Frequently Asked Questions
Questions About Buying
Homes absolutely depreciate. As a physical asset, time takes its toll on any and every home on the market. The house itself, the physical structure that you built or bought, is a depreciating asset, just like a car. It will age and fall apart over time unless you are constantly pumping money into it for maintenance. And the costs of maintenance and repair are expenses. Even when you pay off the mortgage, you will have costs to maintain, insure, and pay taxes on the value of that home. So the bigger the physical house, the more it will cost you to keep it. That’s a fact.
Now you might be thinking, “but houses do go up in value, so how do you explain that?” Yes, they can as long as the region where you live is growing economically and you continue to maintain the home. If your region is growing, housing over the long term will roughly increase in price along with wage growth.
The simple answer is that it depends. Ultimately, only the buyer can determine the value of a home, and that varies from buyer to buyer. One buyer may perceive certain qualities as more valuable than others. The year built is just a number and doesn’t represent the whole package. The age of the major home expenses, the quality of the construction, the land/location, and the overall costs all need to be compiled together to evaluate value.
When thinking about what type of home is right for you, it is important to note that older homes typically sell for significantly less than a newer home would. In fact, according to a recent article in the Wall Street Journal, new construction comes at a 10-20% premium over older homes. Also, a newer home will cost more to purchase, but remember that it can also sell for more later on down the road–that could be a valuable attribute for some. However, to purchase an older home at a significantly lower price per square foot is also a great value, and there is huge potential for increasing value through upgrades.
A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. Because securities exchanges only accept orders from individuals or firms who are members of that exchange, individual traders and investors need the services of exchange members. Brokers provide that service and are compensated in various ways, either through commissions, fees, or through being paid by the exchange itself.
In Real Estate specifically A broker is a real estate agent who continues their education and successfully receives a state real estate broker license. Unlike real estate agents, brokers can work independently and start their own brokerage and hire other real estate agents.
It’s possible to avoid escrow and pay your own taxes and insurance under certain circumstances. This will make your monthly mortgage payment lower, but you’ll have to make separate payments for property taxes and homeowners insurance.
If you’re buying or refinancing a home, you may be able to opt out of having an escrow account, but in certain instances, your mortgage lender or the rules of the state you’re in may require you to have a certain amount of equity or a minimum down payment. In some cases, how you occupy the property may matter as well.
The entire mortgage process has several parts, including getting pre-approved, getting the home appraised, and getting the actual loan. In a normal market this process takes about 30 days on average. During high-volume months, it can take longer—an average of 45 to 60 days, depending on the lender. If the lender uncovers any financial issues in your record (e.g., a low credit score, previous foreclosure, or overwhelming debt), getting a mortgage can become a slower and more complicated process.
Questions About Renting
Landlords are allowed to raise the rent once the lease has expired. If you decide to stay in the same house or apartment once the lease is up, you should read your new lease carefully and make sure the rates haven’t gone up. If they have, see if you can negotiate with your landlord. If you are renting on a month-to-month plan, then rent increases are more likely to occur. In this case, landlords can raise the rent every month if they wish. But it’s important to note that many states require a 30 day notice before the rent is officially raised. This will give you time to find a new place if you cannot afford the new rent price.
The security deposit is a set amount of money that the landlord takes from you as collateral for the structural integrity and cleanliness of the house. In other words, this money is set aside by the landlord to inspire tenants to take good care of their rental property, and if you don’t, it gives them the opportunity to recoup those losses.
However, if you keep the house in good condition and don’t inflict any damages on the property, then you will get your security deposit back at the end of your lease. To ensure that there are no misunderstandings between you and the landlord, be sure to take inventory of any wear-and-tear you see when you move in, preferably via photo. This way no pre-existing damages can be mistakenly blamed on you and you can get your security deposit returned fair and square. Generally, landlords are required to return the security deposit 30 days after the lease ends.
It is very important to know the difference between these two terms, as they will determine how long you’ll stay at a place and sometimes even the rent price. A fixed-term lease is an agreement that states the tenant will remain in the apartment or home for a pre-determined amount of time — usually a year. Month-to-month leases also tend to have higher rent prices because the landlord is not guaranteed income for the next month. Unless you are in a precarious or time-sensitive situation, it’s often a better financial call to go with the fixed-term lease.
Making simple aesthetic changes, like swapping furniture, is not a problem (unless you rented a furnished space). But if you want to make changes to the property itself, like painting or mounting some shelves on the wall, you will need to check the terms of your lease. Many landlords have a clause in the lease requiring written permission, so even if you receive verbal permission from your landlord, be sure to cover your butt and get a written document specifically telling you what you can and cannot do.
Foregoing landlord permission can leave you with a financial mess at the end of the lease term if you aren’t able to reverse all of the changes. It’s much easier to be straightforward with your landlord and simply ask what kind of changes you’re allowed to make.
Subletting entirely depends on what is stated in your lease and your local tenant laws. Some landlords welcome sublets and others would rather not deal with the complications, but in some areas, regardless of what your lease states, your landlord cannot forbid you from subletting. If you have any questions, be sure to ask your landlord. If you find someone to sublet your room/living space, be sure to inform your landlord of the tenant change. Keeping open communication is essential on this issue.
