Is the McMansion feeling too large and costly to maintain? Maybe the kids are moving onto college and you’re ready to start planning for a retirement home and want to save money by living in a smaller space. For these and other reasons, many Americans are choosing to downsize their homes, but it’s not right for everyone. Among advantages are savings in heating and cooling a smaller space, less time spent on cleaning and maintenance, and potentially less spent on taxes. Having less space can be an asset or a hindrance depending on your situation: less room for furniture and personal belongings, and less money spent on shopping for items if there is no room to store them. If you’re considering downsizing to a smaller home, the first steps you will want to take will be to determine what you have and assess your needs, both financially, and in relation to your lifestyle. Calculate all assets and costs Estimate how much equity may be in your current home based on its market value and how much you owe. If you are in an equitable situation, determine how much you will net after a sale. Include closing fees, moving costs, homeowners association fees, any need for repairs at your current home or a new place, and considerations of large items that may need to be purchased, such as a new refrigerator, washer and dryer, or a lawn mower. Find out the current tax rate and how they are calculated on homes in the area where you wish to purchase, and consider these annual costs, and remember they are subject to future increases. Will you need to rent temporarily after your sale, but before you close on the new home? You’ll want to crunch all of the numbers on the moving costs to really understand how much you will potentially net once your current mortgage is paid off. Be realistic about whether or not cost savings — if any — are worth the lifestyle change. Once you’ve looked at homes in the new area in which you would like to live, determine your price range and how much you’ll be able to put down on the new place. Using an online mortgage calculator, you can figure out how much your monthly payments will be and try out different mortgage scenarios. Know your market Knowing the value of your home and of the one you wish to purchase are important, but know your market as well. All of that hypothetical money and smooth selling and purchasing transactions are just a dream if homes in your area are not selling well. Do some market research to get a realistic feeling for whether or not houses are moving quickly and if they’re selling close to the asking price. Ideally, you will sell your home before purchasing your new home to avoid paying two mortgages and potential tax pitfalls. Talk to local real estate agents about how your market is trending, and take a look at recent sales data. Can you realistically expect your home to sell in a timely manner and for a satisfactory amount? Is downsizing right for you? You’ll need to make many quality of life considerations before making the drastic change of downsizing. First, you need to think about how long you plan to live in the smaller home. If you plan to keep the home through retirement, you need to look at the features of the new place if you plan to be in it while you are less active and possibly have health problems. Can it be easily modified to accommodate ramps and widened doorways if the home needs to be made wheelchair-accessible? Are stairways comfortable and cabinets easy to reach? Is it near enough to doctors, hospitals, and shopping for convenience in old age? Is public transportation readily accessible? You’ll also want to determine how much yard space and the associated maintenance you want, both now and in the future. A smaller home doesn’t necessarily have to mean a smaller yard if you find happiness doing yard work or digging in the dirt. However, if you’d prefer a life of low maintenance, you may want to consider a smaller yard, or even a condominium. Having less space can result in less stress over maintenance effort and costs, but it can also mean less room for prized possessions, hobbies, and heirlooms. Will you have to give up a beloved hobby or weekend flea market outings, or will you find pleasure in simplicity, with less to clean and organize? Downsizing will present some lifestyle changes. Will all family members have access to their desired level of quiet space or privacy? Will noise from another family members be problematic? Take personal comfort into consideration. A smaller home doesn’t have to be ruled out to address these factors, but study room floor plans carefully to minimize conflict and maximize comfort. In a small home, it can be hard or nearly impossible to entertain large groups or have overnight guests. Other social considerations should also be made, especially if you’re moving away from an area you’ve inhabited for a long time. Are you going to lose your social connections? Will you be able to easily travel for special occasions over time? Downsizing to a smaller home can be financially and emotionally rewarding for many people, but it isn’t a one-size-fits-all plan for everyone, and does not always provide significant savings. It is important to take a serious look at all of the financial, lifestyle, and emotional factors to determine if downsizing is a good move for you and your family members before taking such a big step. Read more: http://www.mybanktracker.com/news/2013/07/30/downsizing-home-considerations-to-m

