After make an offer to a house

Right after your contract is accepted, you will order an inspection of the property. An inspector crawls throughout your house looking for problems in the house. Is there termite damage? Is the roof in good shape? Do the faucets leak? Inspectors will even run the dishwasher to make sure it works okay.

Upon a satisfactory inspection report, your lender will order an appraisal. Notice that the appraisal and inspection are two entirely different things, although some get them confused. An inspection looks for problems with the house. The appraiser on the other hand ‘‘appraises’’ or determines the value of the home. Comparing similar homes in your area that have sold recently, typically within the previous twelve months, does this. While appraisers may indeed note the condition of the house as Good or Average, they don’t inspect the house for defects like an inspector does.

At the same time, your title is researched and a report is prepared. Your title report reflects all previous owners of the property as well as anyone else who might have had an interest in the home such as a lender issuing a mortgage or a contractor who placed a lien on the home during a remodeling stage. The purpose of this research is to make sure there are no other previous owners who at some point might lay claim to your property after you close on your house. For example, some long lost heir to the house fifty years ago never signed anything authorizing transfer of the house. Or there is an unsatisfied judgment on record that has never been paid. All previous liens or claims against the property have to be accounted for and properly released. When this is done, the title company will issue a title insurance policy protecting the lender and others against any
previous claims, recorded or unrecorded.

Once your appraisal and title work are done, your loan then gets sent to the underwriter, who reviews all the documentation and authorizes your loan papers to be printed. Your papers are sent to the person assigned to hold your closing, you show up, sign, and close your deal.

Renting or Buying?

Perhaps one of the easiest ways to determine if it’s better to buy or
rent is to sit down and calculate the financial advantages of owning
versus renting. This is commonly done on line-with a ‘‘rent versus
buy’’ calculator found on the Web.

These calculators compare your current or probable rent situation
with a projected home ownership number. They’re easy to find. I ran
a Google search for the term ‘‘mortgage and calculator’’ and I got
back 1,190,000 Web sites that had those two terms.

But the kicker with these calculators is that rarely will they tell
you that ‘‘No, it’s not a good idea to buy.’’ Part of what makes this
true are the tax benefits of home ownership. The interest and property
taxes associated with a mortgage are generally tax deductible.


You can deduct them from your gross income. With rent, you can’t.
Yeah, I know. When you’re a renter you don’t pay property taxes
or mortgage payments. Instead you give money to someone else for
the privilege of living there. But you can’t write off your rent. It’s
just that. Rent.

When do these calculators suggest it’s better to rent? When you
intend to own your next home only for a year or so. Buying a home
incurs other expenses, such as money for down payment, property
taxes, and hazard insurance (which is much higher than a renter’s
policy). Many apartment complexes pay your electric bills along with
water and other utilities.

When you own, you pay all these. Owing a home with all its tax benefits
doesn’t outweigh the acquisition costs to buy the home if you’re
only going to own it for a short period.Short term, rent.

Longer term, buy. Are your rent payments the
same or less than what a mortgage payment would be? Depending
upon where you live, they may be the same. Especially if interest
rates are relatively low.
Let’s say you’re renting a nice 3,000-square foot, 3-bedroom
home close to schools in a friendly neighborhood. You might be paying
$1,800 each month in rent. A similar 3-bedroom home might
cost $150,000. If you put 5 percent down to buy the home, your
monthly house payment, including taxes and insurance, would be
close to $1,200 using a 30-year fixed rate at 7.00 percent.

If rent payments in the area you want to buy are near what a
mortgage payment would be, it makes sense to buy. If you can save
$600 per month and you also get to write off the mortgage interest,
then it’s truly a no-brainer.

Another reason buying is generally better than renting is simply
a matter of appreciation and equity. When you rent and property
values increase, that doesn’t affect you other than your landlord will
probably raise your rent again. And of course each time you make a
rent payment you’re not increasing your equity in anything, just
helping your landlord increase his stake in your house or apartment.
I’ll give you an example.

Your rent is currently $1,000 per month, and you’re thinking
about buying a $150,000 home. If you put 20 percent down and
borrow $120,000 at 7.00 percent on a 30-year fixed rate, your principal
and interest payment are about $800 a month. Let’s also assume
that property values are increasing in your area by about 5
percent per year. What’s the situation after two years? If you rented,
you paid someone else $24,000. But if you owned and itemized your
federal income taxes you likely deducted over $16,600 in mortgage
interest on your taxes. You also paid your loan down by over $2,500,
while at the same time increasing your equity position in the house
by nearly $18,000. Now you see why those calculators always tell
you to buy a home.

Through all of these calculations, remember the real reason to
buy: You buy a home because you want to. Because you like it. It’s
your home. I know that a home is one of the largest single financial
commitments someone can make. And while I agree with that statement
let’s not go overboard here. Buy a house because you want to,
not because some calculator told you so.