Short-Term Homeownership: Is it Worth it?

ShortTerm Homeowner Ownership- Is it Worth it- 150x150Owning a home is most people’s life-long dream, but, between mortgage payments and maintaining the home, home ownership can be very expensive. The closing costs that you will have to pay when buying a home will be a few thousand dollars, to which you will have to add the real estate agent’s commission. Property taxes and insurance are two other costs that you will have to take into account when deciding if buying a home is the right choice.

 Home ownership is expensive, but it also has a lot to do with how long you plan on living in that home. Simply put, the longer you live in your home, the better your chances that the home will turn out to be a great investment.

The Cost of Buying, Owning and Selling a Home

Buying a home involves several costs, which shouldn’t be overlooked by anyone who wishes to become a home owner. The various fees that you will have to pay at closing will generally cost you a few thousands of dollars. Some types of mortgage loans allow you to finance these costs, but you will most likely have to pay them one way or another.

The cost of owning a home varies, but it shouldn’t be underestimated. Your monthly mortgage payment will, most likely, be your largest monthly bill. Apart from that, owning a home also requires you to pay property taxes, insurance and utilities, such as water, gas, and electricity. Your home may need repairs or improvements, which will drive the cost of owning a home much higher.

Selling a home will probably require you to hire a real estate agent, so you should factor in the real estate agency commission when you calculate how much you have to spend when selling your home. Costs for services like home inspections or credit checks are normally paid by the buyer, but there are some fees that you may have to share with the buyer.

Owning a Home for a Short Period of Time

Short-term home ownership can be advantageous, but it depends on several factors. Postponing the purchase of a home will result in missing out on tax deductions for home buyers and not gaining equity. Also, there is always the risk that the housing market can improve suddenly, which will drive house prices much higher, making it more difficult for you to afford a home.

If you plan on moving out after a short period of time, then your best choice is to develop a strategy that will protect you from losing significant amounts of money. You could, for example, find a home that is priced under market value but is in need of repairs, spend the money to repair it, and sell the home for a profit. If you can do most or some of the repairs yourself, you will save a lot of money that would otherwise be spent on a contractor.

Another way in which you can make short-term home ownership work for you is to buy a foreclosed home or a home with sellers in a hurry to sell. Of course, you will have to take many more precautions to ensure that you don’t end up with a home that needs expensive repairs.

The bottom line is that short-term home ownership is risky, and can cause you and your family to lose money. Before buying a home, you should consider all aspects of home ownership, without neglecting the amount of time that you are planning to invest in the home before selling it. Owning a home for a short period of time can also turn profitable, and be a great choice for you and your family, but you will have to do the necessary research beforehand and take all the precautions that you can.

California’s Homeowner Bill of Rights

Q&A-California's Homeowner Bill of Rights-150x150Question: What are the most important aspects of California’s Homeowner Bill of Rights?

Answer: On January 1, 2013, the California Homeowner Bill of Rights became a law. It was designed to protect the rights of mortgage consumers that have long been needed for quite some time. Its provisions are designed to guarantee transparency and fairness to homeowners especially during foreclosure. The most important aspects of the bill include:

Important Aspects of the Bill

  • Tenant Rights- The purchaser of a foreclosed home is required to give a tenant at least 90 days before instituting eviction proceedings. The owner is obliged to honor the lease in case the tenant has a fixed-term lease that became active before title transfer during foreclosure. This notice, however, may not apply if the owner proves that exceptions intended to prevent a fraudulent lease apply.
  • Enforceability- Borrowers now have the authority to seek redress in case of material violations of the new foreclosure process provisions. A borrower will be entitled to damages after a sale and injunctive relief prior to a foreclosure.
  • Verification of Documents- Lenders who record and file unverified documents will be charged a penalty of $7,500 per loan in an action instituted by the civil prosecutor. Such lenders may also face litigation from the Departments of Corporations, Financial Institutions and Real Estate.
  • A Guaranteed Single Point of Contact- Under this bill of rights, homeowners are guaranteed a single point of contact, a specified team at the bank or person who is familiar with the facts of their case as they try to maintain their homes. This makes access to paperwork and an application for a mortgage loan modification very easy.
  • Dual Track Foreclosure Restriction- The California Homeowner Bill of Rights restricts mortgage servicers from starting the process of foreclosure when the homeowner in question is seeking a loan modification. If a homeowner has applied for loan modification, the foreclosure process will not proceed until the application has been reviewed.
  • Blight Curbing Tools- The bill has given receivers and local governments more tools to enable them to fight the blight caused by vacant homes in the neighborhood. This is aimed at ensuring that foreclosed homeowners are compelled to pay for the required upkeep in case they violate provisions of the mortgage code.
  • Mortgage Fraud Prosecution Tools- The bill has given the Attorney General the power to prosecute complex mortgage related crimes between 1 and 3 years. The AG’s office will be using a grand jury to investigate, prosecute and indict financial crime perpetrators.