When you sell or purchase a home, its appraised value is based largely on recent sales of similar properties nearby. Looking at recent sales can help you better understand the value of your own home or one you may someday hope to purchase.
Here’s an online resource that will allow you to check sales prices in your area. Listed transactions are up to one year old and fall within a maximum three-mile radius of the address you search. You can follow the link next to each property to see more details.
If you find this resource useful, I invite you to share it with others. When you have questions about home values or home financing, please reach out. I’ll be glad to help.
In order to save up a huge amount of cash for the down payment on your first mortgage, you need a solid savings plan!
When you take out a mortgage on your new home as a first time homebuyer, the more you can pay as a down payment the better. The down payment on a mortgage reduces the principle of the loan and means that you will be paying tens of thousands less in interest payments over the life of the loan.
Most financial experts recommend that you should save up at least 20% of the value of the home as a down payment. Depending on the value of the home that you want to buy, this can be a serious chunk of money.
The conventional saving tricks of skipping your morning latte and eating dinner at home just aren’t going to cut it when saving up this much money! You will need some strategies for saving big.
Here are some tips to help you get closer to that down payment:
Make A Separate Savings Account
No matter how much you have already saved for your down payment, create a new savings account to put the money in. When the money is in your personal account it is so much more tempting to spend it on day to day expenses. Also, a savings account will give you a better rate of interest so that you can help you money grow.
Pay Off Your Credit Cards First
If you have credit card debt, you will be paying interest charges to the credit card company every month. These charges can really add up, especially if you are only paying the minimum on your loans. If you can pay down this debt you will have extra money every month to put into your savings instead.
Get A Part-Time Job
If you want to accelerate yourself towards having your down payment saved up, you could consider taking on a part-time job in addition to your full-time job on a few evenings and weekends.
It doesn’t have to be something that you do forever, but even sticking with it for six months to a year will give you thousands in extra income that you can put straight towards your down payment.
Make A Backwards Budget
Do you find that after you have paid all of your bills and your living expenses, there is nothing left over to save? Rather than calculating all of the money that you use on your monthly expenses and then saving whatever is left afterwards, why not make your budget the other way around?
Start off with how much you want to be able to save per month then subtract that amount from your net income. The number you have left is what you have to live off.
You will find that you naturally change your habits to make this amount of money work for you and if it if not enough you can increase your income by getting a side gig. These are just a few ways that you can save up for a down payment on your first home in order to save money over the years on your mortgage.
An open house gives you a great opportunity to look more closely at real estate you might be interested in buying. It also affords you the chance to chat with the owner or real estate agent so you can bring up any issues or hesitations you have with the home.
Knowing what to ask can be difficult, so below are examples of questions to ask at the next open house you attend.
Why Has The Seller Decided To Sell Now?
If you ask why the seller is moving, you could learn valuable information to help determine your offer or possibly whether or not you want to buy the home.
Knowing whether the owners are about to go into foreclosure, have experienced trouble in the neighborhood, or if they’ve retired and completely paid off the home can help you understand how urgently they need to sell their property.
Has The Seller Had Any Other Offers?
Don’t forget that you are not only negotiating with the seller for a price, you are also competing with other potential buyers. It really helps to know what you are up against.
It is important to understand that you might not get a 100% straight answer to this question as most sellers know that competition or perceived competition can cause a potential buyer to move forward more quickly and at a higher price.
If you’re comfortable in this discussion, you might want to try and see if you can find out the details of any other offers.
Does The Property Have Special Ownership Costs?
Ask the agent or owner about the other costs associated with owning the property, such as Home Owners Association fees within a condo complex or a gated community. It’s important to know about these extra expenses in advance so you can make an informed offer.
You may also want to ask about any pending litigation concerning the property. Litigation is not always a deal killer, but it’s better to know the details before you sign closing documents.
What Furniture And Appliances Are Being Sold With The House?
Most of the time, a seller will include their major appliances such as the refrigerator, stove and dishwasher with the home, but this isn’t always the case. If you don’t already have these items, it’s important to know whether they are included in the purchase price.
Is There Anything Else That You Want To Leave With The Home?
This is an important question to ask. Especially if there are specific things in the home that you have a strong interest in. Perhaps there is custom art work or a pool table that fits perfectly in the game room.
The seller may be eager to part with those items and include them in the sale of the home or sell them at a large discount. The open house is a great opportunity to learn more about a home before making the decision to buy it, so be sure you ask the right questions.
