Deciding To Own
What are some of the benefits of owning a home?
Excellent question. Many significant benefits.The first one is obviously tax benefits. Most people do not realize the signifigant tax savings, and I get these calls all the time at the end of the year when my clients sit down with their accountant and call me and say, "Oh my goodness, John, I cant believe what I just saved in taxes." That is a huge factor. You have to remember the first part of any loan is going to be primarily interest, and that's all right off the bull if that is a phrase I can use. Second benefit of owning a home is simply pride of ownership. You own the home. No one can tell you the landlord is coming through in 24 hours to due a general inspection. There is no violation. Pride of ownership, that's a huge one.The third big factor is wealth building. It really forces you to save. In other words every mortgage payment you making is literally like going to the bank and putting a deposit in your bank account. So it forces you to save. Those are three huge factors.
What are some of the drawbacks of owning a home?
Well, I don't know if there are really any drawbacks to the American dream; it's kind of sacrilege to even think such a thing. But if you wanted to lead more of a nomadic life, a life on the go, you are firmly entrenched into a community. It's not like you can pick up your tent and vanish into the night. So a drawback is, for example, you could say that with an investment may not be as liquid as you'd like, meaning it's not cash in your pocket. Same thing with real estate, it's not something that you can dissolve overnight.
Can I really own a home for what I pay in rent?
With regards to buying a house, you can absolutely own a home in relation to what you are paying in rent. The biggest obstacle facing most home buyers when buying a home is getting past that initial down payment. If you can get past the down payment, very often your monthly mortgage for a home is the same as when you were paying rent.
How much house can I afford?
The amount of home that you can afford is a direct function of a couple of things: Credit, income and savings. Credit being the most important. But I would recommend anybody find a good lender, meet with them, let the lender pre-qualify you. The term is to get pre-qualified. Let the lender tell you what home you should be looking for for two very good reasons. You don't want to under-buy, meaning, you'll still be getting killed on taxes. You don't want to fall in love with a comfort zone just beyond your comfort zone because then you'll be disappointed and heart-broken
How important is my income when qualifying for a home purchase?
When it comes to qualifying for a home purchase, income is not as important as credit is, and that comes as a surprise to many buyers. But the reality is that this is what an institution (a financial institution) is looking at, your creditworthiness; as your past history predicts your future potentiality of being a good borrower.
How much will a new home cost me after taxes?
When getting started in real estate, taxes are not something you get past, taxes kind of stay with you. In my state for example, your property taxes are 1.25% of your purchase price annually. Throughout the country, taxes could vary by state or county, but it is something that's incorporated into your monthly payment.
How do I calculate my monthly payments on a new home?
When buying a home, the good news when calculating your monthly payments on a new home is that in this age of information, there are countless websites that will enable you to go and determine what your value is. This is in stark contrast to the golden age of real estate, where you would have to have a scientific calculator and really know what you were doing when calculating your monthly payments. Like I say, there are many, many websites. You can determine interest-only, or a traditional principal and interest loan.
What is the difference between a "buyer's market" and a "seller's market"?
The difference between a buyers market and a sellers market is all about supply and demand. All about when a market is red hot, and buyers have low interest rates, and they have reason to believe prices are on the rise. This then becomes a seller's market because the buyers have the incentive to get things done. When that is turned around, for example, if there is a negative consumer confidence, if there is some scary news on CNN headline news that's going to drive buyers back out of the market, then suddenly what you have is a buyer's market because the buyers just aren't in the mood to buy, and as a seller, you're looking to work with anybody hoping to produce a reasonable offer.
