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50 facts
about owning a home.
Home Information System™
Note: The tax information contained herein is general in nature and based on authorities that are subject to change, both retroactively and/or prospectively. Applicability to specific situations is to be determined through consultation with your tax advisor.
Homeownership is one of the most important steps you’ll ever take. It often involves buying, selling, moving and financing. To make the best decision possible, you need to know the facts and work with a qualified sales professional.
Your McCluskey GMAC Real Estate agent has effective and proven processes in place to help you find a home or sell your current residence. The Home Buying System™ is a step-bystep approach that allows you to examine your housing and financing needs even before you start looking.
The exclusive Home Marketing System™ is a well-organized strategy that is designed specifically for home sellers. This process will help bring the right buyers to your door — ultimately
closing the deal.
General facts
FACT #1 Older homes appeal to many buyers, but newer homes may offer more for the money. Newer homes are usually more energyefficient, easier to maintain and have better plumbing, wiring and mechanical systems. They have many features and accessories that aren’t found in older homes — or which could be costly to install.
FACT #2 Young people are not priced out of the housing market. Younger persons make up the vast majority of home buyers. The National Association of Realtors found the average age of first-time buyers to be 31 years.
FACT #3 Money isn’t the only thing to consider when buying a home. A house is more than just a roof over your head. It creates a sense of stability and identity for you and your family. It offers privacy, independence and selfsufficiency — needs money alone can’t satisfy.
FACT #4 Homeownership can be a good investment opportunity. Homeownership offers a combination of advantages not found in other investments: leverage, appreciation in value, financial security and the ability to use the investment (live in the home) while it’s working for you.
FACT #5 Renting does not protect you against rising occupancy prices. Rental units are just as susceptible as houses to rising taxes and insurance, utility and maintenance costs — and the landlord will pass the costs on to the tenant.
FACT #6 Homeownership enhances your overall financial credibility. As a homeowner, you prove yourself in a number of ways: you’re viewed as prudent, credit-worthy and selfsufficient when you take on the responsibility of ownership.
Facts about buying
FACT #7 You probably can get a home protection plan when you buy a house, whether it’s old or new. When you buy a new house, the builder should give you a protection plan to guard against faulty materials or quality of work. With older homes, buyers in most states can now obtain such a plan to protect them against major repair expenses and breakdowns.
Note: Ask your McCluskey GMAC Real Estate Agent about our HSA Home Protection Plan!
FACT #8 You can typically arrange better terms if you check out financing before you look for a home. Shop around for financing before you look at houses. Mortgage lenders should
be able to give you an idea of how much money they’ll lend you based on your income and credit rating. Knowing what you can afford helps you bargain more confidently with sellers. Your McCluskey GMAC Real Estate Agent can put you in touch with a loan officer at Integrity Home Loans, our in-house Mortgage Partner.
FACT #9 Quality of construction is important when you buy — even if you don’t expect to be in the home very long. You can’t afford to overlook quality of construction in a home purchase. Poorly built homes can require costly repairs and maintenance and can waste energy, too. Look for a house that works efficiently with a minimum of cost and aggravation on your part.
FACT #10 A professional inspection, before you buy, can be a small price to pay for protecting your big investment. Professional home inspections cover the house from foundation to roof, including plumbing, wiring, heating system, and so forth. The whole process takes only a few hours, and the cost is nominal when you consider what it could save you in the long run.
FACT #11 Commuting costs should be considered when making a purchase decision. Take time to calculate your commuting costs to work, school, shopping areas and recreational facilities. If your commute is very long, you’ll pay more in gasoline, as well as insurance and parking.
FACT #12 The waiting game is a losing game. If you’ve put off buying a house waiting for prices to come down, you could end up losing. While you wait, you live with less house than you probably could afford, spending money on rental payments that could be going toward your own home.
FACT #13 Your equity in a home builds faster if you assume an existing mortgage. When you assume a mortgage, you’ll probably need a larger down payment — but it can be worth it if you find an assumable mortgage on the right house.
