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SHOULD I RENT OR BUY?

Owning your own home is a classic American dream and part of American culture. Right now, more Americans own homes than ever before. Purchasing a home is a considerable financial investment, and does not guarantee that you will save money in the short or long run. The main considerations when deciding between renting or buying a home include your lifestyle, your ability to secure a mortgage and your financial situation.

As part of a lifestyle, rentals fit some people’s time restraints. Renting an apartment or home requires fewer maintenance or upkeep requirements compared to owning a home. Renting apartments give people the opportunity to live in trendy, fashionable neighborhoods that may not be affordable when purchasing a home. Renting also allows people flexibility when a job or lifestyle dictates a move.

Not everyone can secure a mortgage. Despite the many types of mortgages and federal programs, some people simply do not have the needed credit rating, or they have too much monthly debt to qualify for a mortgage or to obtain the loan necessary to afford the home they want.

Other considerations are how much you want to invest in a home and how willing you are to let that affect your lifestyle. Dallas real estate, like other great cities in Texas, can be expensive and like all property, may risk unseen expenses such as major repairs, property tax reassessments, or disasters.

Buying a home does not guarantee equity or profit on the sale. Like all investments, a home carries a level of risk. Because there are fees and costs with securing a mortgage, you will pay thousands of dollars upfront for your home. Depending on your mortgage and payments it may take years to build enough equity to compensate that expense. If you need to sell in a few years, you may never recover those initial costs. If you move around frequently or anticipate needing to in the near future, you will want to seriously consider the expense of short-term ownership of a home.

Many factors affect the property value of homes, communities and cities. Take the following questions into consideration:

  • Does the community you live in have one primary company as an employer?
  • Does your community have one major industry creating most of your community’s jobs?
  • Can a downturn in that company or industry shift the demand for housing where you live?
  • Are the demographics in your community changing?
  • Are fewer people moving into your community?
  • Is the average income in your community declining?
  • What is the likelihood of crime rising or of there being a lack of appropriate funding for schools or city services?

These factors among others affect the property values of entire communities or cities.

You should also consider what will happen to the entire housing market over time. If the economy is doing well homes tend to appreciate in value but in an economic downturn home values tend to stagnate. When you rent, you have more flexibility in reacting to major trends in the economy. When you own, you gain tax benefits by deducting certain home costs from your personal taxes.

Whether it is best to buy or to rent depends on each situation. If you weigh the lifestyle and personal changes and risks you can make an educated choice and make the decision that is best for you.

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WHAT SHOULD I BUY?

CONDO OR SINGLE-FAMILY HOME?

The purchase of a condo allows a person to own a predetermined area of space, not necessarily land. Condo owners share in the ownership of all common areas such as hallways, foundation, stairs, social rooms, etc. under a legal arrangement. With a single family-house, the owner is solely responsible for the entire property. A house entitles the owner to the rights of the land, all permanently attached structures and the air above it. In both instances, owners have title of ownership and tax responsibilities and may rent and sell the property they own. There are many factors to consider when deciding between the purchase of a condo or a single-family home.

CONDOS

About one-third of all residential real estate transactions are condos. In general, condos cost less than single-family homes, which appeals to many first-time home buyers. They also appeal to older people because there is little to no exterior maintenance. “Empty-nesters” also like leaving larger houses for the convenience, increased safety and amenities of a condo. There is no cutting or watering the lawn, trimming hedges, painting the exterior, etc. Many condos also have common amenities such as pools, workout rooms, tennis courts, even golf courses. Many people purchase condos as an investment, and earn income by renting out the condo.

By-laws are established to set certain rules and manage the overall property of a condo building. A condo association (group of owners within the condo) enforces and changes by-laws. By-laws are usually very extensive and typically cover areas such as noise, pets, common area usage, exterior decoration restrictions, interior renovations, etc. Typically there is a monthly association fee that is paid into a fund to cover maintenance, repairs and cleaning, so that the owners share financial responsibility for common areas. These fees vary greatly and should be considered along with the cost of the condo. On the other hand, association fees do allow condo owners to save on some general maintenance costs.

Condo Pros

  • Generally more affordable
  • May provide increased security
  • Often offer amenities (pool, gym, etc.)
  • No outdoor maintenance
  • Earn equity (like a house)
  • May deduct interest payment from taxes (like a house)

Condo Cons

  • Less control over space
  • Condo fees
  • Generally more difficult to sell than single-family homes

SINGLE-FAMILY HOMES

Everything about a single-family home is yours. You have no association rules and no association fees. However, you should always check out a neighborhood before buying because some do have HOA fees, especially in gated communities. There is also a tendency for single-family homes to appreciate in value more quickly than a condo of comparable size. Of course many factors contribute to a home’s value such as location. Single-family homes allow you to enjoy more privacy and control.

