First-Time Buyers: Go Big or Choose a Starter Home?

Buying your first home is a big step. In fact, it’s a landmark event in most people’s lives. In the beginning stages of your very first real estate transaction, everything can seem daunting. How are you supposed to know where to start? How do you know what you’ll qualify for? How do you decide what kind of house is the best bang for your buck? Before you make any decisions, you’ll need to figure out exactly how much house you can afford, followed by how much house you actually need.

Starter Home…?

The fact is that in this day and age, there’s very little chance that you’ll stay in your first house long enough to pay off the mortgage. So instead of thinking long term, you might want to narrow your thinking down to your current needs and wants. You can always expand on those later on down the road. If you’re single or part of a young family, you probably don’t need too much out of your first house. While you obviously have preferences and needs that are unique to you, most buyers looking to buy an entry-level home won’t need much beyond a two- or three-bedroom house, townhome, or condo.

There are some great benefits to buying a starter home. First, when you opt for a smaller, less customized home, your options open up a little bit. If you want to live in the middle of the city or in a very popular part of town, you might have to start small anyway to meet budget constraints. Additionally, a smaller place typically means less upkeep and maintenance. Starting small also gives you the freedom to save, build equity, and “move on up” later once you’ve outgrown you starter home. When it’s time to sell, you may also have an easier time doing so, as entry-level homes are in higher demand than larger upgrades.

…or Forever Home?

If you’re lucky enough to have great job security and income stability, and you know you’ll be in your home for a while, it might be beneficial to spend a little more and have room to grow from the start. Be aware, though, that even if you can comfortably afford the monthly payment, you’ll need to factor in other expenses like maintenance and repairs for a larger home and/or lot. While the benefits of buying a starter home are pretty great, there are also benefits to starting out with your forever home. First of all, starting small means there’s almost a guarantee that you’ll be moving out and starting the buying process all over again in just a few years. If you know you want to start a family soon and know you don’t plan on leaving the area, why not go bigger from the beginning?

Other financial considerations to keep in mind are interest rates and market changes. If you can afford to get into your “forever home” now at a lower interest rate, it might be better for you in the long run. You just never know what interest rates or the local housing market are going to look like in the next five years or so. Buying that bigger home now instead of upgrading later means you’re locking yourself in to a lower rate and mortgage payment.

The Bottom Line

You want to be comfortable and not struggle to make your mortgage payment each month. It’s important to stay within a budget that will allow you to pay your mortgage comfortably and still be able to afford the little extras you love. No one wants to be “house poor.” Sit down with your financial advisor or mortgage lender and figure out your sweet spot—that perfect monthly payment that won’t take up the majority of your paycheck. Then, instead of looking at total purchase price, think about how much you want to spend each month. That will be a big deciding factor in whether your first real estate purchase is a starter home or your forever home.

What’s the Difference Between a Deed and a Title?

Deed and title. They’re two of those real estate jargon terms everyone thinks they understand…but do they really? Some people tend to use the terms interchangeably, but there’s actually a significant difference. Let’s take a closer look.

Deed vs. Title

Deed is defined in the dictionary as “a legal document that is signed and delivered, especially one regarding the ownership of property or legal rights.” It’s an actual, physical document that is signed by both the buyer and the seller of a property.

Title, on the other hand, is “a right or claim to the ownership of property.” It’s just the legal way of saying you own a property and have the rights to use it. As a key to remembering what title means, you can associate having title of something to being “entitled” to its use.

Think of it this way. A deed is a physical legal document that confirms or conveys ownership. The title is the abstract concept of the legal right to use the property. When you buy real estate, you’ll receive the deed, the official document that gives you title to the property. Now that we have that cleared up, let’s look at a couple of other terms you should know.

So What’s a Title Search For?

Before closing, your lender will order a title search to make sure the owner has the legal right to sell the property to you. As long as the all clear is given, the seller can transfer title to you through the deed. The deed will then be recorded at the county assessor’s office or courthouse, after which you officially have the deed and title to your property.

What About Title Insurance?

Instead of insuring you against something that could happen in the future, title insurance protects you against something that might have already happened, the proof of which could arise at any time. Even though a title company has done its due diligence in declaring a title to be clear, there’s always a very small chance that something might have slipped through the cracks somewhere over the years. For instance, there could be a lien that was filed in such a way that it was easy to miss; or a distant relative or ex-spouse could claim that they have a stake in the property. Having title insurance protects you and your lender from any financial loss. While these instances are rare, they do happen from time to time. Title insurance makes it a little easier on the owner and the lender.

Do you have more questions about deeds, titles, and title insurance? Be sure to contact your trusted Johnson & Wilson Real Estate agent for a more personalized explanation!

