HOUSE BUYERS.

Hawera & Normanby Star, Volume XLIII, Issue XLIII, 4 January 1924, Page 8

HOUSE BUYERS.

PITFALLS AND BURDENS

The United States, Department of Commerce is rather in advance of NewZealand administrative policy in the matter of giving advice as to acquiring homes and avoiding dangers and ex- i cessive burdens in a haphazard system I of purchasing property. A booklet hag j been issued by the Division of Building j and Housing of the Bureau of Standards. Most of its information applies especially to conditions in the Ijnited States, but some of the advice has a general application. The authors emphasise that the -first x question that should be considered by fee prospective buyer of a home is .the actual measure of the annual burden of finance involved. It is bad buying if ! the financial obligations absorb too! much of the family income and compel a reduction, in the living standard. Emphasis is laid on the importance of having all agreements regarding finance, building, and purchasing | { drawn* with careful attention to legal j X detail and properly signed by both parties. The more cash one can pay I down the better, it is pointed out, and ( usually it is desirable to possess, free J from obligation, at least 20 per cent of the value of the house and lot in cash. A larger cash payment helps to insure a loan at a low interest rate, and one that can be comfortably paid off by systematic instalments at regu- - lar intervals. To carry out this plan systematic saving is also necessary. The practice sometimes indulged in of ' borrowing cash on life insurance policies to make a first payment is dis- ■ countenanced as improvident, since it deprives the borrower's family of its full protection. After the first cash payment is made obtaining a plan to pay the balance of the total cost is not difficult, provided the amount paid down has amounted to 40 or 50 per cent of the whole pur- : chase price, but this problem becomes harder as the proportion to be borrowed grows larger. Such loans are generally obtained on a first mortgage ip to 50 or 60 per cent of the value ■f the property, which is considered >ne of the safest of investments and hould be easily obtained from a buildng and loan association, savings Tank, rust company, or from some individual, )erhaps the seller. If it proves impossible for the buyer;o borrow all the money he needs on i first mortgage, he may have to borrow the additional amount on a second mortgage or note, on which interest rates generally run higher, sine the bolder takes more risk. The pamphlet warns that an unscrupulous lender may encourage the purchase of an expensive piece of. .property in the belief that the buyer cannot meet the payments / and that he can foreclose the mortgage and buy back the property himself at a forced sale, when prices may be low. Interesting reference is made to buying sections in undeveloped territory, where one may have to wait years for water, drainage, electric light, and other utilities. It is deemed wise to check values by actual conditions jather than by exaggerated prospective improvements. Front-foot' values shown by recent genuine sales and assessed valuations may serve to check valves, though a fair appraisal should be obtained from a disinterested third pefson. An appraisal by a building and loan association is generally . safe, and when financial institutions will not lend on first mortgage more than 40 per cent of the price asked, it may be assumed that the price is too high. The judgment is always worth while, it is stated. In carrying out the actual purchase it is important for the buyer not to bind himself until he is sure exactly what he is to pay for, and has made definite financing arrangements, otherwise he may suffer a severe loss. Com , petent examination of the title is essential, and it is well to note also whether any easements exist on the property. Ladies can thank "No-Rubbing" Laundry Help for shortening the one© dreaded washing day to a brief hour or jso to-day. It works wonders, and ' only Is for 7 weeks. Galloway and Sons, Nonnanby.—Advt.