Life lessons on purchasing your first home.

Buying your first home can be an exciting, scary and an overwhelming process.  I remember my first home purchase.  I was newly married and excited about the prospect of not renting.  We made a lot of mistakes but also learned valuable lessons.  In an effort to find a house we thought would be great and spacious, we broke the number one rule.

Rule #1 Location, Location, Location.

In our infinite wisdom we decided that having our house back up to the freeway and across from the airport couldn’t be that bad, right?  WRONG!  Not once did we use our backyard and our front yard was not much better.   Aside from the fact that we didn’t use the majority of our property, we had a tough sell when we moved two years later.

Rule #2 Don’t bite off more than you can chew.

The house wasn’t in terrible shape when we purchased, but we soon began updating.  Being well experienced carpenters (not) we dug right in.  Ripping out the bathroom and taking a quick one hour course at Home Depot we felt we were ready to take on tiling.  This project was the first of many.  Needless to say, this led to a lot more home improvement projects over the years.  I am not saying your first home shouldn’t be a fixer upper or need a little updating, but take into account your level of experience and the time and money it takes to complete a project.  I have always found that you should come up with a time table and a budget and then double it and you will be in the ballpark.  When we chose to undertake this project, my husband was attending full time school while working full time and I worked full time while caring for a new baby.  Can you say overload!

      

Rule #3 Stay on budget.

We actually did something right our first time (applause please.)  When looking for our first house we knew that the amount of the mortgage needed to stay in a certain range.  Our starter house was located on the Boise bench and costed (drum roll please) $79,000.  Imagine spending that today with these interest rates.  At the time interest rates were in the mid 7’s so that put our payment in a comfortable $720 range.  We could have spent more, but knew this was where we needed to land to save the money for the improvements.  I am sure you have heard the saying that you are “house poor”.  I assure you this is a thing.  When at the end of the month you have enough to pay your mortgage, fuel, food and little else, you are house poor.  Give yourself some cushion so that you can travel or buy a new pair of shoes once in awhile.

Rule #4 Work with knowledgeable professionals

There are several mortgage programs that can help you realize your homeowner dreams.  FHA offers low down payment options although mortgage insurance is required depending on how much you borrow.  The VA has a zero down program for those that qualify and Idaho Housing has some great options as well.  Make sure that you have a great lender that is willing to explain all the fees and any penalties you make incur if for instance you need to sell sooner that anticipated.  Working with good people will help the process go smoother and can help you avoid headaches.

Rule #5 Be realistic.

When buying your first home you may want to try and get everything you want in this purchase.  The fact is most homeowners sell their first home and move up in as little as 11 years, sometimes less.  If you are newly married with no kids, you may not need a five bedroom house (talking to myself here.)  Look at your lifestyle and think about what matters most.  If you have kids that will be going to school soon then a great school district may be the most important thing to you.  If you are single and like hanging with the ladies or gents maybe a downtown condo is more your style.  Just think about where you are now and where you intend to be in the next few years so that your new home is someplace you love.

Hopefully this helps you think about a few more things that you hadn’t considered and that you can learn from my mistakes.  I would love to help you find your first home and guide you through the process.  Give a call 208-695-0524.

Do you have a will?

We have been told that wills/trusts are a great way to make sure your estate is managed and disbursed according to your wishes.  I recently had a client where had this advice been followed it could have saved her thousands of dollars and spared her a lot of frustration.

If you or your partner pass without a will or trust the process of probate can be time consuming as well as costly.  In some cases probate without a will can take up to 6 months and can cost in excess of $4000.00.  Will and trusts can be formed anywhere from $100-$1800 depending on that type of estate you have.

When it comes to real estate and the selling of your property the process of probate cannot be avoided.  Property purchased jointly will have both (or more depending on the situation) on the title.  In order to sell the property both parties must be present and able to sign the title over to a new owner.  If you or your partner(s) has passed and they are unable to do so you will be unable to sell the property.  Once the estate has gone through probate assuming there is not a contested will or other hiccups the title will be clear so sell to a new owner.

Just because you are married and you are both listed on the title of your shared property does not mean probate will not be needed.  Idaho law permits a married person to leave his or her property to a child, a friend, or a charity, the law requires that a probate occur to determine who is really entitled to inherit the decedent’s property even when there is a surviving spouse.  If a trust or will was put into place this would instruct how the decedent wanted his/her property to be distributed.

If your title states right of survivorship this may allow you to sell the property without going through the probate process.  This can vary by county.

As with all things regarding legal matters I recommend consulting with an attorney and getting solid legal advice prior to making any decision.

 

Homeowners Exemption

tax-bill

What is it?

Idaho has a homeowner’s exemption for owner-occupied homes and manufactured homes, which are primary dwellings, which includes the value of your home and up to one acre of land.

How does it help me?

If you occupy your home and it is your primary residence.  The homeowners exemption allows 50 percent of the value of your home and up to one acre of land to be exempted, up to a maximum amount (2017 the amount is $100,000.)  Example:  if your home was assessed by the county to be valued at $200,000 the homeowners exemption would bring the value down to $100,000 and you would be taxed on only the $100,000 value.

How do I get the exemption?

If you purchase and occupy your home prior to April 15th of that current year and apply on or before that date and meet the other eligibility requirements you should receive the benefit.  If you fail to file the paperwork before the deadline you will not receive the benefit till the following tax year.  Filing the paperwork and getting receipt from the county that they received your paperwork is of utmost importance.  While shopping for homes there will be homes that do not have an exemption in place due to the home either being a rental or not the primary residence of the home owner.  In these cases your tax bill with likely be higher the first year you are in the home until you are able to file the exemption for the current year.  This distinction can be important because when applying for a loan it can affect the amount you qualify for since the taxes are calculated in your monthly payment.  Your real estate agent will be able to tell you if the home you are interested in has a homeowners exemption in place.