Why Should I purchase a Home right now?

Why Should I purchase a Home right now?

This is a question that most people ask themselves.  Below you will find some frequently asked questions and answers about whether or not you should purchase a home.

 What are the Advantages of Home Ownership?

• Significant appreciation and wealth building opportunity
• Generally known as the best investment one can make
• Locked in monthly payments for a specific term
• Tax deductibility of interest and taxes
• Pride of ownership; sense of community

What are the Benefits of Home Ownership?

Building Equity – Loan Principle Reduction

• Principle payments reduce the amount of money you owe to your lender if you pay more than interest only
• When you sell your home, your cash proceeds are increased by the amount that you have paid down your loan and appreciation of the property

 Building Equity- Property Appreciation

• The appreciation of your property is the increase in your value from the time you purchase until the time you sell
• This typically is the biggest financial benefit of owning a home
• Your appreciation is based on the increase in the total value of the house unlike most investments where the return is based on your initial cash investment

 What are the Tax Benefits of Ownership?

• The interest that you pay on your home mortgage is tax deductible
• The real estate taxes that you pay are also tax deductible
• This dramatically decreases the amount of income tax that you owe.
• This tax benefit can be realized at the end of the year in a larger refund or taken throughout the year by decreasing your withholding on your W4.  The actual amount of the benefit depends on your tax bracket.  Please consult with your CPA.

 What are the Disadvantages of Renting?

• No appreciation
• Rent usually increases annually
• No voice in management
• No tax benefits
• No pride of ownership
• Cannot alter interior of renal units
• Subject to sale requiring renter to move

 What credit score must I have to qualify for a mortgage?

• Right now the minimum credit score is 580.  But most lenders will want you to have a 620

 What do I need to apply for a mortgage?

• Call our office to complete a buyer prequalification form
• Complete a mortgage application
• 2 most recent pay stubs
• Down payment of 3% of selling price. (if you are a 1st time homebuyer)

 How much money do I need to have at closing?

• Down Payment of 3% of selling price
• Closing cost and prepaid items (Generally 2% of purchase price).  However most sellers will pay your closing cost right now.

 Can my down payment be given to me?

• Absolutely as long as it comes from a relative

 How long does it take to close once I am approved?

• Closing could take place in as little as two weeks

 Do I qualify for the US Government 1st Time Homebuyer Tax Credit?

• Yes, if you are a 1st time homebuyer or if you haven’t been on title for the past three years