FACT #14 It pays to look for an “anxious” seller to get the best buy. The more anxious a seller is, the more likely you are to get a better bargain. Sellers often become anxious when a house has been on the market a long time and their moving day is drawing near.
FACT #15 As an apartment renter, you may face the dilemma of either buying your unit or moving out. Owners of apartment houses sometimes convert their buildings into condominiums. Consider the option carefully. If the terms are right, you could stay where you are and start enjoying the tax benefits of homeownership.
FACT #16 A condominium purchase agreement has an important bearing on your rights — and expenses — as an owner. Condominium owners are buyers purchasing more than dwelling units — they’re purchasing a relationship with their neighbors. Owners decide how much to spend on repairs, improvements, management, recreational facilities and more. Know where you stand before you sign any contracts. Ask your GMAC Real Estate sales professional for a copy of “Condominiums: Right for Every Lifestyle.” This brochure outlines important information regarding condominium living.
FACT #17 As a buyer, the services of a real estate professional may cost you nothing. The real estate commission fee is paid by the seller. And, since a majority of homes are sold through real estate agents, the overall marketplace has the commission built in. You might save money buying directly from a seller — at the expense of viewing a choice of homes in the community.
Facts about financing
FACT #18 You can save money by shopping around for your mortgage. Rates and terms often differ from lender to lender, so check them carefully. Visit local banks, savings and loans, insurance companies and other financial institutions. Compare interest rates, appraisal fees, legal costs, points and other fees.
FACT #19 You can choose from several different types of mortgages. Today, there are many different kinds of mortgages available to home buyers. Depending on which type you choose, your interest rate, down payment requirement and monthly payment can vary greatly. Remember to ask your McCluskey GMAC Real Estate sales professional or your Integrity Home Loan officer about the mortgages available to you. Your sales professional can also provide the brochure “Ways to Finance Your Next Home” from GMAC Real Estate. It contains further details about mortgages and general financing information.
FACT #20 Government-insured home mortgages are options if you don’t have a large down payment. Government-insured home mortgages are made by private lenders. This insurance protects the lender if the borrower defaults and these loans are often assumable.
FACT #21 Mortgage terms can be negotiated. Once you’ve selected a mortgage lender, you may negotiate terms. Lenders may give you a break on items such as interest cost, down payment size, loan length or prepayment penalties if you have other accounts with them. You might also reserve the right to borrow more money at a prearranged interest rate — an option called an “open end” clause.
FACT #22 A bigger down payment isn’t always the best way to go. A bigger down payment means smaller monthly payments and a lower interest expense over the course of the loan. But a smaller down payment may allow you to invest leftover funds in accounts that earn substantial interest — and you could be dollars ahead. Do the arithmetic both ways and seek the advice of your lender on your options.
FACT #23 A short-term mortgage will build more equity for you in a shorter period of time. The shorter the term of your mortgage, the less interest expense you’ll have and the faster your debt will diminish. And, if you owe less on your mortgage, you’ll also receive more cash when you sell.
FACT #24 Interest rates on mortgages may be high, but the interest is tax deductible. In most cases, every cent of the interest you pay to the lender is tax deductible. The benefits are the greatest in the early years of a mortgage when monthly payments are made up primarily of interest cost. To understand this tax deduction, always check with your tax advisor.
FACT #25 It may not be advantageous to pay off your mortgage early. Contrary to what most people think, reducing your mortgage debt may not always be in your best interest. That extra money may be better used in your business, as an emergency fund or in another investment. And, remember that once the mortgage is paid off, you can’t get the money back until you refinance or sell your home. You have to decide what’s best for your family and your budget.
FACT #26 A prudent refinancing of your mortgage can give you valuable financial flexibility. As the years go by and your equity in the property increases, you might consider refinancing to put some cash in your pocket or to lower your monthly payments. Weigh the costs against the advantages before refinancing.
FACT #27 A second mortgage on top of a low-rate first mortgage may be cheaper than refinancing. Sometimes a combination mortgage is a better solution than a complete refinance. Your monthly payment may be higher due to the shorter term of a second mortgage, but the interest savings may offset the monthly outlay.