As the real estate market significantly rebounds, some buyers and sellers are dipping their toes in the waters for the first time. Inevitably, they come into the market with assumptions about how it works. Their assumptions may come from TV reality shows or watching their parents’ house-hunting experiences. Maybe they’ve learned about real estate from a co-worker’s recent home buying or selling experience. The trouble is, the new buyer or seller’s assumptions are sometimes based on outdated or generalized “real estate myths.” Here are three such myths that many less-seasoned home buyers and sellers assume are true. Myth No. 1: Spring is the best time to sell a home Historically, real estate seasons were tied to summer and the end of the school year. Families were the typical buyers or sellers, and they wanted to move during the summer so their kids could start anew in September. That’s how spring became the prime selling season. It’s true there are still more homes for sale in the spring, which means there’s a lot of activity and buzz. But spring isn’t necessarily the best time to sell a home anymore. The reality: The best time to sell is during the holidays and right after Today, more than half of buyers aren’t married, and their decisions aren’t based upon school schedules. So spring isn’t as relevant as it used to be. Instead, the best time to sell a home is in November, December and January. It’s a supply-and-demand issue. Most sellers assume buyers aren’t seriously looking during this prolonged holiday season. And yet, many buyers are looking at properties in person and online right up until Christmas Eve. If the right home goes on the market in mid-December, a serious buyer — and there will be a lot of them — will take note. After New Year’s Eve, most buyers jump back into their routine with a resolve to get into the real estate market, even though many sellers wouldn’t even consider listing in January. The net effect: Savvy sellers will face less competition for a still-strong pool of buyers during this period. And that makes November-January a great time to sell. Myth No. 2: Always start with your lowest offer There’s no generalized strategy for making an offer on a home anywhere, ever. A seller could have overpriced or underpriced the home on purpose. Some markets may be more competitive than others. But, somehow, in the back of the buyer’s head is good old Uncle Bob saying “never offer the full asking price.” That strategy might work if you’re trying to buy a used computer on eBay. And it worked in some real estate markets years ago. But times have changed. The reality: A low offer may get you nowhere fast A buyer in a strong, tight inventory market today would be wasting their time making low offers right from the start. It’s likely a home that’s priced right and shows well can receive multiple offers, sometimes even over the asking price. In this environment, constantly throwing in low offers because that’s what your Uncle Bob advised you to do will likely lead to disappointment. Instead, work with a good local real estate agent to understand the market. You’ll quickly learn after a few weeks on theopen house circuit (and maybe a disappointment or two) that starting low may not get you anywhere. Myth No. 3: A cash offer trumps all There’s an assumption that a seller, considering two different offers, will always go with the cash offer because there’s less risk. As a result, many buyers who hear they’re competing with a cash offer assume they won’t get the home. They may not even make a formal offer. At the same time, many cash buyers assume that because they’re paying cash, they can make an offer below the asking price, and it will likely be accepted. The reality: A savvy seller may be more tempted by a solid financed offer Consider a seller with a home priced at $399,000. The seller receives two offers: One is a cash offer of $375,000. The other is an offer for the full asking price, with 25 percent down, a bank pre-approval letter and swift contingency periods. A good buyer’s agent, upon learning their client is competing with a cash offer, will arm the seller with lots of data supporting their client’s finances, such as a credit report and verification of income or assets. The agent might even arrange a call between the seller and the buyer’s lender. Learn your market When you become a buyer or seller, especially for the first time, the most important thing you can do is learn your market. Talk to a savvy local agent, and don’t make assumptions based on what you think you know. Real estate is local. Every market is different, with its own customs. If you believe there are general rules for real estate strategy that apply everywhere, anytime, you’ll likely be fooled — not only in April, but every other month of the year. Read more: http://www.businessinsider.com/thre

