First Time Home Buyer
A family member can “Co-sign”, if required for an FHA approval. A family member can pay for down payment and closing costs as a GIFT. Down payment assistance programs are available for FHA financing.
Trust One Mortgage has helped thousands of people achieve their dreams, and everyday, we pride ourselves in continually qualifying clients into homeowners to becoming our “Client for Life.” We understand that home buying is a difficult and confusing situation, but our certified team of experts can bridge the gap from applicant to owning your dream home.
Rent Vs. Own
If you’re thinking about buying a home, you probably have a mental list of the benefits owning a home would bring to your life. You imagine waking up and falling asleep in your own home, decorating as you please, or maybe even getting away from the loud neighbor you hear every evening through the paper thin walls of your apartment complex. You are ready to invest your monthly housing expense, instead of giving it all to your landlord every month.The desire to own a home has been felt by nearly all Americans. Owning a home is the American dream. So what’s stopping you? That’s a good question, one that should be carefully answered. It’s important that before you buy a home, you understand the potential impact it will have on your finances and lifestyle.
Listed below are some of the new responsibilities and added benefits of owning your own home.
- Maintenance - If you’ve never owned a home before, you are probably used to calling your landlord when an appliance breaks down, or something else goes wrong. When you own your home, you become the landlord. When the dishwasher stops working, you get to call the repairman and pay for the repairs. Be prepared to spend more time and money on emergency and planned repairs on your home.
- Disposable Income - When you buy a home, you can either pay cash or get a mortgage. Most people have some kind of mortgage on the home they own. To get a mortgage, you will need a down payment. Saving for a down payment will take discipline on your part, and possibly some time. And this is required before you even move into the home! Once you move in, you will need to continue setting aside money for repairs, improvements, new appliances, etc.
- Monthly Cost - In some cases, your mortgage payment will be more than your current rental payment. This is especially true if interest rates happen to be high when you purchase your home, or if you buy a proportionately larger home than you are renting. Mortgage payments are typically higher than rent because besides paying the principal and interest on your mortgage, you must pay for hazard insurance, property taxes, and any mortgage insurance that might be required. Risk – Any investment you make has some element of risk. Luckily, purchasing a home is on the low end of the risk spectrum. Since no investment is totally safe, you will want to do sufficient research before you buy the home, and continue staying atop of current trends in your city and neighborhood to verify your investment is doing well. Insurance and proper maintenance are other ways to protect your investment.
- Liquidity - Buying a home should be considered a long-term investment. If you plan on moving frequently, you might not recoup closing costs and fees paid when you get a mortgage, or the fees paid to a Realtor when you sell the home. And unlike a mutual fund or stock, you must sell your home to turn your equity into cash. Selling your home might take months and relocating to a new residence takes energy. These are hindrances to accessing the money you invested and why equity in a home is considered a non-liquid asset.
Home Ownership Benefits
- Pride of Ownership – It is a great feeling to own your own home. This benefit may be enough to outweigh any disadvantage previously listed. With your own home, you feel a sense of stability and community that you probably didn’t feel when you rented. This comes from the fact that you own a piece of property in a neighborhood along with others enjoying the same benefits as you. Investment – Since you are going to have a housing expense for most of your life, it is definitely worthwhile to consider investing some of that expense in a home of your own. For those people who plan on staying in a home long enough to pay off their mortgage, owning a home is a forced savings plan.
- Appreciation - If your house increases in value (becomes worth more than you paid for it) you will benefit from this appreciation. As you continue to pay your mortgage, and your home appreciates, your equity grows. When you sell your home, this equity will become dollars in your bank account. It is important to carefully choose your home so that over time you will benefit from appreciation, because it is not necessarily guaranteed.
- Tax Savings – Consult your tax advisor for the specifics of any tax savings you might benefit from with owning you own home. Usually, some expenses may be tax deductible such as mortgage interest, property taxes and mortgage insurance. If you are ready to take advantage of the benefits of owning a home and feel you can handle the new responsibilities it will bring, you will want to take the next step and determine if you are prepared to qualify for a mortgage.