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Houses come in all shapes and sizes, and we’ll
help you understand the four basic types: new home, used home,
fixer-upper and foreclosure.
You thought that choosing the right neighborhood,
size, number of bedrooms, closeness to work, closeness to schools
and closeness to shops were all difficult decisions, but one of
the first decisions should be what type of house you want to get.
Although houses can come in a mind-boggling variety, a recent
MotleyFool.com article discussed the four main types of home:
new home, used home, fixer-upper and foreclosure.
New Home
There are plenty of advantages to getting a new
home. Everything in it is new, so repairs and maintenance costs
should be minimal, and most builders offer a warranty that can
be five to 20 years. Also, you get plenty of chances to make it
uniquely yours by choosing all the upgrades and options you want
right at the start. A few warnings though. Getting all those options
can be pricey, and bring up the base price by tens of thousands.
Keep this in mind when deciding what price range to look for.
Also, do plenty of research on the builder. Make sure they are
reputable and that their work has a history of being of high quality.
Finally, do not be too shy to negotiate. As with all home purchases,
there is plenty of wriggle room.
Used Home
Whether it is called a used home, a resale home
or a “gently used” home, it all means the same thing:
at least one person has previously lived in the house. There are
some basic facts you will have to accept with a used house. You
will almost certainly want to change certain things, and there
will almost certainly be much higher repair and maintenance costs.
A home inspection is a must – you have to know the quality
of the house you are buying. A warranty is also a good idea, and
not usually that expensive considering the peace of mind you are
getting.
Fixer-Upper
The idea here is that you’ll be able to afford
much more house than you could otherwise hope to have, and at
the same time, make something lenders call “sweat equity”
– this is basically the difference between the purchase
price of the house, plus all repair costs, and the end resale
value of the house. The bigger the number, the better the investment.
Of course, a fixer-upper means a lot of hard work, disruption
and time. If you are prepared to make the sacrifice, it could
well turn out to be a great investment, and a great place to live!
Foreclosure Homes
Any home could end up being foreclosed on, meaning
that the owner could not make the mortgage payments, so whoever
held the mortgage has taken possession of the house and is trying
to sell it. Typically, you can get some great deals on such houses
in exchange for a quick sale, such as lower prices, smaller down
payments, special loan assistance, reduced closing costs, etc.
However, keep in mind that someone who could not afford to make
mortgage payments probably could not afford to make the necessary
ongoing repairs and maintenance every house needs.
Now that you understand your options, you
are one tiny step closer to finding your dream home!
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