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So What’s this going to cost me??
// August 3rd, 2009 // No Comments » // Costs, First Time Buyers
So you read my last blog post and I’ve got your interest when you heard about all the great benefits homeowners have over renters. You’re on board, but you want to make sure you’ve got the cash to do it. Good, you’re a responsible saver.
The first number you should have in your head when you are thinking about buying a home is that you will need a minimum 3.5% for a down payment (unless you are buying in a rural area, if this is the case call me, we’ll talk). Buying a $100,000 house, you’ll need $3500. If you do not personally have this money you are allowed to receive a gift from a family member for the down payment. This must be a gift though, no paying it back.
Next we need to talk about closing costs. Closing costs are the costs associated with getting a mortgage. A great mortgage professional can spell out all of these costs for you before you even start looking. Need a referral? Ask me, I know a guy. While a down payment needs to be your own money or a gift from a relative, you can ask the seller to pay for your closing costs. There may still be some fees that you will still have to pay so it is good to plan for a little cushion when saving your down payment.
Once you identify a property that you want to make an offer on, you will need to put down what is called earnest money. Earnest money is required to make a contract valid and it shows that you as a buyer are serious about purchasing a home and you are willing to put a little skin in the game. While there is no set figure that you must give, generally $1000 is a good amount on properties under $200,000. This earnest money is held in a trust account by the listing broker until the house closes. At closing, typically you deduct your earnest money from your down payment. Example, you need $3500 for your down payment, but you already put down $1000 in earnest money. On closing day you would bring just $2500 do the closing table.
Lastly, when you move in you are going to want to paint, decorate, landscape, and so on and so forth. Make sure that buying a house doesn’t completely wipe all your savings out. Nobody wants to be house broke.
Home Ownership
// July 26th, 2009 // No Comments » // Benefits of Home Ownership, Renting vs. Owning
I meet a lot of people in my job which is a good thing right? There is always the certain group of renters that just don’t know that they can afford a home. Now I will be the first to say that owning a home is not for everyone. There’s a right time and a place for everything and some people just aren’t there yet. That being said there are alot of people out there paying down their landlords mortgage on a monthly basis instead of buying up a little piece of America to call their own.
So what’s the big deal in home ownership?? Well first of all, tax deduction. Each year at tax time homeowners get to write off the interest they pay their mortgage company each year. This is big, for example, I got to write off $8000 in mortgage interest last year. WOW! Renters don’t get to take a deduction for the amount of rent paid. Secondly a home is an investment. When you buy a home at a good price and make improvements to it, generally in 5-7 years when you go to sell it you will make a profit. Now the key to this is buying a home at the right price. Many people who purchased homes in 2006 and put no money down are not making any money on their homes right now, THAT is a completely different blog post for a different day though.
Another advantage of owning?? Stability. When you go to your local mortgage lender he or she will most likely get you a fixed rate mortgage, unless you refinance down the road, this payment will always be the same, for 30 years. Know any rentals whose rents don’t rise for 30 years? I don’t.
Lastly, how about the design flexibility of owning your own home? You get board with the green living room, paint it red, 6 months later you can’t paint it brown. Your options are as open as your creativity when it comes to renovating, remodeling or landscaping. Can’t do that in an apartment.
