It aloof so happens she has such a abode for sale. It needs lots of work, but my bedmate is a plumber and his buddies can admonition us fix up the house. The accord is we put up our $4,000 as ”nonrefundable application for the option,” and 50 percent of our account hire is accustomed against the downpayment. We acquire two years to exercise the option, but if we don`t buy during the aboriginal year the advantage bulk increases 10 percent. In accession to hire we are to booty affliction of aliment costs but not above repairs. At the end of the two years, my ancestor has promised to accommodation us any added banknote we ability charge for the downpayment to exercise the option. Are there any pitfalls of this lease-option?
A-Congratulations on award that sweetheart lease-option deal. I acquire bought and awash abounding backdrop on lease-options, including my home, and acquisition them abundant for both client and seller. However, abounding acreage agents abash lease-options because (1) they don`t acquire their allowances and (2) they get alone allotment of their agency now and the blow back the advantage is exercised.
From the tenant-buyer`s viewpoint, lease-option advantages accommodate (1)
low banknote requirement, (2) abounding or fractional hire acclaim against the bottomward payment, (3) lock-in of the acquirement bulk at today`s bazaar value, (4) lower rental payments than mortgage payments, (5) affairs the acquirement option, unless banned by its terms, and (6) time to plan how to accounts the exercise of the acquirement option.
From the landlord-seller`s viewpoint, lease-option advantages accommodate (1) college account hire than bazaar rent, appropriately abbreviation abrogating banknote flow, (2)
option bulk set at top bazaar value, (3) usually the tenant`s alleviative the home like an owner, (4) tax-free use of the advantage money until the advantage expires or is exercised, and (5) connected tax deductions for costs and abrasion during the advantage period.
A-There is no affiliation amid the allurement bulk for a home and its closing sales price. I`ve apparent abounding homes advertise for far beneath than the allurement price, but I additionally acquire apparent homes advertise for over the allurement bulk if it was set too low. Occasionally I acquire alike apparent homes advertise for their exact allurement price.
But the allurement bulk is generally the seller`s ”dream price,” which bears no accord to the home`s fair bazaar value. Back you see a home you appetite to buy, afore you accomplish a acquirement action ask the acreage abettor to adapt a accounting ”competititve bazaar analysis.” This anatomy shows contempo sales prices of agnate adjacency homes as able-bodied as allurement prices of adjacent homes currently for sale. By abacus and adding for the pros and cons of the home, you can access at an able offer.
A-Shame on me for not emphasizing the ability of leverage. The primary affidavit home buyers should accomplish a 10 percent to 20 percent banknote downpayment are (1) they can aerate their assets tax answer for mortgage absorption and (2) it is too backward to change their minds later. You are correct. I should explain the allowances of advantage by authoritative a baby home downpayment.
Q-My bedmate and I acquire over $50,000 a year, but we alone acquire about $5,000 in accumulation for a home downpayment. We apprehend that is not enough, but we can`t assume to save abundant more. Any account how we can buy a home in our situation?
A-In best communities $5,000 is not abundant for a home downpayment. However, it is affluence to pay as application for a charter with advantage to buy. Start arcade for homes in the bi-weekly classified appetite ads beneath both
”houses for sale” and, added important, ”houses for rent.” Back you see a abode you appetite to own, ask the buyer to charter with an advantage to buy. Not every buyer will accept. But owners of rental houses will be abnormally acquisitive to accept to your angle because the rental bazaar is bendable in best cities.
To anatomy a acceptable lease-option from your viewpoint, be abiding to ask for a hire acclaim against the downpayment. For example, accept the hire is $1,000 a month. You should ask for at atomic a 25 to 50 percent hire credit. If the freeholder agrees to a 50 percent hire credit, at the end of 12 months you will acquire $6,000. Alike if you acquire to pay above-market hire to get a appropriate hire credit, the added hire will be advantageous because you can`t save as fast as you will body acclaim against the downpayment.
Further lease-option capacity are in my appropriate address ”How To Accomplish Profits with Leases and Options,” accessible for $3.50 from NewspaperBooks, Box 4386, Orlando, Fla. 32802.
Q-In January we visited Florida, breadth we inspected a new acreage development project. We arrested out the developer, and he has an accomplished reputation. But we are anxious about affairs a lot in a development in which no houses acquire been built. What do you anticipate of affairs a lot for $15,000 in such a project? We would body on the lot in about 12 years back I retire.
A-Please don`t buy unless you plan to use the lot aural six months. The acumen is too abounding things can appear to change your retirement affairs aural the aing 12 years. If you assert on buying, advance alone money you can acquiesce to lose because that is apparently what will happen.
A anniversary never goes by back I don`t accept at atomic one letter, usually from a added or from a being who wants to apperceive how to advertise a lot in a retirement development. Unfortunately, best of these lots are virutally unsaleable because the buyer is aggressive with the developer who has hundreds, sometimes thousands, of aggressive lots for sale.
A-Congratulations for planning ahead. Best home buyers who pay 10 percent bottomward and access 90 percent mortgages are not acquainted of the adversity of accepting rid of the accidental PMI exceptional back their loan-to-value arrangement drops beneath 80 percent.
Most lenders will acquiesce bottomward the PMI exceptional back a new appraisement is acquired and the accommodation antithesis is beneath 80 percent of the acquainted bazaar value. But if you acquire the accident of accepting your accommodation awash to the belled Freddie Mac, again accepted rules lock you into seven years of accidental PMI premiums.
Therefore, back you access your PMI accommodation be abiding to assert on the lender`s accounting affiance the accommodation will not be awash to Freddie Mac.
Q-We plan to advertise our home in April or May. However, our backyard is rather bare. Back the acclimate gets bigger a mural artist says she can advance our backyard with new shrubs, plants and backyard with underground sprinklers for a absolute bulk of $2,450. While this bulk seems aerial to us, she says it will add at atomic $5,000 to the bulk of our home. Do you agree?
A-Of advance I can`t accord specific abundant advice, but I acquire abstruse that able agriculture pays abounding times its cost. While $2,450 seems like a lot of money, if the landscaper knows what she is accomplishing you could add several times the bulk to the bulk of your home.
I advance that you ask the landscaper for references from her antecedent audience and ask them if they were satisfied. Accepting apparent how bound and profitably landscapers can transform a property, I am an agog apostle of hiring a able mural architect.
Please note: Absolute acreage laws alter from abode to place, and laws of your breadth should be arrested afore authoritative decisions on absolute acreage problems.
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