Tag: homeownership

The 5 Ways Your Finances Change After Buying A House

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Being a homeowner or investor is more than just having equity and a place to call home. It changes your life physically, emotionally, and financially. Before buying a house, make sure you’re ready for these five financial changes. 

1. Your credit score will drop.

Once you get a mortgage, your credit score can drop 10 to 40 points, so don’t be alarmed. You’re taking on a lot of debt, so that’s why it falls. But the drop is temporary. One study from LendingTree discovered it takes about nine months for your credit score to recover. Once it improves, paying your mortgage on time each month will boost your score. 

2. You have more costs.

Compared to renting, your costs will seem like a lot, especially when there are costs that new homeowners forget or didn’t consider. Some of these costs include pest control, lawn maintenance, HVAC maintenance, taxes, and possible HOA dues. Utilities will also increase if your new home has more square footage than your last place, and you’ll need new insurance coverage. 

3. Savings is important.

Unexpected expenses like repairs and breakdowns are common homeowner problems and aren’t always budgeted for initially. This is why a savings or an emergency fund is crucial. Get ahead of the game by saving three to six months’ worth of expenses. This should include your mortgage payment, utilities, and other regular bills. 

4. Late payments don’t exist.

One late payment is a catastrophic avalanche of severe consequences. Most lenders have a two week grace period, but if it’s not paid by then, you’ll get charged a late fee. The late payment will also hurt your credit score. If you hit three months of being behind on a mortgage, the lender can foreclose your home.

To avoid this, create a monthly budget or take advantage of the several applications that can help you budget. You can also start automatic payments or monthly reminders, so you don’t miss a payment. If you do miss a payment, contact your lender immediately and ask for a goodwill gesture of removing the late payment from your credit report. You might be surprised by people’s kindness over a mistake. 

5. New tax benefits

As a homeowner, you’ll get a new tax deduction compared to when you were a renter. Your real estate taxes and mortgage interest could create tax savings for you later. Especially as a new homeowner, it’s essential to talk to a professional to see if you can maximize your deductions and hopefully get more cash.

 

If you’re ready for these five financial changes to your life, then contact me today to begin your home buying journey. We are here to help–(512) 721-1094 or dbrown@talkpropertymanagement.com. 

The Different Types of Real Estate Investing in the Austin Area

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Did you know that there are several ways to invest in real estate in the greater Austin area? You heard that right! Let’s take a look at the most common ways to invest in real estate.

Homeownership

When you buy a home as your primary residence, you are investing in real estate. There is a distinction, however. When you own your home, you won’t increase your monthly cash flow or actively make money.

Rental Properties

A rental property (or properties) is another way to invest in real estate. In this case, the rental income you collect from tenants becomes an additional revenue stream that can add thousands of dollars to your yearly income. Selling the home in an appreciating market can also turn your equity into a nice profit someday. Renting out a property doesn’t come without challenges. Rental income may not be consistent from month-to-month, and there could be seasons when the property is vacant. Be sure to consider the added expenses of general maintenance, repairs, and insurance, too. (If you have a question about managing a rental property, reach out to me anytime.

Flipping

When House Flipping, the key is to buy low. While it’s a quicker way to make money than relying on rents and it can be a lot of fun, there’s always a risk that you won’t make money on your investment. There’s also a chance that the improvements will cost more than expected. Flipping requires time and effort, so be sure to consider this carefully before buying a house to flip.

REITs

Real estate investment trusts, or REITs, are not as common as the previous three examples. These are trusts or companies that finance or own real estate investments, and they sell shares to investors. In turn, the investors hope to earn a percentage of the income made from that real estate investment. REITs are more of a “hands-off” example of real estate investing, and the downside is that you don’t have any say about the decisions made regarding the property or properties.

Could this year be the year you invest in real estate? If you have questions about the different types of real estate investing in the greater Austin area, give me a call. I’m always happy to help.