It's true, too. A house costing $600,000 in Toronto might sell, on a comparable lot in the suburbs of Thunder Bay, for $100,000. Never in the history of this country have locational differences been so marked.
From a buyer's point of view, there are two ways of looking at this locational preference. The classic advice is to buy the modest house on a more expensive street. Such a house is easy to resell, and its value will hold up well, for there are always buyers eager for the prestige of that particular neighborhood. And remodeling or adding to it is possible because alterations won't push it out of the price range for that area. The most luxurious house on the street, on the other hand, won't ever repay the owner for the money invested. No matter how elegant it may be, buyers with money to spend will aim at a different, more prestigious neighborhood.
In one way, then, an overimproved house represents an opportunity for the buyer who wants lots of space and luxury features and isn't worried about resale value. If you think you will live in the house for a long time, and if you like the area, you may be able to pick up a great deal for your money.
Money-$aving Tip!
Remember that the best house on the street can be hard to sell, or to resell.
Before you invest in a home though, pay attention to the trend in the
neighborhood. One that's on its way down could pose real problems when you
go to sell. On the other hand, an up-and-coming area can prove a good
investment. You can judge by the exterior of nearby houses. Are they being
allowed to run down--missing spindles on porch railings, junk cars in
driveways? Or are there signs of revitalization--new paint jobs, roofers at
work? Local police can give you statistics on whether crime rates are rising
or falling in a given area, and you can learn a lot about the schools by
attending a meeting of the local PTA.
This article is an excert from Guide To Buying Your Own Home, CENTURY 21(R); Dearborn Financial Publishing, Inc.(R), 1995. THIS BOOK CAN BE FOUND IN YOUR LOCAL BOOK STORE
ADUSTABLE MORTGAGE RATES
Until the early 1980s, almost all mortgages were fixed-rate, with the
borrower knowing in advance exactly what the monthly payment would run for
principal and interest over the full 25 or 30 years of a loan.
As interest rates began to skyrocket and finally hit 18 percent, lenders found themselves locked into unprofitable long-term commitments to keep their money lent out at rates like 5, 6 and 7 percent. This led to serious problems for lending institutions, and many were reluctant to make any further fixed-interest loans.
What emerged was the adjustable-rate mortgage, the ARM. The ARM shifts the risk of changing interest rates to the borrower, who also stands to benefit if rates drop during the period of the loan. It is often chosen when interest rates are high; when rates drop, most borrowers prefer to lock in fixed-rate loans. Those who plan to remain in a house for only a short time may opt for an adjustable rate that starts low and won't be adjusted for three, five or even seven years.
Money-$aving Tip!
Consider an adjustable-rate mortgage when interest rates are high.
To choose wisely, the borrower must shop around, asking about the details of
each ARM loan to find the one best suited to his or her own situation. And
judging adjustable-rate mortgages requires understanding a whole new
vocabulary.
The interest rate on your loan may go up or down, according to an index that follows the trend for interest rates across the country. To keep things fair, your lender must key the changes to some national indicator of current rates . It must be outside the control of your lender, and it should be a figure you can check for yourself, as published in the business sections of newspapers.
This article is an excert from Guide To Buying Your Own Home, CENTURY 21(R); Dearborn Financial Publishing, Inc.(R), 1995.
THIS BOOK CAN BE FOUND IN YOUR LOCAL BOOK STORE
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