Home Ownership

Ownership of your own home has taken a hit in recent years, but if the buyer approaches it with care, home ownership can be an excellent move toward financial security.  The necessary “homework” falls into several critical categories.

Before You Buy

Buying a home is complicated. Most people need a mortgage to buy a home.  Find out how much you can afford and shop for the best terms.  Next, educate yourself about home values in your chosen area.   Negotiating the best possible terms with the lender and the buyer may require a loan broker and a real estate agent.

Know your legal rights. Equal access to homeownership opportunities without discrimination is the law under the Fair Housing Act and other federal laws, as well as under various state and local laws. The Real Estate Settlement Procedures Act (RESPA) requires that homebuyers be given disclosures at various steps along the way, and it prohibits kickbacks.

As an Owner

The most important things you can do to protect your investment are maintaining adequate homeowners insurance, keeping your home in good physical repair, and being a good member of the community and of any homeowners’ association (HOA) that may cover your property. 

Inspect hidden areas of the house and be proactive about small problems, like little leaks under a sink or gaps in the caulking around windows. Those small annoyances can become major problems, including mold or rodent infestation.  To lower utility costs, upgrade your home’s systems, such as insulation, heating, and air conditioning, when you can afford to do so.

Do not neglect the landscaping and curb appeal of the exterior of the house.   Be a good neighbor.  Keeping an eye on nearby properties and even participating in a neighborhood watch organization can reduce crime and protect property values.

Know your limits.  Botched improvements and repairs can cost more than hiring a professional in the first place. Do not make changes to your home without obtaining necessary building permits and HOA approvals.  Failing to comply with local building codes, zoning laws, or private covenants can prove costly.  Keep careful records of your repairs and upgrades, with copies of permits and warranties.  Even if you never have a problem, these records will be helpful when you want to sell.

Timely payment of your mortgage and real estate taxes must be a top priority. Late payment can result in penalties and liens that reduce your equity in your home. Be aware of trends in mortgage rates.  You may be able to refinance and lower your monthly payments. Keep a financial reserve.  Major expenses, like furnace replacement, can hit unexpectedly and are almost never covered by insurance.  If you find yourself in financial trouble, seek help immediately to avoid foreclosure.

Time to Move

Older people sometimes consider putting their homes in the names of their children, in the hopes of avoiding probate or taxes, if they are having trouble paying home-related expenses. Or they may have the mistaken belief that not owning a home will enable them to get a governmental program to pay nursing home costs.  This is almost never a good idea and can be disastrous.  Consult an attorney or consider a trust to deal with inheritance and nursing home issues. Investigate a reverse mortgage or consider selling if financial issues make ownership too difficult. Selling a home is stressful, but if you have kept good records and maintained your home, it will be easier.