HOME is Where Your Happily Ever After Begins

Realizing the American Dream

For most people, buying a home is the most important decisions of their lives. The decision is not usually an easy one. But, trends in home prices and mortgage rates, combined with the tax advantages of home ownership, make this an excellent time to turn the home of your dreams into a reality.

Pride of Ownership

Pride of Ownership is the number one reason why people desire to own their own home. Owning your home gives you freedom to decorate the house, paint the walls, play your music loud, and change the look of your home anytime you would like. Also, it gives your family a sense of stability and security that is not found in renting a property.

Buying vs. Renting

If you’re thinking of buying a home, you’ve probably already asked yourself, “Can I afford to buy?” But one important question you need to ask yourself is, “Can I afford to continue renting?”

Rental payments are gone, once you make them. But with each mortgage payment, you are “buying” something tangible, building up equity. The longer you own your own home, the larger your equity.

Also, a home is an investment that helps you keep up with inflation. Although not all homes appreciate at the same rate and some years are better than others, real estate has historically kept pace with and usually appreciated faster than the rate of inflation.

One thing you must keep in mind, too, that through the years, your income most likely will increase faster than any increase in your mortgage payment. Rent payments, on the other hand, tend to increase right along with your paycheck.

Mortgage Rates

As a rule of thumb, a one point drop in mortgage rates means that half a million more families will qualify for affordable financing. Yours could be one of them!

Rates for conventional, 30-year fixed rate mortgages are now in a reasonable range. Increasingly popular alternate forms of financing may make your loan even more affordable. Your real estate broker can provide information on the types of mortgage plans available to you.

Homeowner Tax Advantages

When you’re figuring out how much you can afford to commit to monthly mortgage payments, don’t forget the tax advantages of home ownership.

Both property taxes and interest payments on a mortgage for an owner occupied home are currently tax-deductible. In the early years of a typical mortgage, all but a small percentage of each monthly payment is used to pay off the interest on the loan. This means that as a homeowner, your annual taxable income could be substantially reduced by deducting the payments you make on property taxes and yearly mortgage payments.

And, later on, should you decide to take advantage of the growing equity in your home by taking out a home equity loan, the interest on up to $100,000 of home equity indebtedness is tax deductible.

The question is not, “Can I afford to buy?”  The real question is, “Can you afford not to?”

 

Annual Income	Monthly Payment	Purchase Price
$20,000	$467.00	$86,995
$25,000	$583.00	$108,603
$30,000	$700.00	$130,399
$35,000	$817.00	$152,194
$40,000	$933.00	$173,803
$45,000	$1,050	$195,598
$50,000	$1,167	$217,393
$60,000	$1,400	$260,797
$70,000	$1,633	$304,201
$80,000	$1,867	$347,791
$90,000	$2,100	$391,196
$100,000	$2,333	$434,599

**Based on 5% interest rates and does not include taxes, insurance, PMI. Payment could be lower or higher based on rates, down payment, pre-paids, escrows.

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