How-To Tuesday: Easy Fixes for Layout Problems

When a house has a layout that you just don’t love, there’s almost always a way to fix it. Of course home design television shows make it seem super easy to remove or add walls, but fixing a layout doesn’t always mean blowing out walls or even building new ones. Not everyone has the time and resources to complete such projects. Even if adding or subtracting walls isn’t an option for you, there are lots of easy ways to mitigate any problems you might have with the layout of your home. Whether you want to make a wide-open space feel cozier and more formal or create more space to breathe…there’s a fix for that.

Closing Up an Open Floor Plan

Use Furniture or Architectural Features

A large bookshelf, an interesting sideboard, or a bench are all perfect pieces for creating separation within a large, open space. To separate a living room area from a dining area, try using a large table with banquettes instead of individual chairs. This is a great way to create the illusion of a distinct, more formal dining area. There are also options like electric fireplaces, columns, and sliding barn doors to cordon off certain areas.

Use Different Materials to Divide Large Spaces

Using different colors, textures, and materials on walls, ceilings, and floors can fool the mind into thinking one large space is actually made up of smaller, warmer spaces. To help visually shrink a room, use darker, more saturated paint and textile colors.

Create Vignettes with Furniture

Use furniture combined with area rugs to create separate, distinct areas. If you have a large great room, for example, try creating different “conversation areas.” You might arrange the couch and a couple of chairs around one area rug; another couple of chairs and an end table on a separate coordinating rug; and a dining table and chairs over a third rug.

Opening Up Cramped, Separate Spaces

Remove Doors and Cabinetry

Something as simple as taking down a door and door jamb between two smaller rooms can open it up by creating a view and pass-through to the other room. Items like custom built-ins and cabinetry can also be taken out to create a little more space and open things up more.

Add Windows or Skylights

Natural light will almost always help a room seem bigger than it is. Opening your home up to the outside (even if it’s through glass panels) can help stave off the claustrophobic feeling some rooms give off. If you can add more than one window, it will do a lot to help a room feel bigger. Glass-paned French doors are a good idea, or you might even try a bay window if it’s an option. If adding regular windows isn’t structurally possible, skylights are another great option for letting in natural light and opening a room up to the rest of the world.

Use Mirrors

Mirrors have always been the perfect way to trick the eye into thinking there’s more space in a cramped room. While we don’t recommend installing an entire mirrored wall (hello, 1970s dining room!), a large, decorative mirror or two will do the trick nicely. If the room is a bedroom or another room with a closet, mirrored closet doors are a good option as well.

Lighten Things Up

To help a room feel more airy and spacious, keep your decor on the lighter side. Shades of white, light beiges, and light grays do a good job of reflecting light and making things seem more open. Sticking to lighter wood finishes helps too. Use the same color on walls, trim, and the ceiling to blur the lines that define the room.

4 Times a Home Seller Can Back Out of a Deal

There are certain times when a home buyer is allowed to back out of a home sale without any consequences. These are usually laid out in contingencies within the offer to purchase a home, and they exist to protect the buyer if something doesn’t work out. Other than those specifically stated terms, a buyer always risks losing their earnest money deposit or being sued if they don’t follow through with the deal. But what about the seller? After all, the seller owns the house, so what’s keeping them from deciding at the last minute that they don’t want to sell after all? Let’s explore some of the circumstances in which a seller can back out of a deal without consequence.

The contract isn’t signed yet.

Either party may back out of a deal before the contract has been signed by both the buyer and the seller. Perhaps the seller got cold feet. Or maybe the job offer that was forcing them to move to another city fell through. There are lots of reasons a homeowner might decide not to sell, and they’re completely protected as long as they back out before the contract is ratified.

A contingency hasn’t been met.

The seller might have included a stipulation in the contract that hinges upon them being able to find another home within a certain period of time. If they are unable to find another home before that expiration date, they’re perfectly authorized to terminate the contract.

The buyer doesn’t perform.

There’s a lot of behind-the-scenes stuff buyers have to take care of before a home sale is official. If, for any reason, the buyer doesn’t perform one of these tasks by a specifically stated deadline, the seller is welcome to cancel the contract. For example, if the buyer fails to secure financing within the number of days laid out in their offer, the seller doesn’t have to wait around for them to secure a loan.

There’s a dispute over repairs.

Even though a contract is completely ratified and financing has been secured, the deal isn’t quite sealed yet. There’s still a home inspection to be taken care of. Once the home inspection has been performed, the buyer will typically present the seller with the report and ask for certain items to be repaired before closing, or they might ask for a credit to repair it themselves. If the seller feels that the buyer’s requests are unreasonable, or if they have someone else lined up to buy the home as-is, they can walk away from the deal without any ramifications.

Yes, sellers are protected under certain conditions that allow them to walk away from a home sale. If you’re the buyer, however, rest assured that your seller cannot pull out of the deal for any old arbitrary reason without consequence. Sellers who fail to perform without good reason could be sued for breach of contract or for specific performance. Rest assured knowing that there are plenty of protections in place for both the buyer and the seller in a real estate transaction.