BUYING A HOME IS AFFORDABLE

There are many reasons people rent. Some of those reasons are circumstantial, like they are unsure of their future, and where they will be living, or they just moved to a new city or state. Owning may be seem like a daunting task to some. First time homebuyers may not know how to get the process started. For a good majority though, they just do not think they can afford buying a home.

Buying a home is affordable, you cannot afford to not buy. You may say, "but wait, the market is hot right now, prices are higher than they have been for many years, I can't afford that". You would be correct in your statements except the last statement. Many people do not realize they can afford a home. In Utah there are more people looking to rent than there are rentals available. Simple economics tell us that high demand and low supply means inflated prices on rent. You will be able to get into a mortgage right now that will be close to what you are paying in rent. You can also expect your rent rate to go up when your lease renews, because your landlord knows rates are on the rise, and they'll want to get as much out of their units as possible.

You simply cannot afford to rent right now. The market is on the rise, and in my opinion will continue to increase for at least the next couple of years. Your rent money, needs to be converted into equity money. The longer you put off your home purchase, the more your equity potential will decrease.

Real Estate is a great way to invest into your retirement. You don't have to buy the mansion that you want to retire in, now, but you need to buy something so you can start on that path. When searching for a home, you'll want to keep in mind that this is just a starting point, not a final destination.

Are you worried you do not have enough money to put down on a home? It's a legitiment concern, and stops many people right in their tracks. Many don't realize that you DO NOT have to have 20% to put down on a home unless it is not your primary residence. There are several different types of loans out there, and you can put very little down. If you are eligible for a VA loan, you do not have to put any money down.

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HERE'S WHY YOU BUY

A Built In Savings Plan: You can often find a home with a mortgage payment similar to your rent payment. Each month you pay your mortage, you are making an investment into your home, it's not going into the pocket of a landlord. Home prices continue to be on the rise. It is very easy to build equity while making a similar payment each month. When renting, you are not investing your money into anything, and are not building equity. It's just like a savings plan, and you don't have to think about it, just make your monthly payment.

A Home, Not A House: There's something to be said about owning your own home. You can take pride in it, you can take pride in knowing that it's yours and not someone else's. Attach permanent fixtures to the walls rather than using Command Strips and thumb tacks. Hang your pictures, hang that large mirror you've always wanted in your bedroom, or build a permanent bookshelf into your library room rather than having cheap shelves that can topple over easily. Paint the rooms any color you want, even if it would seem outrageous to some. Rip up the carpet and put something you would like, maybe a different color, or maybe hardwood floors. The options are endless, it is YOUR home after all!

Join A Community: With rental or apartment living, there's not much opportunity to have a community. It's like a revolving door, neighbors are constantly changing for various reasons. Once you get to know someone, either you move or they move. Putting down roots allows you and your family to have a better quality of life and be happier. Communities with a higher own-to-rent ratio tend to have lower crime, higher property values, and higher voter turnout.

Stability: Owning is much more stable because you know that your mortgage payment will remain constant because you don't have a landlord who will increase the payment every time it's time to renew your lease. Sure it will fluctuate a little with property taxes and insurance, but not a lot. Once your home is paid off, you don't have to worry about payments anymore, which is great for retirement. With renting, the payments never end. You'll pay rent until the day you die.

Tax Benefits: Each year on your taxes you get a very large deduction for the interest you pay on your mortgage. Lower income households can actually receive what's called a Mortgage Credit Certificate (MCC) which gives a credit of 10% to 50% on mortgage interest paid during the year. When you go to sell your home, you can receive a home sale tax exclusion on the equity of your home. To qualify you have to have lived in the property for the last two out of five years. Single individuals get an exclusion on up to $250k in equity. Married filing jointly get an exclusion on up to $500k in equity. Pretty sweet, right? If you invested your money into the stock market and made a single penny on it, you'd have to pay capital gains tax. This is why investing in a home is one of the smartest decisions you can make for now and the future. If you either do not qualify for this exemption or you make more in equity than the exemption covers, you still have options for receiving tax breaks on that money. Anything you put into the home to make it sellable can be deducted. So paint, new carpet, repairs, etc... You can also deduct costs associated with the sale. Such as real estate broker fees, attorney fees, closing fees, escrow fees, title fees, etc... As long as they are paid by the seller. This is for informational purposes only, I would advise you to speak with a CPA to get tax advice specific to your situation.

Investment Property Potential: Have you always wanted to own investment properties but thought you could not afford a single home let alone multiple? This home you bought was just a start and you'll probably want to upgrade in a few years. You can either sell this home and put the equity towards another, or you can keep it and turn it into a rental. I can teach you how you can afford to do this, while building passive rental income. In fact, I can teach you how to own 5 homes and potentially pay CASH for the 5th.

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BUYING A HOME STILL SEEMS INTIMIDATING

What about the liabilities of owning a home? If something breaks, you are responsible for fixing it. I understand that many people do not have the means to pay out a large sum of money at once for a repair, and even those who do don't want to. That's why I recommend always carrying a home warranty. Many purchase warranties on cars, so why not your home? I'll make another blog post explaining how these work, but they are a great form of insurance, and really don't cost much compared to how much one repair can cost. It is also important to make sure you have adequate homeowner's insurance to cover any losses. I would recommend working with a broker rather than purchasing a policy online because the broker can explain coverages to you, and help you understand how claims work. Plus, when something does happen, a good broker will help you with the claims process, and they are local. Coupling both a home warranty and homeowners insurance is a great way to not only protect your investment, but also lower your out of pocket expenses.

If you are open-minded to looking at the market, and finding something that fits your specific needs, let me know. Fill out the contact form on my page, and let's talk! I can also connect you with excellent mortgage brokers and insurance agents who can answer your questions in those areas since they are the experts there.