How does one choose between buying and renting?

When is the best time to buy?

What are closing costs?

What are, and why do we pay, property taxes?

Are property taxes deductible? What about taxes on second homes or investment properties?

Do I need a home inspection?

What is an appraisal?

What is the difference between an appraisal and a home inspection?

What exactly is PMI and how can I get rid of it?

Which home renovations add the most to the price?

How does one choose between buying and renting?
While homeowners have the freedom to make decisions regarding their property, most renters do not worry about maintenance and other financial obligations associated with property ownership. Homeowners that secure a fixed-rate mortgage, are better able to plan financially because monthly housing expenses will not increase dramatically. This way, wise investments can be made, and, hopefully, yield long-term profits on the initial investment.

However, such returns depend on value appreciation. Aside from maintenance costs, the monles paid to the lender is usually greater than the total amount paid in rent. To determine whether a property is a long-term investment, prospective buyers should spend some time investigating potential communities or neighborhoods.

When is the best time to buy?
Here are some great reasons to buy.

• You need a tax break.
• The mortgage interest deduction can make home ownership appealing.
• You plan to use the property long enough for any appreciation to cover your transaction costs.
• you want to own, not rent.
• You can afford it.

What are closing costs?
Closing costs are the fees for services, taxes or special interest charges that surround the purchase of a property. They may include upfront loan points, title insurance, escrow charges, document fees, and prepaid interest. Unless these charges are included in the loan, they are paid at the closing.

What are, and why do we pay, property taxes?
Property taxes are the annual fees that property owners pay for owning real estate usually 1.5 percent of the property's current market value, although they are calculated in many different ways. The county or local government uses the money to help fund public services.

Are property taxes deductible? What about taxes on second homes or investment properties?
Property taxes on all real state transactions are deductible against current income taxes. Interest and property taxes are deductible for second homes if expenses are itemized. The best advice to follow can be provided by your accountant or tax adviser.

Do I need a home inspection?
Absolutely. For example, roof, plumbing, and electrical repairs are major problems and can amount to tens of thousands of dollars or more. Think twice before signing a contract to purchase property " as is".

What is an appraisal?
An appraisal is a thought process leading to an opinion of value. This opinion or estimate is arrived at though a formal process that typically uses the three "common approaches to value". They are the cost approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. There is the Sales Comparison Approach -which involves making a comparison to other similar, nearby properties which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of value for a residential property. The third approach is the income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.

What is the difference between an appraisal and a home inspection?
The appraiser is not a home inspector not does he/she do a complete home inspection. An inspection is a third - party evaluation of the accessible structure and mechanical systems of a house, from the roof to the foundation. The standard home inspector's report will include an evaluation of the condition of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floor, windows and doors; the foundation, basement, and visible structure.

What exactly is PMI and how can I get rid of it?
PMI stands for private mortgage insurance. It insures a lender against loss on homes purchased with a down - payment of less than 20%. Once equity in the home reaches 20% you can eliminate the payment and start saving immediately. For a detailed discussion of PMI and how to get rid of it click here: What is PMI and how to get rid of it.

Which home renovations add the most to the price?
The answer to this is different depending upon the location of the home. Different markets value amenities differently. Adding a central air conditioner in Houston, Texas may add significant value while putting one in a home located in buffalo. New York might not have much impact.

As a rule, the most value returned from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms were second, returning 85%.