The price of a house has many contributing factors on how much it should cost. For example, factors like the location, amount of square feet, any visible defects, down payment, buying down interest rates, homeowners insurances, monthly mortgage payments, property taxes, number of bedrooms, your credit score, the inspectors charge, the real estate agents charge, etc.
The first thing I considered when looking for a house is the location. The location is very important due to wanting to feel as safe and comfortable as possible. Places nearby like adult entertainment spots, tattoo parlors, or an airport nearby houses are considered large indicators of a high-crime area. Many key points may make an area be considered dangerous or a "poor location". There are many factors in which the price of the house won't get top price because buyers will "discount" the location if any of the following are included; any place adjacent to any active railroad tracks, near an environmental or waste dump, downwind from a manufacturing plant, the house being built on any swampy soil, etc. Just like there are reasons as why to the price of a house may decline, there are also reasons as to why the price may alter. Updates and upgrades have a big change on the prices. A new roof recoups more than 80% of its value when the home is sold. The most modern and important upgrades are kitchens and bathrooms which receive a boost in the total amount. Also, steel entry doors and manufactured stone increase the price a lot. There are three main attributes as to why a home's price may alter, the proximity to a school, proximity to work, and the proximity to any place with entertainment or shopping. Getting a house that has one of the three main attributes won't boost the price per square feet dramatically. Although, getting two of the three attributes may have a stiff competition and increase prices. Including three of the three might need a small "war chest" to finance your home buying exploits. Due to these attributes, I have decided that buying my home near a school is not necessary because of all the traffic I will receive due to parents picking up and dropping of their children. Thus, meaning I don’t need my job to be close to my house because I will not be receiving as much traffic as I would have with the school nearby. Finally, shopping and any entertainment isn't necessary but would be enjoyed if they were close by although it would increase the probability of traffic as well as any adjacent active railroad tracks. Thus, coming to my conclusion that all three of the attributes that may increase the price of my house are not necessary and would preferably choose a place where it was not built on swampy soil, there are no adjacent or nearby railroad tracks, no environmental waste dump, and a downwind from manufacturing. Also, a new roof, upgrades in the kitchen and bathroom are a big factor included on what I want in my house because that way later on I will no longer have to worry about problems with the roof and I will not have a struggle going to change anything in the kitchen or bathrooms and a steel entry door is not necessary.
Different amounts of down payment affect the loan. Down payments are money you give to the homes seller. The rest of the payment to the seller comes from your own mortgage. Down payments are expressed as percentages and a down payment of at least 20% lets you avoid mortgage insurance.it is required as insurance of not losing that money if you can't make the house payments and thus making you end up in foreclosure. Thus, coming to the conclusion of getting a home with at least 20% or higher if possible in order to avoid mortgage insurance.
A buying down rate can lower your monthly mortgage payments and are fees paid directly to the lender at closing in exchange for a reduced interest rate. For example, 1 point costs 1% of your mortgage amount or $1000 for every $100,000. I have decided to pay some interest up front in exchange for a lower interest rate over the life of my loan. Also, the longer someone decides to own their home, the more points help you save on interest over the life of the loan. To calculate the break-even point you divide the point cost by the monthly payment savings and equals the months to reach your break-even point.
Also, I have agreed to hire an investigator because they can spot any defects there may be that the owner may or may not be aware about and for the following reasons as well. Although, buyers may forego their right to an inspection report although that would be a risk that most mortgage lenders will not underwrite. For most buyers, mortgage financing is unforeseeable on a favorable inspection because banks will not want to lend money where there are already many termites. Even if a home is under contract, the inspection report can greatly impact the price of the home in either way, and it is mostly affected downwards as the buyers inspector may uncover unknown or undisclosed issues that require repairs. The more recommended repairs there are listed on the report, the more negotiating room a buyer has. If the deal were to fall through, the seller must unveil the inspection report to future buyers, which would only further affect the chance to sell the house at its original listed price, which may benefit anyone else who decides to buy it if I don’t. The downside is that There is no licensing or certification for inspectors required by the state of California which makes inspections something very difficult to get and trusted inspectors as well. Inspectors who have more of an experience usually come with an insurance named Errors & Omissions (E&O) insurance which may help to cover themselves in case of any mistakes. The absence of this insurance may be an indicator of something being wrong, most likely a person with no experience.
Another thing or requirement is the appraisal of the house. The appraisal is the real estate industry’s formal process for pricing a property. All states have a requirement for appraisers to be licensed or certified by an organization accredited by the Appraiser Qualifications Board (AQB), without this they may not. Whenever a loan is involved in the financing of a property purchase or home equity borrowing, an appraisal is almost always required. Most lenders won’t approve a loan for more than the appraised amount, thus if the assessed value falls short the seller either needs to lower the price or the buyer needs to put extra money down to decrease the loan amount. Additionally, if the appraiser deems there is a structural issue such as a faulty roof or termite damage, the bank will not approve the loan until the issues are fixed – most often at the expense of the seller. Appraisers follow a structured process for evaluating the property by looking at recent comparable sales to establish a benchmark price and then get to adjust the price of the house to increase or decrease according to the upgrades and improvements there have or have not been made relative to the comparable properties.
Lower Fed interest rates typically lead to lower mortgage rate offers from banks; this, in turn, decreases the monthly mortgage payments a homebuyer must pay for a given mortgage amount. The smaller the monthly payment, the more “affordable” a loan is to prospective homebuyers; this fact can increase the size of the mortgage for which homebuyers are eligible to get which, in turn, might drive up property prices. While current Fed interest rates are at near-historic lows, the Federal Reserve has hinted at a hike in the federal funds rate by the end of the year, which should eventually manifest itself as an increase in mortgage interest rates. However, because income and other economic factors continue to strengthen, particularly in California, some experts don’t believe that a rise in Fed interest rates will have a significant impact on residential property prices.
In conclusion, I decided to buy a house in El Rio, Oxnard CA with four rooms, two bathrooms, a modern kitchen, living room, small dining room, garage, large backyard, and a large driveway. The total cost for this house is $400,000. Also, there are two middle schools, a high school, and elementary school nearby. There are also stores and entertainment not so far from the house which is not so bad. Although, the traffic will not be bad because school starts later than the time work starts. Due to hiring the investigator there will be a cost of $500 more although they may find defects that can lower the original price of the house. The house I chose also had a down payment of 17% which won't help me avoid mortgage insurance but may be a good thing. Also, the buying down rate would be $4,000. Additionally, the homeowners insurance on average, is $1,083.