Why Buy A Home?

People still need a place to live and renting is not for everyone. Renting has flexibility (and even that flexibility is tempered by the lease, and payments can be flexible too, going up in many cases), but the advantages of owning are too great to ignore.

Some of the most frequent things I hear is that “There is no money available for mortgages” “You need perfect credit” or “I need too much for the down payment” Let me clear up these common misconceptions.

· There is plenty of money available for financing. In fact there is so much supply and so little demand that interest rates are at historic lows.

· You don’t need perfect credit. FHA focuses on the ability of a person to repay the loan more than a credit score. Of course a history of not repaying loans will hold you back, but perfect credit is not an absolute requirement. Now, you do need a job and the ability to repay the loan, but that’s a good thing.

· You don’t need a big down payment. FHA financing requires only 3.5% down plus closing costs, and sellers can contribute 3% towards those closing costs (Which covers most if not all of them)
Now for the advantages of buying.

I always tell people to look at their home as a place to live. Buy it because it’s where you want to be, where you want to raise your family, or retire etc., but there are other good, financial, reasons to buy a home.

Tax breaks: Most people are aware of the interest deductions on mortgages. Many people will adjust their payroll deduction and see a bigger paycheck right away. But an even potentially bigger tax break is from the capital gains exemption. When the price of your home goes up, and it should, you do not have to pay capital gains tax on the first $250,000 of gain, $500,000 for couples. This can be a Huge savings!

Principle reduction: After 5 years of renting you’ll have 5 years of cancelled checks. After 5 years of house payments, you’ll have more equity in your home. In 15, 20 or 30 years, even if the value of the home never goes up, you’ll own the home!
Appreciation: As I said, in the past 25 years I’ve seen prices go up and down. But the general trend long-term has always been up. Home prices tend to follow the cost of living and inflation. It is a good hedge against inflation. Real appreciation comes from buying in a good location, at a good price. And it takes time. A good agent is really valuable here. Right now prices are at a low point and the phrase “buy low sell high” seems to fit.

It’s YOUR home: This covers a lot and it means different things to different people. Maybe it’s pride of ownership, maybe a base for the family, maybe a good investment. What do you want? What does a home mean to you?

So, you have to live somewhere. If you’re renting now and want to have more than canceled checks 5 years from now, call me. I offer a free consultation. If you own a home and you’re worried that you won’t get what your home is worth, call me. I can do a Market Analysis and give you facts, not fears. Also, if you’re waiting for your home to go up in value, remember that the home you want will be going up in price too, (along with interest rates.) And, there are some strategies we can talk about regarding this.