YOUR FIRST TIME BUYING A HOME

There is nothing more we can do to enhance our lives and build a successful future than buy a home.  It's a cliche but still true...when you buy, you are building your dream.  When you rent, you are building someone else's.

Most people who retire comfortably can do so, in large part, because of home ownership.  If you find it hard to save a lot of your income, you're not alone...sometimes even those with very high paying jobs are still swamped in debt.  See How Much Home Can I Afford?

ADVANTAGES OF OWNING A HOME

     1.  LEVERAGE. You need only put up a fraction of the cost of the home....if you qualify, a lender will come up with most of it, and at this time, the interest they are charging is very low by historical standards.  Really, it's hard to imagine lower.

     2.  APPRECIATION. If you buy right, your home is likely to go up in value considerably over time, while your payments to the lender are normally fixed. This is wealth building!  The longer you own the home, the more likely this is to be true.

     3.  EQUITY GROWTH. This means that, with every payment you make, you own more of your home and the lender less.  The rate of growth of your share accelerates the longer you keep it...this is another way it pays to think long term.

    4. TAX DEDUCTION. The tax code encourages home ownership (punishes renters?) by allowing you to deduct the interest portion of your mortgage payment when filing your income tax return, and that's the majority of it (in the early years). 

     5.  PRIDE AND PERSONAL FREEDOM. Maybe this belongs at the top. As a homeowner, you are free to do as you want with your property (respecting local ordinances, of course). You cannot be put out of your home because someone has raised your rent or decided to sell. And every improvement you make is an investment in yourself. 

THINGS TO CONSIDER

      1.  SOME CASH NEEDED. There are a variety of programs offering Down Payment Assistance but at least some cash is usually required to purchase a home. It may not be a lot as there are programs to help your first time buying a home and if you have limited cash.  But it is possible that you will lose all the cash you put up, just as with any investment.  Of course, renters are guaranteed to lose all their rent money!

     2.  CREDIT SCORE.  Better credit will get you a better deal from a lender as they assume there is a lesser chance of a default on the loan. So while planning to buy, do all possible to reduce credit card and other consumer debt. Make payments on time, no matter what. And speak to one or more lenders...they have lots of information for first time buyers about managing existing debt and how to get the best possible deal. 

     3.  CREATE A CUSHION.  Consider your income source(s).  Are you dependent on a single job? Is that job easy or hard to replace if it went away?  Lenders usually won't lend you money they don't think you can pay back but you know how secure your income is.  Best to have at least a few months cushion and build that over time.

     4.  YOU ARE RESPONSIBLE. For long time renters, it can come as a shock when the roof leaks or the refrigerator quits and you realize it's yours to solve. It helps to collect referrals for repairs and YouTube is an amazing source of free DIY repair tips. 

These are some things to consider but the most important thing is to make a commitment not to let your future self down! It may take some time to get the pieces in place, but the sooner you start, the sooner you'll take possession of your own home.

Jonathan Micocci

727 224-8918

jonathan.micocci@evusa.com