When it comes to deciding whether to rent or buy your next home, it all boils down to the golden rule of real estate: location, location, location. Renting can make complete sense in one city, while it would be a money drain in another. And the length of time you plan to stay in that area has a big impact on the bottom line as well. But in general, housing values are becoming a much better investment than they were just a few years ago. And if you're looking to settle down, it's probably best to seal the deal. "It depends on your local market," said Brendon DeSimone, a Zillow real estate expert. "There's no one answer for the whole country." Here's what you should think about before you sign the dotted line on a lease or a mortgage. Location You first need to dig into data on your local market. There's no one geographic area that's taking the housing market by storm, but many areas of the manufacturing-ravaged Midwest are a good bet. Trulia points to Detroit, Toledo and Cleveland as some of the most attractive areas for home buying right now. It's also wise to check Zillow's Breakeven Horizon index, which takes into account the price of a down payment, purchase costs, and utility and maintenance fees in different cities. According to the index, it would take 8.3 years before buying a home makes more financial sense than renting a home in San Francisco. But in Tampa, that number is much smaller, at 1.6 years. The New York Times also has a great rent vs. buy calculator. The bottom line: Don't commit to buying until you check local data. But even in urban areas, buying is often a better deal right now. Longevity Renting is ideal for someone who plans to live in an area for fewer than three to five years. If you were to buy a house in that time, you might not get the return on your investment. If you buy a house and sell it within a couple years, DeSimone said you'll lose about six to seven percent of the money you put in to a home through the cost of selling — including transfer taxes and the real estate commission. Granted, you shouldn't rent forever. Apartment rents are expected to rise by about 4 percent annually through 2015. Home prices are also bouncing up as the housing market improves, jumping by about 10 percent in February alone. "If you have any doubt about long-term longevity, then you should be renting," he said. "Don’t waste your money." The bottom line: Rent if you can only commit to staying in the same spot for a year or two. If your job will keep you in the same place for several years, it's a good time to buy. Maintenance Before buying, you also need to be ready to pay higher insurance and maintenance costs on a home than you would on a rental apartment. When your sink gets a leaky pipe in a house, you can't call your landlord to bring down his toolbox to fix it for you. And those unexpected costs can potentially add up to thousands each year, depending on the age of your home. Many websites recommended stashing away 1 percent of your home's worth for annual maintenance costs. The bottom line: If you're not ready to pay out of pocket when your fridge is on the fritz or your hot water heater mysteriously shuts down, go with renting. Upfront cost Before buying a home, potential owners need to ensure they have at least 20 percent of the cost for a down payment. Although you can sometimes get by with less, most buyers must meet that threshold to qualify for a typical home loan, DeSimone said. Twenty percent down is often called the "magic number" for a house down payment and can come with lower interest rates compared to loans for people who can only afford 10 percent. Upfront costs for renting an apartment typically include a down payment of at least one month's rent and a security deposit, which you can recoup at the end if no damage is done. But buyers also can take advantage of current record-low interest rates. And they don't have to deal with landlords or fluctuating rents. The bottom line: If you can't afford to put down 20 percent of the home's cost, rent instead. Return on investment Home prices are on the rise, but they're still about 30 percent lower than they were before the real estate bubble popped. Regardless, prices are going up –– a good signal for potential home sellers down the line. And the housing inventory is at its lowest in years, showing that real estate is finally in high demand. On the other hand, there's no chance you'll never get back the rent that you put into an apartment. The bottom line: Theoretically, there's more to gain by investing in a home, but if the economy takes another downturn, we could be easily singing a different tune in a decade. Millions of homeowners were left with underwater mortgages in the wake of the housing crisis, which left them living in homes that were worth less than they could sell for. The Verdict: There's no hard-and-fast rule for whether renting or buying is the "best" choice in today's economy. Buying a home is becoming a more attractive investment as the economy slowly improves, and it's surely a move to consider if you're planning to stay in one spot for several years. Otherwise, take a gamble on renting for now. Read more: http://www.businessinsider.com/renting-vs-buying-a-new-home-2013-4#ixzz3NV