Single-Family House Pros

  • Generally appreciate in value faster than condos
  • Give control over property
  • No association fees, unless in a planned community or gated community
  • No by-laws

Single-Family House Cons

  • Responsible for all house maintenance and yardwork
  • May have limited on-property amenities
  • May not offer the security of community living
  • Not always as affordable

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SELECTING A COMMUNITY

Most people who are moving ask for a home with specific features (a certain number of bedrooms or bathrooms, etc.) which is located “in a good community”. However, it is important to keep in mind that your idea of a “good community” may be very different from that of others and maybe even the agent who is helping you find a home.

What you need to do is consider how a community will meet your lifestyle needs and how “safe” a neighborhood is. We put “safe” in quotations because no community is 100% safe. Your local police department maintains crime statistics from FBI reports and is an excellent source for crime information. Other sources include online reports from the FBI and reports from private sources. When evaluating crime statistics, consider property crimes versus personal crimes. Property crimes range from vandalism to burglary. Most communities have some level of history with property crimes, so it is necessary to evaluate the extent of these crimes. Personal crimes range from harassment to homicide. Understandably, most people would not like to live in a community that has a high record of personal crimes. Keep in mind that statistical reports don’t always tell the whole story; in urban areas, for example, the distance of a few blocks can make a big difference in how “safe” a community is.

Another consideration is what is your preferred lifestyle and how a specific community can fulfill those needs. One way to evaluate your lifestyle needs is to make a list of all the activities you like to do in your current community and those you’d like to be able to do in your new community. Also consider what you don’t like about where you live now. Do you like a busy community with lots of activities? Do you like outdoor activities? Is it important to have a variety of restaurants and shopping within a certain distance? Do you like seclusion and quiet? What community public resources do you currently use (schools, community colleges, library, day care, recreation center)? Rank these preferences in order and seek communities that satisfy most of your needs. It doesn’t hurt to create a list of resources for each community you’re considering. Many times the local city hall will have a packet of community resources. For information on local schools, check out our school information section within each community.

Do your homework in choosing a community. A really nice home in a not-so-nice neighborhood is not necessarily a good investment, but a home in the right community may make your homeownership experience both satisfying and financially rewarding.

Contact us for friendly, expert advice and helpful resources to assist you.

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FIRST-TIME HOMEOWNERS

ADVANTAGES

Buying your first home is a major decision; being a homeowner comes with many advantages. A mortgage payment combined with property taxes and insurance is often the same or only slightly more than monthly rent. And, you will be building equity with each payment. Additionally, your payments will be offset by tax savings from mortgage interest deductions, which constitute most of the payment in the early years of a mortgage

CHALLENGES

One of the biggest hurdles in the first-time buyer’s purchase is producing cash for the down payment and buyer’s closing costs. But even this obstacle is not insurmountable. If you are a veteran, you may be able to obtain 100 percent financing through a VA loan and many lenders offer 95 percent financing. If your income enables you to qualify for the necessary mortgage loan, you may be able to negotiate a contract in which the seller pays your purchase closing costs and adjusts the price upward so that you, in effect, finance your closing costs. But the loan appraisal will still need to support this higher value in order for the loan to close.

A good place to start the entire process is to visit a Home Team Mortgage loan officer to “pre-qualify” and establish your maximum loan amount. (An agent can help you determine your affordability level, too, if you don’t mind sharing income and debt information). This loan maximum, coupled with your available cash, will determine the price range in which you should look. You may begin shopping by researching community features you want and need, remembering that “location-location-location” is as important as the home itself.

When shopping for a mortgage, look at the overall cost, not just the interest rate. Generally speaking, the higher the rate, the lower the number of points charged. Make sure you understand any hidden costs or special early payment penalties, which could create problems for you. Look at different mortgage products, such as shorter-term fixed-rate loans or adjustable-rate loans, but be sure you understand what your “worst-case scenario” is if interest rates rise.

WORKING WITH AN AGENT

Buying a home is usually an emotional decision, and you need the counsel of a reputable, knowledgeable real estate professional who will help you buy wisely. As a first-time buyer, professional real estate assistance is crucial. You should insist that the agent work with you as a “buyer’s agent” to be your advocate in the transaction. In most cases, this agent is still paid out of the seller’s commission paid at closing, so you will not pay extra to be represented by a good agent. See the suggestions for selecting a qualified agent; you do not have to be moving from one city to another to take advantage of these suggestions.

A good agent will help you evaluate the pros and cons of purchasing a single-family home, condominium, or townhouse, and what the various types of ownership mean to you. Should you buy a resale home or new construction, and what kinds of inspections or warranties should you seek in each situation? When making an offer, how much below listing price should you offer, and how does the price compare to similar homes on the market? Are you negotiating terms and other costs (home warranty, for example) as well as price? What do you do if inspections uncover needed repairs? Are there any factors related to the house or neighborhood, which could create resale problems? What closing costs are considered typical?

