Are you looking to purchase your first home? It is an exciting moment in your life but financing your first home may feel overwhelming. The following suggestions will help you prepare to finance your first home.
Learn What You Can Afford
Contact a lender to find out how much you can afford. Be sure to understand the full picture which includes the cost of taxes and insurance as well as your monthly mortgage payment. Consider visiting more than one lender to get a sense of all of your available financing options. Using online mortgage calculators will give you some idea of what your monthly payment might be but discussing the real options will provide a more accurate picture.
Clean Up Any Credit Issues
Most lenders rely on your credit report to determine what kind of loan they will provide you. The better the credit report the better the terms of your loan and the more options you will be offered. By improving your credit report you can save a significant amount of money over the life of your loan because you may qualify for a lower interest rate. Improve your credit score by making sure you pay all of your bills on time. Pay down any debt you have.
Consider Your Down payment Amount
The down payment is the amount of money you pay for the house at the time you sign the mortgage. For example, if you are purchasing a $500,000 home and you provide a 20% down payment you will be paying $100,000. Often first time homebuyers do not have the money for a 20% down payment and other options are available. If you are able to provide a 20% down payment you will avoid mortgage insurance which will save you money.
To learn more about buying your first home contact us. At Trumark Homes we specialize in new homes with livable floor plans. We work with new homebuyers throughout the purchase process.
A few factors should be considered when determining if you should buy or rent a home.
Current Market Situation
It is worthwhile to evaluate the current market when determining if now is the best time to buy a home. As it stands today, interest rates are remarkably low. Therefore many people are finding it better to buy than rent because it is possible to buy a home and pay the same or less per month than a current rent payment. In addition the housing market has rebounded from the recession making purchasing a home a wise investment. It is likely the home will gain value in the future meaning you will make money if you decide to sell down the road.
Some consider one advantage of owning a home is that the owner is able to remodel as they like. Homeowners can paint the walls, upgrade appliances, remodel the bathrooms, install a pool, etc. Any change they desire within the city code is possible. Renters are not able to make any changes.
On the other hand, if you own a home and a repair is needed it is your responsibility. No one else will handle the repair for you. Homeowners should either be handy or ready to hire someone who is handy for maintenance. Purchasing a new home reduces the amount of maintenance you will need. If you do not look forward to repair projects consider buying a new home.
Although the landlord will take care of maintenance for renters sometimes renters are still frustrated. Landlords don’t always complete maintenance in a timely fashion. Or they don’t keep up with things as well as the renter would like.
Initial Investment vs. Tax Benefits
Purchasing a home requires an initial investment. You will have closing costs and a downpayment on the mortgage. In comparison the security deposit for a renter is typically significantly less expensive. On the flip side, a renter will have no tax benefits. No aspect of the security deposit or monthly rental payment is tax deductible. For a homeowner the interest paid on the mortgage is tax deductible for those that itemize their taxes. The tax savings can be significant with this deduction incorporated.
Many people say that one advantage of being a renter is the ability to move at the end of the lease. Keep in mind that the landlord is not required to renew the lease either. So a renter may intend on staying only to find out that the landlord has decided to sell or even move into the property himself. Therefore the renter is asked to leave and has to find a new living accommodation unexpectedly. A homeowner has the security of knowing that they will not be asked to move as long as they continue to make their mortgage payments.
Contact us at Trumark Homes to learn more about owning your first home. Enjoy the ability to remodel, the security of knowing you won’t have to move unexpectedly, the tax benefits, and the investment potential of being a homeowner.
Should I buy a new home or a used one? This is an age old question that is asked by most home buyers at some point in time. The hard part is – there are no right or wrong answers. The best way to determine which route is best for you and your family is to make a list of pros and cons for each scenario. Below is a list of each that will help get you started.
Pros of purchasing a new home:
- A new home usually has a warranty.
- A new home has never been lived in by anyone else.
- You can completely customize a new home to fit your unique taste and lifestyle.
- In a new home everything is brand new.
- A new home will have more modern features.
Cons of purchasing a new home:
- The landscaping may be non-existent or minimal. Many times the sod is not included. Generally the builder can install the sod for you; however, it may be an additional cost.
- The more upgrades you decide to add to the home will raise the final price of the home.
- Usually the window coverings are not included.
Pros of purchasing an existing home:
- Many people prefer living in an existing neighborhood.
- An existing home generally has mature trees and landscaping.
- Most times the window coverings are already in place.
- The upgrades in an existing home have been paid for by a previous owner.
- If there were any builder defects, they have, in most cases, already been discovered and handled under the warranty.
- An existing home has a history so you will be able to see how much the property has appreciated over time. However, this doesn’t guarantee future marketplace performance.
- Generally, an existing home is less expensive to buy than a new home.
- Existing homes usually have lower taxes and since an existing home doesn’t appreciate as fast as a new home, you will, in most cases, pay lower taxes.
- With an existing home, you will, in many cases, be able to get a larger home for less money.
Cons of purchasing an existing home:
- You will not have the new home warranty.
- Generally, an existing home could require more maintenance.
- An existing home could potentially have termite issues.
- The neighborhood could decline more quickly than a new neighborhood.
- You might have to give up some of the more modern amenities that a new home might offer.
Whether to buy a new home or an existing home can be a difficult decision. But it doesn’t have to be. If you would like more information about buying a new or existing home please contact us. Trumark Homes specializes in helping homeowners through the entire buying and selling process.
If you think buying new homes in San Jose, California (or CA) is going to be a struggle, you may be laboring under some assumptions about the San Jose housing market that are no longer true. As pointed out in the Forbes Trulia housing predictions for 2014, due to new construction like Trumark’s new home communities, there is more inventory on the market in 2014. Add to this the fact that investors are scaling back their home purchases, and you have a buying process much less competitive and frenzied than in recent years.
Local observers including Pete Carey of the San Jose Mercury News agree with experts who are predicting a much calmer market in 2014. “That’s good news for potential homebuyers, since there will be more homes to choose from, fewer bidding wars and less worries about spiraling prices”, Carey said.
There is also good news about the ease of getting a mortgage. Although rates are expected to climb somewhat this year, the desirable side-effect is to make mortgages easier to get. Because higher rates reduce refinancing activity, banks are more inclined to ramp up their purchase lending. In addition, the new mortgage rules effective in January give banks better clarity about the legal and financial risks they face with different types of mortgages, making them more willing to lend.
CBS News quotes Erin Lantz, director of mortgages at Zillow, the housing market research firm, advising home buyers that “it’s important to remember that mortgage rates in the 5 percent range are still very low.” One of the most comprehensive reports on the relative strength of housing markets across the country is issued by Zillow, a realty services giant. As noted in the Herald Tribune 2014 housing market forecast, the report combines a variety of factors ranging from an area’s average home prices to its unemployment rate and population-growth trends. Solidly in the top five? You guessed it, San Jose, California!
The Herald also puts to rest any anxiety about the possible disappearance of mortgage interest tax breaks: “It seems as if housing tax write-offs are always on the table in Washington, but it’s doubtful that any major changes will be made in 2014. Most legislators are wary of doing anything that might hurt the industry’s recent rebound.”
Trulia’s analysis includes the cherry on top of all the good news: “Consumer optimism is climbing back: in Trulia’s latest survey, 74% of Americans said that homeownership was part of achieving their personal American Dream – the highest level since January 2010.”
To talk about achieving your American Dream, please Contact Us.