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?”

**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.

The nation’s five largest mortgage firms may be forced to reduce loan balances for distressed homeowners as part of an agreement with state attorneys general and the Obama administration to settle claims of faulty mortgage practices, a top state official involved in the negotiations said Tuesday. The proposal is part of a set of remedies banks would have to agree to in order to settle the state and federal probes launched last autumn, which found that the largest mortgage firms illegally seized the homes of at least dozens of borrowers and engaged in shoddy practices that short-changed troubled borrowers.

Mortgage principal reductions would comprise part of a larger fine levied on Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial. Penalties could reach $30 billion, officials said. The forced reduction of mortgage principal as a penalty against flawed past practices has proven contentious. Some Republican attorneys general have objected, as have some Republican members of Congress.

On Tuesday, however, a state official told The Huffington Post on condition of anonymity that the option “very much remains on the table.” While officials have not determined how much would be exacted from the banks — and specific dollar amounts to settle the probes have not yet been discussed between the state and federal governments and the banks — the proposal to compel financial firms to cut loan balances is part of one of two documents circulated Tuesday at a hotel in northern Virginia, where bankers, state officials and policy makers from the Obama administration began a three-day meeting. The targeted banks have argued vociferously, both in private discussions and in public, that they opposed cutting distressed homeowners’ principal balances.

(Credit : http://www.huffingtonpost.com)

BUYERS

SELLERS

Daniel & Chastity Davenport | Davenport Agents
Chastity Cell: 256.337.8021 | Daniel Cell: 256.529.0413 | E-Fax: 888.408.7435
info@davenportagents.com | Daniel@davenportagents.com | Chastity@davenportagents.com | Facebook – Twitter – MySpace

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EXIT Realty of the Valley
3810 Sullivan Street, Suite C, Madison, AL 35757

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