Southern NH Real Estate Answers

A few tips for FHA or USDA financing…

FHA (First Time Home Buyer) and USDA (United States Department of Agriculture) Rural Redevelopment are two government programs that encourage home ownership by offering little or no money down financing.  In order to qualify for this financing the buyer not only has to qualify, but the home itself also has to meet specific standards and qualifications as outlined by the program - here are a few things to keep in mind:

1.    Make the most out of your real estate agent. Before you see any property make sure your agent has talked to the listing agent and let them know you are going with an FHA or USDA loan. The listing agent will be sure to reveal any potential problems with either loan (they don't want to waste their time with a deal that won't go through either).

2.    Do some homework yourself. USDA loans cannot be in flood zones, if you need a 0 down loan, you can't get one in a flood zone. Check out floodsmart.gov and see if it's in a flood zone before you look at it.

3.    FHA and USDA financed properties need to meet certain standards before your bank will give you a loan for them. Any big problems like a bad foundation, bad plumbing, electrical repairs needed, leaking roofs, even PEELING PAINT can kill your deal.

4.    In a normal private sale minor repairs are not a huge obstacle because you can get the seller to take care of the. BUT, if you're looking in the bottom of the market, you are probably finding a lot of REO (bank owned) properties. Banks are usually very unwilling to do repairs or allow anyone else to do the repairs.

What can I expect to pay for home improvement expenses after I buy a home?

 

First, let’s get our definitions straight:  Home maintenance and repair projects are projects that need to be done to maintain the integrity of your home.   They include areas like roofing, furnace maintenance, windows, exterior painting and electrical. These projects need to be addressed first in order to efficiently run the home without jeopardizing safety or energy use.  Once these projects are taken care of, it is then time to take a look at home improvement projects in other areas in the home.  By definition these projects include anything done to improve the look or function of your home, but are not strictly necessary for its maintenance, integrity, or occupancy.

 

Kitchens and baths are among the top rooms people consider for remodeling first, and are often improvements considered as buyers shop for a home.  Buyers also often explore the possibility of making smaller rooms bigger, or making other additions on to the existing structure.  In the warm weather months or climates, improving the landscaping is another high priority for many new home owners.  All of these improvements are personal choices, not necessary changes, that were most likely planned on or made prior to a home purchase – but what is a reasonable amount of money to spend making a home “your own”?

 

The National Association of Realtors Profile of Buyers has gathered data to best help answer the question of what to expect for home improvements once the home is purchased.

·         The typical buyer spent $4350 on home improvement projects within the first three months of their home purchase.

·         Repeat buyers typically spend more than first time buyers; $5330 compared to $3070.

·         28% of first time buyers spend less than $1,000 on home improvement projects.

·         Buyers who purchase new homes typically spend slightly more than those who purchased previously owned homes.

·         Home buyers who plan to stay in their homes for one year or less spend the most money on home improvement projects within the first three months, $5830.

It would be prudent to examine your list of desired home improvements and identify those that may qualify for a tax credit.  Tackling these projects first may help you have the necessary money to tackle other projects in the future.  Please consult your tax accountant before expending any money – you may even find that you can afford to tackle a project that you would have thought too expensive, or even become aware of improvements you could make that would save you money in the long run.  For example, new laws provide tax credits for making your primary residence more energy efficient. You may want to consider these improvements as an advantage over others that do not qualify in the same manner.

Ultimately, what you spend on home improvement projects is a personal decision - but a little homework can let you know if the changes you may make to a newly purchased home are reasonable as compared to market trends.  You may also save yourself some money by prioritizing projects for maximum tax benefits, or even energy efficiency.

 

 

Suzanne Damon

Member of the Greater Manchester-Nashua Board of Realtors

Can a contract to sell a house be broken?

You may want to consult with an attorney first to gain counsel on weather of not the penalty for breaking a contract is worth it to you. Any contract can be broken. The penalty for doing so may be more costly than you would like. Look at the purchase agreement you signed & see the terms you agreed to under the ‘default’ section. If you are talking about a listing agreement with a real estate agency, there might be a clause that speaks to this there also.