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Posts from the ‘Buying A Home’ Category

How Home Ownership Builds Wealth

If there’s anything history has taught us, it’s that homeownership is one of the best ways to build wealth and secure your financial future.

Here are five primary ways being a homeowner can help you accomplish this:

Homeownership can help create a forced savings.
Most people aren’t very good at putting money aside each month, but every financial expert would agree that having a savings cushion is essential for financial freedom. For homeowners, a monthly mortgage payment can act as a forced savings. As you pay down your principal, you build equity, which helps to increase your net worth.
Homes usually appreciate in value.
While there’s no guarantee that the home you buy will appreciate, there’s a pretty good chance. According to the Federal Housing Finance Agency’s House Price Index , home values have appreciated an average of 3.33% each year since 1991. For instance, if you
purchased a home for $100,000 in 1991, your home would be worth almost $250,000 today. In addition to the amount you’d have paid off on your mortgage during that time, this appreciation in value builds even more equity, therefore increasing your net worth.
A home is a tax shelter.*
When you earn a profit from a property or investment (say, the stock market), you normally have to pay capital gains tax. But if you make a profit when selling your home, that profit can’t be taxed (with some limitations), which keeps more money in your pocket. Owning a home also comes with other tax benefits, such as deductions on mortgage interest, mortgage discount points, mortgage insurance, and property taxes.
These reduce your taxable income and can help you keep more of your hard earned
money.

You can have a fixed, stable housing payment.
Renters are susceptible to fluctuating rental prices, which have historically gone up each year. Mortgages, on the other hand, can be fixed, which provides a stable housing payment that won’t fluctuate over the life of your loan. This will allow you to keep your cost of living down and put more of your money toward savings, investments, or other avenues that can help you build wealth.
Homeowners have a greater net worth.
According to the Federal Reserve’s latest Survey of Consumer Finances, homeowners have 36 times more net worth than renters. As of 2013, the median net worth for
homeowners was $195,400, compared to $5,400 for renters. This comparison clearly shows the power of homeownership for building wealth.

If you want to gain financial freedom, homeownership is a no­brainer. Buying a home is one of the smartest things you can do to help you build wealth for the long­term.

Buyer’s Check List; Survival Guide

1. Figure out how much house you can afford.

  • Calculate your monthly income and debt.
  • Check your credit report and FICO score.
  • Figure out your down payment.

2. Get pre-approved for a mortgage.

  • Contact one of our preferred lenders
  • Choose a type of mortgage.

3. Determine what you want and need in a home.

  • Choose a location (downtown, urban, suburban, rural).
  • Choose a type (single family, townhouse, condo, loft).
  • Choose a price range.
  • Choose a size.
  • Choose an architectural style.

4. Research your target neighborhoods.

  • Look online for information on schools, crime rate, traffic and zoning.
  • Determine your work commute.
  • Scout local amenities, such as parks, shops and restaurants.

5. Work with a buyer’s agent who knows the neighborhood.

  • All our agents are qualified and experienced

6. Search for homes in the MLS and For Sale By Owner (FSBO).

  • Browse listings online
  • Ask your agent to set up tours of homes that fit your criteria.
  • Check local newspapers.
  • Pick up flyers and attend open houses.

7. Research each home you want to buy.

  • Ask your agent for comps to estimate the property’s fair market value.
  • Ask the seller’s reason for selling.
  • Review all property disclosures.
  • Find out about liens, easements or other restrictions.

8. Make an offer and negotiate.

  • Determine the purchase price.
  • Include contingencies, such as financial, inspection or purchase.
  • Spell out any special requests and repairs you want included in the sale.
  • Determine an earnest money amount.
  • Define a move-in date.
  • Once both parties agree to the terms, sign the Purchase and Sale Agreement.

9. Finalize the deal.

  • Get the house appraised.
  • Get a professional home inspection.
  • Consider getting specific inspections for structural engineering, roof and termites.
  • Use the appraisal and inspection reports to re-negotiate if necessary.
  • Choose a home insurance company.
  • Complete the loan process with the lender.
  • Do a walk-through inspection prior to closing.
  • Set aside cash for the closing costs and down payment.

10. Close the purchase.

  • Review the settlement document at least 3 days before closing to see how funds will be collected and distributed.
  • Get a cashier’s check for the amount you need to bring to closing, including the down payment and closing costs.