Friday, March 24, 2017
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GET REAL:
Why Pay The Mortgage On Someone Else's House?
The only one who benefits from a rent check is the landlord. Renters never see that money again, while homeowners usually profit when they sell. In addition, renters can't use any of their rent payment as a tax deduction, like homeowners can. If you or someone you know is renting, it's time to put that rent check to better use!

The mortgage-interest deduction is probably the best financial argument for buying your first place rather than renting. Consider this example:

If you can afford a mortgage payment of $1,000 (principal and interest only), you can buy a house for $206,980 if you put 10% down on a 30-year mortgage at 5% interest. If your payments started in January, you would pay $9,252 in interest for the first year in the home. That entire amount is deductible on your federal income tax return! Assuming you are in the 25% tax bracket, you would save $2,313 in taxes, or $193 per month. So your $1,000 payment is really only $807 when you factor in the homeowner's tax advantage.

Can A Renter Really Afford To Buy?

The real question is whether renters can afford not to buy. The tax savings alone make the purchase of a home a wise financial decision. But let's go a step further.

Using the same example, a 10% down payment would create an immediate equity of $20,698. Assuming the $206,980 house grows in value by just 3% a year, in five years it would be worth $239,947. The original loan amount would then be down to $171,060, yielding an equity of $68,807. In addition, remember your annual tax savings after five years equal to $11,195. The total value of your equity and tax savings would be $80,002 after five years.

Pick A Loan
To take advantage of the financial benefits of homeownership, first-time home buyers must find out how much buying power they have. We can help. Call us for information about the whole range of mortgage options now available, including low- and no-down-payment loans, and programs that allow buyers to wrap home-improvement costs.

Plan Ahead
Although some lenders allow buyers to use up to 41% of monthly income to purchase a house, beware of becoming "house rich and cash poor." Be sure to budget for first homeownership costs beyond the mortgage, including expenses for:

  • moving
  • decorating and furnishing
  • homeowners insurance
  • property taxes
  • homeowners association or condo fees (if any)
  • utilities -- power, water, sewer, cable, trash pick-up, internet
  • yard tools, supplies and general upkeep
  • home repairs, supplies, cleaning and upgrades.
Today, first homeownership is a wonderful dream-come-true for more people than ever before. Let us help turn those dreams into a first home to be proud of.



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FIRST TIME How To Buy The Most Home For Your Money
QUALIFIED How Much House Can You Really Afford?
TIRE KICKING Secret Tests To Check A Property's Condition
LOCATION LOCATION: The Most Important Questions Every Buyer Should Ask
NEGOTIATE How To Buy The Home You Love At The Price You Want
SEARCH Quick Checklist For Finding The Perfect Home
INVEST YOUR RENT Why Pay Your Landlord's Mortgage?
MORE FOR LESS Six Tips For Getting The Best Loan
OPTIONS 10 Savvy Ways To Pay For A Home Today
SHELTER Six Little-Known Ways To Help Relatives Finance A Home
 
       
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