How to Guide to Sustainable Home Ownership
by Michelle on August 18th, 2009
Despite current economic conditions, low interest rates, upbeat economic reports, and government incentives are making this one of the best housing markets in decades. Whether you’re a first-time homeowner looking to take advantage of the available $8,000 tax credit before it expires at the end of Nov. 2009, or looking to downsize or to upgrade, now is a terrific time to buy a home.
One lesson many people have learned all too well lately is the importance of knowing how to buy a home responsibly to ensure successful, sustainable home ownership. To help you buy a new home and make the best use of your money, I am sharing with you some home buying information and advice.
Begin by having a plan.
Don’t act immediately. Think about what you want – the type of home and the neighborhood – and what you can manage at this point in your life. How will a mortgage figure into your retirement plans or payment for the children’s education? Think about how your cash flow may change in the future. Talk to a mortgage lending specialist very early in the process who is familiar with the community and who can help assess your needs, calculate costs and determine what you can afford.
Then choose a manageable “standard vanilla,” fixed-rate loan and payment schedule that fits your goals. And perhaps, most importantly, ask a lot of questions and be sure you fully understand the terms of your loan.
Be conservative.
Equity is the difference between the appraised value of the home and the debt or current loan balance on the home. It is important to have realistic expectations of what the appraised dollar amount is when you are pricing your home for sale. You may qualify for a large loan and find you can’t easily handle the payments because the actual sale price of your home was much less than its appraised value. As I like to say, “Hope for the best, but don’t count on the best,” and borrow only what you need and can afford to repay.
Make a difference.
Maybe the house you have your eye has been vacant and needs some work—the paint is peeling, the floors and cabinets are dull or cracked, or the kitchen needs new appliances. Renovations on any scale are an opportunity to get exactly what you want and increase your home’s value, which in turn strengthens the neighborhood.
But be sure to look at more than just the “carpet and the fixtures” because there are other parts of the home whose repairs can be very expensive. It’s important to ask yourself: Can I afford repairs that may be needed in the first year—the next year? Therefore, I remind you, don’t be afraid to ask questions about the condition of the home while shopping for a home. To avoid “costly surprises,” here are some questions to ask:
- Does the home have insulation in the walls, crawl space and attic? Losing heat and letting in the cold is inefficient;
- How old is the roof? Asphalt and wood lasts about 20 years, and clay is the most expensive to replace and repair;
- Has the heating, cooling, and hot water equipment been updated? Usually the older it is, the less efficient it is; look for the ENERGY STAR label for efficiency;
- And what type of material was used for the exterior siding? Was it properly maintained? Can I afford to maintain it because each material, albeit, wood, vinyl and brick, require different maintenance needs, such as cleaning, painting or mortar re-pointing?
There are a wide-array of loans in the marketplace designed to help rehab and purchase a new home. Look for loans, like the ShoreBank Home Energy Conservation Loan, that offer a free energy audits.
The energy saving improvements can reduce your monthly utility bill by 25 to 45 percent while increasing the home’s appraised resale value, sometimes in the neighborhood of 15 percent. In addition, they reduce the amount of greenhouse gas emissions that harm the environment. In fact, our nation’s homes contribute one-third of all green house gas emissions, or roughly the same amount emitted by autos and commercial buildings.
My next blog will share with you some suggested low-cost, eco-friendly home improvements that will add value and comfort to any home. In the meantime, if you have any questions about responsibly buying a home and obtaining a quality, affordable mortgage, please send me an email.
Tags: community development, environmental sustainability, green banking, home affordability and stability plan, home ownership, ShoreBank, triple bottom line