When you already have a home, you may be interested in determining if a refinance is a good option. You will not have to worry about restrictions on down payments or some of the problems that can occur with a down payment.
However, if you are considering purchasing a home in or the surrounding communities, understanding down payment restrictions is important.
Gifting Of A Down Payment
There are some programs that will allow you to use a gift for your home down payment. However, before you assume this, make sure you talk to your loan officer. Generally speaking, the lender will require the person making the gift to provide a letter stating the money was a gift and does not require repayment.
Windfalls Of A Down Payment
When people hit the lottery or come into money through an inheritance, one of the first things they may consider is buying a new home. However, it is important to keep in mind that lenders will typically want to know exactly how you came up with your down payment.
Borrowers still need to show a “trail” of how they came into money. If your down payment amount has not been “seasoned” the lender may not accept your loan.
What Is A Seasoned Down Payment?
Generally speaking, your loan officer will want a “paper trail” to document your down payment. Most lenders require down payment funds to be at a minimum six months old.
For example, let’s assume a borrower did win the lottery: If they deposit the funds into their checking account and leave it there for six months or more, the funds would be considered seasoned.
Lender restrictions on down payment funds are fairly common. If you are uncertain if your funds meet the lender’s criteria, talk to your loan officer. In most cases, a lender will require at least one-half your down payment fall into the category of seasoned funds.
Some borrowers may use their retirement account or other savings to make their home down payment.
Don’t wait until the last minute to discuss your down payment with your loan officer because you may wind up disappointed. Keep in mind, every lender has different requirements and these rules may not apply to your lender.
In honor of the Southern Maine Spring Market and all the new buyers, I thought it would be helpful to review a standard checklist on what to expect when purchasing a home in Maine. Depending on the location and type of property will determine the finer details of purchase. For this article, I will present a general checklist for buying a single family home:
Begin by understanding your finances – you will need to know what you can afford to pay monthly as well as determining how much money you will need for a down payment. Prepare a monthly budget to put everything into perspective. This budget should include EVERY expense each month.
Choose your Realtor – you want to choose a Southern Maine Realtor you trust. The cost to a buyer for their service is “FREE” and they will represent you and your best interest throughout the transaction. In many cases, your Realtor can refer you to a mortgage broker as well as other vendors throughout the entire transaction, this becomes your “Team of Professionals” that will help you along the way to successfully purchase a home you feel comfortable with. The Realtor acts as the “conductor” of the entire process from beginning to end just like in an orchestra.
Get Pre-approved before you start looking for a home – understanding what you can afford before you step into a property will make the process more smooth and straightforward.
Look for a home – after meeting with your Realtor, you now should have determined what your want, how much your willing to spend and where you want to look. Start house hunting!
Make an offer – working closely with your Realtor, they will help you understand what the best strategy is to offer on the property based the most recent sales in the area.
Under Contract – this is the most exciting moment for the buyer! Your Realtor will guide you through the all the timeframes that are important within your contract.
Inspection of home – by now, you are anxiously wondering what condition the home you are about to purchase is REALLY in. Your Realtor should be able to have a preferred vendor list ranging from home inspectors to air/water testing and everything in between when it comes time to inspect the home.
Obtain Homeowners Insurance – it is best to get a few quotes from various companies to get the most affordable and best coverage for your new home. Your Realtor should have referrals for you.
Pack and Move – If you plan to use a moving company, secure this early on in the process so you know how much you are going to pack and how much the company will pack and set the date. The rates vary depending on how much you pack yourself.
Final Walk Through – either 24 hours or an hour before the day of closing, walk through the home to make sure it is in the same condition it was when you last viewed it and all the repairs have been completed to your satisfaction, if applicable.
Closing – Once the title company receives your loan documents, you will receive a HUD statement which reviews in detail your fees and then amount of money needed for closing. In most cases the money need to close must be in the form of a cashiers check, so make sure you allow time to go to the bank prior to going to the closing. Your Realtor will arrange with the title company the day and time of closing where you will sign the loan documents.
Congratulations, you are now a home owner – After signing the documents, you get your keys and move in! If there is any personalization you want to make to the home, its best to do it prior to moving in if possible.
As I have said since the beginning, please call a local Maine REALTOR for all your real estate needs no matter how big or small. We are trained professionals here to make your life easier. It’s best to surround yourself with the right team of professionals that can continuously give you the right advice for all your circumstances.