Preparing
for homeownership
For most people the American dream is to
own their own home. You can make it happen, and becoming as
knowledgeable as possible about the home buying process, and what to expect,
will help you reach your goal of home ownership with the least amount of obstacles.
First we will help you determine if homeownership is right for you, and whether or not
you can afford to buy a home at this time.
We will also help you determine your budget for
buying a home, as well as what mortgage lenders look for in
securing mortgage loans.
We will explain how first-time home
buyers and low – and moderate-income households can extend their
borrowing power with a number of flexible mortgage programs.
Are you
ready to buy a home?
What is the reason homeownership is
appealing to you? Buying
a home is not something you just do, it’s something that needs
to be well thought out, because homeownership necessitates an
investment of time and money.
Why buy
a home?
Here are some advantages to owning your own
home.
Your
own home
A home is a place that belongs to you. At this
point in time you are probably prepared to settle down and become
a permanent part of your community. Maybe you need more room in
which to raise a family. Or,
perhaps you want more breathing space than you get in a rental
unit.
Financial
benefits
of buying a home
Buying a home can be an excellent investment for a number of different reasons.
Steady
housing costs. Another
benefit of owning a home is that while rents normally increase
yearly, the principal and interest portions of “fixed-rate”
mortgage payments remain unaffected throughout the entire
repayment period, that is 30 years for a 30-year fixed-rate
mortgage.
Increased
value. Houses can
increase in value, or “appreciate” over a period of time.
A house sold for $75,000 ten years ago in certain parts of
the country is worth much more today.
This increase in value is as good as money deposited in the
bank to the homeowner.
Scheduled
savings. When you
buy a house, your monthly mortgage payments
build up what lenders call “equity”, an ownership
interest in the property that you can borrow against or convert
into cash by selling the house. Renters must keep on paying rent,
without the chance to accumulate equity, the entire time they
rent.
Tax
incentives. Owning
a home can enable you to take advantage of significant tax breaks,
which are not offered to renters.
Interest paid on a home mortgage is usually deductible.
This alone may save you a considerable amount each year in
federal income taxes.
Possible
disadvantages of buying a home
In spite of all its appeal, homeownership
is not for everybody. Buying
a home involves a complicated, time-consuming, and costly
procedure that sometimes carries with it unwelcome responsibility.
High
cost of homeownership
Buying a home may cause a substantial
strain on your finances. For the first several years, you
should expect to pay more for housing as a homebuyer than as a renter. Property
taxes, homeowner’s insurance, utilities, and upkeep added to
your mortgage payment can be more than you would pay for rent.
Possibility
of foreclosure
Foreclosure is the sale of a mortgaged
property (your home) by the mortgage lender.
This happens if the borrower fails to give monthly mortgage
payments on a timely basis or otherwise defaults on the mortgage.
Financial institutions can and do foreclose
when borrowers fail to make their payments.
This can result not only in the loss of your home, but also
in the loss of your investment and good credit mark.
Repairs
and maintenance
People retreat from buying a home because
they don’t want the responsibility of maintaining a home (mowing
the lawn, repairs, etc.).
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