| || || 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.
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:
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.
- 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.