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Home buying is probably the biggest financial commitment you’ll ever make. Buying a home is not just a dollars-and-cents investment; it’s an investment in your life. It will create a sense of stability and identity for you and your family. Regardless of how times change, owning a home remains the cornerstone of the American dream.
RENT VS BUY
With every rent check you write, you’re helping to build equity in your landlord’s property. That money could be going towards building equity in a home of your own. Today’s rates are low enough that your house payment could be lower than your rent payment!
There are many advantages to owning a home...
FINANCIAL INDEPENDENCE
TAX ADVANTAGE
SATISFACTION
CASH EQUITY
SECURITY
INVESTMENT
FINANCIAL INDEPENDENCE
Most people start on the road to financial independence through home ownership. Your principal and interest payments remain the same for the full term of your mortgage while your rent usually goes up as the cost of living increases.
TAX ADVANTAGE
Your real estate taxes and the interest on your mortgage are deductible from your income tax.
SATISFACTION
Home ownership offers special advantages that make life more enjoyable – backyard barbecues, large family gatherings during holidays, a home workshop, a chance to enjoy your family’s companionship in the privacy of your own home.
CASH EQUITY
Better than a savings account, your home can appreciate yo keep pace with inflation.
SECURITY
A feeling of security and stability that comes from owning a home and the knowledge that your home is a safeguard against inflation.
INVESTMENT
Payments on your mortgage mean you are acquiring a major possession; instead of rent, you own. The garden you plant, the carpet you install – all enhance your way of living as well as the value of your home.
HOW MUCH CAN YOU AFFORD?
Before you go out looking for a home, you can get an idea of what you can afford by using our mortgage calculator.
One thing to consider is your down payment amount,. Think you can’t buy a house without a 10% or 20% down payment? Thanks to FHA loan products, many people can now get into a house for as little as 3% down. There are even some special programs for first-time buyers that help with closing costs.
If you are looking at condominiums, you can check to see if the community qualifies for FHA loans here.
PRE-QUALIFICATION VS PRE-APPROVAL
THE BENEFITS OF EQUITY
TAX BREAKS
PRE-QUALIFICATION VS PRE-APPROVAL
Pre-qualification is just a guesstimate of how much you could afford. But with a pre-approval, it’s just that: getting your mortgage approved prior to going out and looking for a new home.
Your loan officer will show you which items you should bring to apply so neither of you will need to wait for various written income, asset and liability information. So you could get a loan decision in just days. And when you apply online, you can get your approval quickly!
THE BENEFITS OF EQUITY
Equity is the principal part of your monthly payment that you can use as a down payment on a new home, or collateral for a home equity loan. You can use a home equity loan to finance home improvements, a child’s college tuition, or a new car.
Real estate is also a great way to keep a hedge against inflation. While some homes do appreciate in value more quickly than others, real estate usually keeps pace with inflation. In fact, homes in general have been appreciating at a steady 3% a year. (Your Realtor® can provide you with the housing appreciation rates in the areas in which you’re interested in buying.)
TAX BREAKS
As a homeowner, when filing your taxes you can deduct the interest portion of your monthly payment-and that can mean big savings. You can deduct your property taxes too. So look at what your monthly mortgage payment will actually be, taking your tax breaks into consideration. You may find out it’s about the same as-or sometimes less-than a rent payment!
With a 5% down payment, a $100,000 30-year mortgage loan at 8% interest (8.15% APR) requires a monthly principal and interest payment of $733.76. Assuming a 28% tax bracket and $150 for monthly property taxes, the after-tax monthly payment wold be about $615! (This is only an example. Please consult with a tax advisor regarding your own tax situation and current tax laws.)
WHY WORK WITH A REALTOR?
Sure, you can do your home search by yourself and probably already have to some extent. Buy, why should you? With an experienced Trusted Realty Group professional at your side, finding the perfect home is easier, faster, and a lot more fun. A good Realtor® can show you more suitable properties, offer valuable advice, and coach you through the entire home buying process. And you’ll save time. Yet many buyers still spend endless hours poring through classified ads, driving all over town, and viewing dozens of unsuitable properties – simply because they haven’t connected with a Realtor®.
Some people think that if they have several agents looking for homes on their behalf, they’ll find a house more quickly. Like most relationships, the buyer-agent relationship thrives on communication, loyalty and trust. By working exclusively with one agent, you’ll improve both the process and the results.
The best part of all, as a buyer, you don’t pay a penny for our services!
Some helpful hints on finding and working with a Realtor®...
- Ask friends, family members, neighbors or co-workers for referrals
- Trust your intuition
- Share with your Realtor® as much as possible about your lifestyle, tastes, needs, and dreams for your home
- Focus your search on a few geographic areas
MAKING AN OFFER
Time for nervous anticipation. You’ve found the home you want, and your Trusted Realty Group Sales Professional says you need to act fast. Yet you want to be as calm and objective as possible. The expertise a Trusted Realty Group Sales Professional can give you at negotiating time is priceless.
NEGOTIATING THE BUY
CONTENGENCIES
EARNEST MONEY
NEGOTIATING THE BUY
The expertise a Trusted Realty Group Sales Professional can give you at negotiating time is priceless.
Be prepared for counter offers. Don’t let the pressure get to you. Remain patient, and let your Trusted Realty Group Sales Professional act as your liaison with the seller to the seller’s agent. You may need to be flexible on price, closing date, appliances and repairs.
CONTENGENCIES
Beware of putting contingencies in your purchase agreement. They weaken your offer. However, if you currently own a home, your offer may need to be contingent on it selling. Of, if you’re uncertain about the structural integrity of the home, you may want to have a home inspection contingency. Just be aware any contingency could take you out of the running if a non-contingent offer is presented.
EARNEST MONEY
Once your offer is accepted, be prepared to seal the deal with earnest money. Earnest money is usually a percentage the home’s purchase price that indicates you’re serious about the purchase and indicates good faith. It’s generally applied to the purchase price when you complete the purchase, but may be forfeited to the seller if you fail to complete the purchase. Contact you Sales Associate to determine the amount of earnest money you should be prepared to pay based on your target home price.
Many first-time buyers are taken by surprise when it comes to earnest money, especially if they have auto make a fast offer. Be sure to discuss with your Realtor® the appropriate amount of earnest money you should be prepared to pay based on the price rage of properties you’re looking at. You should have this amount available in your checkin account so you can write out an earnest money check on the day you sign your purchase agreement.