Your First Home: Should You Get a New House?

new house

When you make the decision to buy that first new house, it’s a big deal. Like, “keep you up at night thinking about it” big deal.

If you’ve been paying rent for a while, buying a new home could seem like the cheaper choice. And there are plenty of benefits for first time home buyers.

Here’s one big piece of advice though.

When buying a new house, know what to expect.

Of course, you can never fully know what to expect. With buying a house, there are always going to be unforeseen obstacles.

But there are expected payments and fees that you can be sure will be part of the process. So it’s best to get familiar with them before you take the plunge.

Down Payments

You want a good interest rate. But in order to get that rate, you’ll need to make a down payment on the house. You can expect at least 10%. So, for instance, on a $170,000 home, this will be $17,000.

And if you want to avoid private mortgage insurance (insurance that protects the bank in case you’re unable to pay your loan), it will need to be at least 20%. So now that $170,000 house will need a $34,000 down payment.

Homeowner’s Insurance

Maybe you had renter’s insurance, so this isn’t entirely new to you. But homeowner’s insurance is usually going to run you considerably more than renter’s insurance.

And it’s required before you take possession of your home. So once you’ve gotten mortgage approval and done all the footwork to get your new house, you’ll need to shop around insurance companies to find the best rate.

The good news is, you can lump your car insurance with your homeowner’s insurance and possibly get a discounted rate.

Property Taxes

This one often catches new homeowners by surprise.

If you’re folding your property taxes into your mortgage payment, that’s going to be an extra bundle of money you’ll need to pay each month.

For example, if you’ve been paying $1000 per month in rent and the mortgage payment on your new house will be around that amount, you might think you’re good to go.

But, if your yearly property taxes are $2400, then you’re looking at adding another $200 per month. So when you budget for your monthly payments, don’t forget to figure in your property taxes divided over 12 months.

Payments and Interest

Obviously, you have to pay your mortgage principal.

At the beginning though, much of your mortgage payments will be going toward paying just the interest. So you want to be sure you’re getting the best interest rate possible.

In the long run, a great fixed rate could end up saving you thousands of dollars.

And that’s just the beginning

On top of the above-listed considerations, there are other things like the fees tied up with escrow, tax services, as well as getting credit reports and a home inspection.

Still, there’s nothing quite too exciting as getting that new house for the first time. It doesn’t have to be scary. If you approach the experience armed with some knowledge, you’ll end up with a place you can truly call home.

Do you have any other helpful tips for those looking to buy a new home? We’d love your input!

3 Helpful Benefits For First Time Home Buyers

benefits for first time home buyersDid you know a number of benefits for first time home buyers exist today?

Buying your first home is an exciting, important, and sometimes stressful process. For first time home buyers, special benefits sweeten the deal and encourage sales.

The term first-time buyer refers to individuals who’ve not purchased a home in 3 years. Most first-time buyers range from 18-34 years old, however bounce-back come in all ages.

Whichever category you fit into, you might not know about the benefits available to you. In this article, we’ll go over some of the benefits for first time home buyers.

Mortgage Interest Deductions

Tax rates favor homeowners. In fact, home ownership is often thought of as a shelter from taxes.

For many, the mortgage tax deduction benefit overshadows the intangible benefits, like pride in owning a home.

How can you qualify? Your mortgage balance must not exceed the cost of your new home. Mortgage interest proves deductible on your tax returns. This is a great benefit because interest is the largest part of a mortgage payment.

Property Tax Deductions

Property taxes for your first home are deductible for income tax purposes as dictated by the Internal Revenue Service. Vacation homes can also benefit from this tax deduction.

Capital Assets

Most people consider their first home a starter home. When you decide to move, you’ll benefit from gaining capital assets.

How does this work?

If the profit you make on your home is more than what is allotted for any tax exclusion, the profit is considered a capital asset. These profits receive special tax treatment.

Even if you profit from the sale of your home, the taxable portion of that profit remains small.

Use Your Mortgage To Build Equity

Each month that you pay your mortgage, you not only pay interest, you also pay the principal balance of the loan. The more of this you pay off, the more equity in your home you secure. This means more ownership for you.

Your Home Appreciates

The real estate market is volatile. It occurs in cycles.

Across the board, homeowners see their investment as a safeguard against inflation of the market.

First Time Homebuyer Loans

First time homebuyer loans come with low down payments, reduced interest, and limited fees. They’re offered to first time home buyers through the Federal Housing Administration.

This type of loan acts as a benefit for first time home buyers because of its minimal restrictions. Consider a first time home buyer loan a large down payment is out of reach, you cannot meet high-interest payments and fees, or your credit score is low.

All of these factors make these loans too good to miss out on for many buyers.

Benefits For First Time Home Buyers in 2017

As you can see, many tangible benefits for first time home buyers exist today. From tax deductions to an easier loan process, buying a home offers more than pride in ownership.

Starting your first home search? Contact us today to learn more about mortgage loans that work for you!