Once you have settled on a community and seen several homes, the next step is to make an offer on a home you like. If you and the seller, with the negotiating help of your agent, come to terms and you execute a sales contract, you will then finalize your mortgage. The mortgage company will require a home inspection and a title search. You may have to coordinate your closing date based on when the seller can purchase another home and vacate.

Contact us for friendly, expert advice and helpful resources to assist you.

 

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BUYING PROCESS

Whether you are buying a condo in Dallas, a single-family home in Plano or a ranch in Athens, the following list will give you an idea of the process you will be taking when making your purchase.

  1. GET PRE-QUALIFIED
  • Meet with one of our recommended loan officers; by sharing income and other financial information, you will know the price range of mortgages you are qualified for.
  • Get pre-approved.
  • Obtain a pre-approval letter.
  • Obtain a Loan Estimate letter explaining the costs of borrowing money.
  • Learn about the many loans available to buyers in today’s market.
  • Learn about closing costs.
  1. EXPLORE OUR RICH COMMUNITY CONTENT AND EASY TO USE SEARCH FACILITIES ON THIS SITE
  • Explore the many counties we sell real estatein, and the neighborhoods within them. We update these pages regularly to bring you the latest in resources and information.
  • Use our property searchto find real estate by selecting from a multitude of filters and attributes for your new home.
  • Sign up for property email alertsto be the first to know as new properties hit the market.
  1. BEGIN VIEWING HOMES WITH ONE OF OUR EXPERIENCED EBBY AGENTS
  • Once you are ready to view homes, it is time to select a real estate expert.
  • When possible, we recommend all decision-makers should visit the various homes.
  • Always be candid with your agent, it will help them understand your particular needs and desires and enable them to select homes you’ll want to see.
  1. PREPARE THE OFFER
  • Your Ebby agent will provide you with a comparative market analysis on your choice of real estate and area (e.g. single-family homes in Dallas), in order to assist you in making an informed decision.
  • Your Ebby agent will go through the contract with you and help complete your offer.
  • Negotiations will proceed until both buyer and seller agree on all terms and sign all documents. Documents will be sent to the title company where a file will be opened, and title commitment and property tax information ordered.
  1. MAKE YOUR LOAN APPLICATION
  • Give your loan officer a copy of the contract and apply for the loan.
  1. INSPECT THE PROPERTY
  • Select an inspector and arrange for both a general inspection and wood-destroying insect inspection.
  • Ebby agents have great knowledge of environmental assessments, and will provide you with further information relevant to your home.
  1. APPRAISAL AND SURVEY OF PROPERTY
  • The lender and title company will make arrangements for the property appraisal and survey.
  • You will be provided with a copy of the Title Commitment Letter.
  • You will need to make arrangements for homeowner’s (hazard) insurance, and for your insurance agent to talk with the closing officer at the title company.
  1. SELLER’S CLOSING IS ALSO ARRANGED
  • You will receive a copy of the closing statement for review prior to closing.
  • You will do a final walk-through inspection of the property.
  • Your Ebby agent will arrange a closing date and time with the title company. The seller’s closing will also be arranged.
  • You will need to bring a cashier’s check for all closing costs and the balance of the down payment.
  1. AFTER THE CLOSING
  • Documents are sent to your loan company for approval and funds are disbursed.
  • The title company receives and funds all money from the loan company. Payment of any accrued expenses in connection with the closing are due including taxes, attorney’s fees, professional real estate fees and title company fees.
  • Legal documents will be recorded in the office of the county clerk and mailed to you.
  • The title company prepares and issues the title policy, and will then send it to you and the loan company.

IT’S NOW TIME TO ENJOY YOUR NEW HOME!

While this process may seem extensive, our agents are real estate experts and specialize in local communities. They will save you a substantial amount of time, effort and money by:

  • Organizing and accompanying you to view homes which meet your criteria.
  • Having information on various neighborhoods to help you determine the right area for work, place of worship, family activities, and more.
  • Providing sales information on the neighborhood of your choice, so you may make an informed decision.
  • Showing you MLS properties, so you don’t have to call multiple offices for information or appointments.
  • Working with all builders throughout North Texas.
  • Negotiating your offer to YOUR best advantage.

What you may expect from your Ebby Halliday agent:

  • Learn and define your needs, desires and goals as a buyer, and help determine your most important considerations in selecting a home.
  • Give you information about agency choices and services available to you.
  • Organize the home buying process, guide you through it and save you time.
  • Search for the right home, always accompany you to property showings and represent your interests.
  • Explore all financing possibilities with you and provide you with a list of lenders.
  • Provide you with a comparative market analysis to make an informed purchase decision.
  • Disclose all known information about properties and areas which interest you.
  • Assist in preparing offers, strategize your offer to the seller, and negotiate on your behalf.
  • Ensure confidentiality of your personal client information.
  • Monitor the closing process step-by-step, and make sure you’re always informed.
  • Provide lists of inspectors to review the condition of the property.
  • Act as your advocate in the most professional manner possible.
  • Treat all parties fairly and honestly.

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