FACT #28 Be prepared to pay settlement costs at the closing of your new home. Closing costs can amount to a few thousand dollars and must be paid at the time of settlement — so know what these costs are before closing. They can include broker’s commissions, lender’s charges, prepaid items, taxes and other charges.
FACT #29 A lender may require you to buy mortgage insurance. If you make a down payment of less than 10 percent, you may have to buy mortgage insurance that covers the lender in case you default. Usually the first-year premium paid at closing varies according to the mortgage plan. Facts about ownership
FACT #30 You can legally seek to have your property taxes reduced. Procedures vary from city to city, but you can appeal the tax assessment on your home. If there is evidence that you’re being taxed too heavily, you may get a reduction — but only you or your attorney can take the steps to correct the situation.
FACT #31 It’s a good idea to keep an up-to-date record of your household possessions. If you ever lose your possessions due to a fire or burglary, you’ll want to have an accurate list of household items to give your insurance company. Make a written record of the items and take photographs; keep your records in a safe-deposit box or other safe place. Ask your sales professional for a copy of “Homeowner’s Inventory” to help you accurately record your possessions.
FACT #32 You can’t afford to overlook the primary tax breaks for homeowners. Currently, mortgage interest and property taxes are deductible — two items that can save you hundreds of dollars every year if you itemize the deductions on your tax return.
FACT #33 An “escrow” account with your mortgage lender can help keep your family budget healthy. Many lenders will set up a plan for you to pay an extra amount with your monthly mortgage payment — money that’s applied toward your property insurance and tax bills. The lender takes care of the bookkeeping and bill paying; your monthly cash flow remains constant so large, unexpected bills won’t disrupt your budget.
FACT #34 Utility costs can be controlled without sacrificing your comfort. Simple energy-saving improvements to your home are inexpensive — yet they can help you save on your utility bills and increase your comfort. These include insulation, weather stripping, repacked faucets, low-flow showerheads and adjustable thermostats.
FACT #35 Preventive maintenance and a reserve account for repairs and replacements can be excellent investments. Periodic checks of your home’s major systems and appliances can identify problems before they become costly. Put aside a few dollars each month to help you budget for inevitable maintenance and repair costs.
FACT #36 Over-improving your house can be a costly mistake. Improving your home can increase your living pleasure and comfort — and often help you recapture your costs later when you sell the home. But if you add too much to your house, you risk pricing it out of the market. Extreme or highly personal improvements may also discourage buyers with more conventional tastes.
Facts about selling
FACT #37 You can expedite the sale of your home if you’ve already investigated financial arrangements. Shortcut the frustration of waiting while your buyer tries to get financing. Check with your lender to see if your existing mortgage can be assumed and what financing might be available to
qualified buyers through other lenders. Consider, too, whether you’d be willing to help finance the purchase based on the buyer’s good credit rating and your financial stability.
FACT #38 A few hundred dollars for minor improvements could mean thousands more when you sell your home. Don’t let minor problems discourage would-be buyers. With the help of your sales professional and some honest friends, survey the house to see where improvements might make it more attractive to buyers. Examples include improving the landscape; repairing and painting gutters; painting inside surfaces; moving furniture to make rooms less cluttered; installing higher wattage bulbs in the rooms; and cleaning closets. Your McCluskey GMAC Real Estate sales professional is an excellent resource for other tips on merchandising your home to sell.
FACT #39 Your listing price should be based on market comparisons, not your emotional attachments to the home. The more realistic your asking price, the quicker you’ll sell your home. Talk over the features of your home and your goals with your sales professional to determine the best asking price. By following the steps in the GMAC Real Estate Home Market Analysis, we’ll help you match your goals with the best list price.
FACT #40 There’s really no “best” time to sell a house. It doesn’t pay to play the waiting game. If the housing market is strong, you’ll get a higher price for your house — but pay more for your new house. If the market is weak, you might have to take a lower price when you sell — but you should be able to get into another house affordably. The time to sell is when your family and financial circumstances determine it’s time.
