CEO of Prudential Douglas Elliman and radio host, Dottie Herman, offers sound advice to both new homeowners and those that are considering buying.
On June 2nd, “Eyes on Real Estate with Dottie Herman” featured real estate expert and author, Eric Tyson, to discuss “10 Things To Do After Buying Your Home.”
Dottie opens with, “Getting the money to buy is hurdle one, and paying is hurdle two.” She then discusses benefits and tips for staging and enhancing curb/internet appeal.
Tyson’s interview begins with his motivation. He says, “A lot of the information that was out there frequently was written by well intentioned journalists, but journalists who didn’t really have that in-the-trenches perspective.” He shares that he partnered with the real estate professionals responsible for “Home Buying for Dummies & Real Estate Investing for Dummies” because of their experience.
He and Dottie discussed today’s home prices and buyer’s remorse. Tyson expressed his belief that people who are able to buy and those comfortable in their financial and employment situations, should buy.
● Affordability – “You have to look at your overall financial situation to figure out how much house you can truly afford.”
● Personal Circumstance – Things that you know about the future of your finances – loan repayments, children’s college, etc.
● Comfort Level – The decision to buy should be a comfortable one.
Dottie then moved on to the most important part of the interview and the points from his book. Below are Tyson’s thoughts on each of the ten tips.
● Solicitors – Many companies will contact you in an attempt to offer you products and services. He explains, “…insurance providers claim to pay off mortgage loans provided something should happen to you or you lose your job.” Purchasing life insurance based on bank solicitation is not the most cost effective way to buy.
*This is touched upon later on in the dialogue during the tenth and final point.
● Hire an Effective Financial Planner – In-depth explanation in his book.
● Hire An Effective Real Estate Team – Tyson says that buyers should thoroughly investigate any potential real estate agent, mortgage person and insurance provider – “Learn enough so that you can evaluate these people and make a good hiring decision.”
● Refinancing – Due to low interest rates, many homeowners consider refinancing.
“It’s a situation complicated by all the financing options available…You know, historically, the motivation to refinance comes from the ability to save money, and refinancing always costs you money, so what you have to look at is ‘how many years is it going to take me to re-coop the financing cost, and is this a worthwhile trade-off?’”
● Electronic Payments – Tyson explains that he was once wary of this, but now believes automated payments are best because they ensure timely payments. Missing payments can negatively affect credit scores and interest rates.
● Set Aside Cash – Dottie asked, “Is there a standard rule of thumb for emergency funds?” “How much is enough?”
Tyson answered, “I think for most people at a minimum they want to have 3 months worth of living expenses.” He then cautions, “if things are more volatile, you should have at least 6 months worth of living expenses.”
● Mortgage Insurance – Buy a classic life insurance policy as opposed to a mortgage insurance policy.
“The life insurance decision comes down to ‘how many years worth of your income are you trying to replace?’”
● Protest Tax Assessments – Tyson encourages homeowners to “pay attention” to their property taxes, especially if you live in an area where taxes are reassessed periodically and your home value is based on current market values.
“Sometimes local towns and municipalities get it wrong.”
● Home Receipts – It is of vital importance that homeowners save all documents. Tyson says, if you “really want to minimize capital gains tax you should sell the home at a profit.” For long time homeowners living in a high cost area, it is very beneficial. Manhattan Real Estate is amongst a handful of purchasing areas where they are extremely important. Documents should always be stored in a memorable place.
● “Take Time To Smell The Roses” – Tyson mentions this in reference to buyer’s remorse. For most, buying a home is one of the biggest decisions they will ever make. While making this decision, it is important to practice self-care.
Tyson worked as a personal financial advisor at Bain & Company assisting large Fortune 500 companies. He began writing in the 21st century and has penned five national best sellers, four of which were simultaneously listed on Business Week’s business book bestseller list. He is the only person to ever achieve this remarkable accomplishment. He is also the recipient of the Benjamin Franklin Award.