THE PRIDE OF OWNING A HOME

One of the biggest reasons why people want to own a home is to experience pride in ownership. This pride—that this is your own corner of the world, and that you have complete control over what goes on inside it—gives your family a sense of security and stability. You also have the freedom to choose what color to paint the walls, what fixtures to attach, and whether you want to knock down the wall and make a bigger room.

INVESTMENT OPPORTUNITY

Like all investment tools real estate has its ups and downs, but in general, the real estate values have always appreciated. In fact, many people see that investing money in a home is a way of protecting it against inflation.

TAX BENEFITS

Owning a home can be a great form of tax shelter since the tax rates are to the homeowners’ advantage. Mortgage interest (which is the biggest part of your mortgage payment) can be completely deducted on your tax return. Just make sure that your mortgage balance is less than the total value or price of your home. And if you’ve lived in your house for 2 of the last 5 years, you can subtract capital gains of a maximum of two hundred and fifty thousand (if you are single) or fie hundred thousands (if you are a married couple).

The good news is that does not have any age requirements, and you don’t even have to buy another home. You can remove that amount from taxes every 2 years, so if you buy and sell homes that frequently you can keep all the profits from the increase in property value without worrying about taxes.

If, for example, the profit from your home is greater than 250,000, you can declare that a capital asset as long as you have retained ownership of the home for longer than 12 months. Capital assets have much more favorable tax treatments.

EQUITY BUILDING AND MORTGAGE REDUCTION

Every month, a portion of your monthly payment will go to the principal balance of your loan, which in turn reduces your total loaned amount. If you look at how amortization usually proceeds, the principal and interest payment becomes a little higher every month. It is at its lowest rate when you make your first payment and then reaches its highest level during the last month. Let’s try the math. For every hundred thousand of your mortgage, you’ll see this reduced by about five hundred dollars.

USING HOME AS EQUITY

You can also use your home equity to help you with other debts. If you have a credit card debt, you can’t deduct the interest you pay (which can be as much as 22%). Equity loans have much better interest rates. Thus you can use the quity of your home to pay off other debts. You can also use your home equity to make other investments such renovations on your home, paying for education, or even starting a business.

One of the most important steps in buying a home is to find financing. How hard is it to get a loan? Well it all depends. While you may have to talk to several lenders and of course go through the necessary paperwork, getting a loan is not as hard as people think.

Your Credit Score

Looking for a lender is not that hard if you have a good credit score. Start with getting copies of your credit report If you have a low credit score, don’t worry, just find ways of improving it or go to a lender that specializes in poor credit history.

Your Lending Institutions

Should you go to a loan officer or a loan broker? Loan officers are the people who work for a bank. Loan brokers, on the other hand, are not associated with a particular bank. They are consultants who have a network of many financial institutions and will then direct you to the best one given your situation.

Another difference between a loan officer and a loan broker is that the former will show you a menu of programs while the latter will offer a menu of lenders.

Furthermore, if you are upset with the services of a particular bank, you should go to the Department of Banking. But if you are disappointed with the services of a loan broker, direct your complaint to the Department of Real Estate.

Your Loan Amount

The amount you can borrow depends on a number of things. For example, your total income, the funds you have for a down payment, your monthly financial responsibilities such as bills and child support, and the average price of houses in the area where you want to live.

Getting Pre Approved for a Loan

It is easier if you get a pre approval for a loan before you start looking around for a home. This saves you a considerable amount of time. You know how much money you can borrow so you won’t waste your energies reviewing properties that are beyond your budget. Plus you stand a higher chance of someone accepting your offer if you have a pre approval letter attached to it. Plus, some of the premium real estate companies or real estate agents won’t even entertain you unless you have a pre approval letter.

Selecting a Lender

You should choose your lender based on three things: experise, customer service, and the recommendations of other people. Make sure he is competent in the industry, and can tell you about the different kinds of loans and what to expect from the processing. See how he handles your questions. Do you feel you’re in the hands of someone who knows what he’s talking about?

Don’t choose a lender based on who can give you the cheapest rates. If a company is giving you a mortgage package that is drastically lower from the market prices, then be very careful. Unusually low rates could be hiding very high closing costs or hidden fees.

The house looks beautiful, but is it worth the investment? After all we’re talking about a lot of money, and a loan that will take you years to pay. You will wonder if you’re doing the right thing or even if you can afford the financial requirements of buying that particular house.

First of all, think about how long you expect to live in that particular area, or if you’re the type of person who will stay in this house for a very long time or prefer to buy and sell houses to get a good profit. This factor will determine not only what type of houses you look at, but even affect the kind of loan you take and the terms of payment.

Another thing you have to remember is that you should negotiate for better rates and then put everything in writing. Ask your lending institution right away for a breakdown of the fees that will be charged on top of the loan amount.

.Remember that you should never do anything that will lower your chances for getting a loan, or you won’t have much room to negotiate for better rates. For example, don’t take out a second loan to make another major purchase like a car, and don’t rack up very high credit card charges before you finalize the deal. You may not realize this, but lending institutions will often conduct a second credit check before closing the deal.

You should also do your best to close the deal at the end of the month. If you close at the start of the month, the lender will ask you to “prepay” the interest on your loan from the date of the deal to the end of the month. Therefore the money required to close will be much greater than if you did it in the last week of a month.

You will have to deposit your closing cost “monies” in an escrow account before you can close. Don’t use a personal check to pay. Pay through a certified check or a money wire transfer. Ask your escrow officer about this.

When the deal has been finalized and the first check sent to the lending institution, relax and enjoy your home! You may feel a pang of buyer’s remorse but that’s normal. It’s also normal to feel stressed, this is a major decision after all!. You can end buyer’s remorse by being very informed about the process of buying a home. Besides, you’ll feel much better after you move into your house and start enjoying it.

One last tip—remember to contact the different services of your change in address. This includes the post office, insurance, movers, telephone, utilities, newspaper, etc. Do this a few weeks before moving so you can make the needed revisions in your address.