FACT #41 Simple, inexpensive selling tools can help a buyer decide to sign a contract on your house. You can help your home sell faster and easier by giving your sales professional additional information that will set your home apart in the prospective buyer’s mind. For example, sketch the home’s floor plan; take photos of your home’s features; and gather information on utility bills.
FACT #42 If you reap a profit on the sale of your home, you can postpone or be excluded from having to pay income taxes on the gain. Currently, the taxes on a financial gain — such as selling your home for a profit — can be postponed if you buy a home of equal or greater value within two years after you sell. If you don’t buy another home in this time period, that profit will be added to your other income, and you’ll be taxed at your regular rate. A one-time exclusion from this taxation up to $125,000 is available if you or your spouse are 55 years old when you sell. Ask your tax preparer for a current update on this deferment/exclusion option before you sell.
FACT #43 A good sales professional earns his or her fee — and then some. You can try to sell your home on your own, but you may be overlooking the vast resources available to you when working with a real estate professional. Through the Home Marketing System, your McCluskey GMAC Real Estate sales professional offers you a comprehensive package of home-selling tools and marketing services that include:
Home Market Analysis
Family Relocation Service
Your Guide to Homes™ (a photo listing of homes)
Home Protection Plan
Buyer’s Needs Analysis
Lender Information Worksheet Facts about moving
FACT #44 Your moving expenses may provide you with a valuable income tax deduction. Currently, your moving expenses may be deductible on your federal income tax return, whether you’re an employee or self-employed. Deductible expenses include your pre-move house-hunting costs, transportation of your family and possessions, and more. Keep proper records of all expenses and check with your tax advisor to see if you qualify for the deductions.
FACT #45 You have important legal rights with moving companies. If you’re moving from one state to another, the moving company is required by law to give you the Summary of Information for Shippers of Household Goods document. This spells out what your rights are and how you can protect them. If you’re moving within your state, check with your attorney general’s office for comparable state rules.
FACT #46 In addition to the usual written estimates of the cost of a move, professional movers now give binding estimates. Binding estimates are guarantees of your final cost, regardless of the weight of your shipment. The advantage is you know your costs up front; and the disadvantage is that your costs could be lower by having the shipment weighed. Items and services added at the last minute can also change the estimate and cause delays.
FACT #47 You can save money by doing a thorough cleaning of your home before the movers come. Movers load everything that isn’t nailed down, and you’ll pay for it by the pound. Before they come, get rid of the things you don’t want or need — discard items, donate to charity (and enjoy a tax deduction) or hold a garage sale.
FACT #48 A simple purchase can help make your move a breeze. Often a moving crew will unload items wherever it seems convenient, and you’ll have to move them later on your own. Instead, buy a template at a stationery store. It’s a stencil that shows various pieces of common household furniture in cutout form. Make a floor plan of your new home and, using the template, indicate where to put each piece of furniture.
FACT #49 Moving carpets and draperies may not be worth the cost. The expense of moving, fitting and cleaning carpets and draperies may end up costing more than replacing them. The weight of the carpet also will add to the cost of your move.
FACT #50 Packing and moving yourself can save money, but it’s a big job requiring planning and effort. Do-it-yourself moving can be a real money-saver — if you’re willing to spend the time and energy. It also depends on the distance involved and the size of your load. Consider combining options: Hire a professional mover for the heavy, bulky items while you take care of the smaller, easy-tocarry cartons. Ask the moving company for the pros and cons of each method.
The Smart Move to Make™. GMAC Real Estate.
Our approach is to simplify the process of homeownership and provide you with all the services needed to do it.
• Exclusive real estate services bring you more value and expertise.
• Global relocation services move you to any destination.
• Trusted financial services add one-stop convenience.
For more information call McCluskey GMAC Real Estate 877-516-7692.
©Copyright GMAC Home Services, Inc., 2000. Photography and some text ©Meredith Corporation. All rights reserved. Printed in the USA. Most firms independently owned and operated. Availability of services may vary. Free offers may be regulated by law. If your home is currently listed for sale, this is not a solicitation for business. IN2136 GMAC is a registered trademark of General Motors Acceptance Corporation. |
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