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Jennifer Bunker
CRS, GRI
Owner/Broker
Coldwater Creek
Properties
Utah's Wasatch
Front
Northern Utah 84405
Voice/Text:
801.791.0365
Fax:
866-542-0513
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10 Steps to Prepare for Homeownership |
1. Decide how much home
you can afford. Generally, you can afford a home equal in
value to between 2 and 3 times your gross income.
2. Develop a wish list of what you'd like your home to
have. Then prioritize the features on your list.
3. Select three or four
neighborhoods you'd like to live in. Consider items such
as schools, recreational facilities, area expansion plans,
and safety.
4. Determine if you have enough saved to cover your down
payment and closing costs. Closing costs, including taxes,
attorney's fee, and transfer fees average between 2 and 7
percent of the home price.
5. Get your credit in order. Obtain a copy of your credit
report.
6. Determine how large a mortgage you can qualify for.
Also explore different loans options and decide what's
best for you.
7. Organize all the documentation a lender will need to
pre-approve you for a loan.
8. Do research to determine if you qualify for any special
mortgage or down payment assistance programs.
9. Calculate the costs of homeownership, including
property taxes, insurance, maintenance, and association
fees, if applicable.
10. Find an experienced REALTOR® who can help you through
the process |
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How Big a Mortgage
Can I Afford? |
Not only does owning a
home give you a haven for yourself and your family, it
makes great financial sense, too.
This calculation assumes a 28 percent income tax bracket.
If your bracket is higher, your savings will be too.
Rent:
_________________________
Multiplier: X 1.32
Mortgage payment:__________________
Because of tax deductions, you can make a mortgage
payment—including taxes and insurance—that is
approximately one-third larger than your current rent
payment and end up with the same amount of income.
To determine what your monthly mortgage payment would be
on various loan amounts, visit:
http://www.realtor.org/realtororg.NSF/pages/FMCalculators?OpenDocument&Login
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Tax Benefits of
Homeownership |
| The tax deductions you
can take for mortgage interest and property taxes greatly
increase the financial benefits of home ownership. Here's
how it works.
Assume:
$9,877 = Mortgage interest paid (a loan of $150,000 for 30
years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5
percent on $180,000 assessed value
______
$12,577 = Total deduction
$3,521.56 = Amount you have lowered your federal income
tax (at 28 percent tax rate)
(12,577 X .28 = $3,521.56)
Note that mortgage interest may not be deductible on loans
over $1.1 million. In addition, deductions are decreased
when total income reaches a certain level |
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7 Reasons to Own Your
Own Home |
1. Tax breaks. The U.S.
Tax Code lets you deduct the interest you pay on your
mortgage, property taxes you pay, as well as some of the
costs involved in buying your home.
2. Gains. Over last five years (1998-2002) national home
prices have increased at an average of 5.4 percent
annually. And while there's no guarantee of appreciation,
a 2001 study by the National Association of REALTORS found
that the typical homeowner has approximately $50,000 of
unrealized gain in a home.
3.
Equity. Money paid for rent is money that you'll never see
again, but mortgage payments let you build equity
ownership interest in your home.
4. Savings. Building equity in your home is a ready-made
savings plan. And when you sell, you can generally take up
to $250,000 ($500,000 for a married couple) as gain
without owing any federal income tax.
5. Predictability. Unlike rent, your mortgage payments
don't go up over the years so your housing costs may
actually decline as you own the home longer. However, keep
in mind that property taxes and insurance costs will rise.
6. Freedom. The home is yours. You can decorate any way
you want and be able to benefit from your investment for
as long as you own the home.
7. Stability. Remaining in one neighborhood for several
years gives you a chance to participate in community
activities, lets you and your family establish lasting
friendships, and offers your children the benefit of
educational continuity.
To calculate whether renting or buying is the best
financial option for you, use this calculator courtesy of
Ginnie Mae.
http://www.ginniemae.gov/ypth/rent_vs_buy/Rent_vs_buy.htm |
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5 Common
First-Time Homebuyer Mistakes |
They don't ask enough
questions of their lender and miss out on the best deal.
They don't act quickly enough to make a decision and
someone else buys the house.
They
don't find the right agent whose willing to help them
through the homebuying process.
They don't do enough to make their offer look good to a
seller.
They don't think about resale before they buy. The
average first-time buyer only stays in a home for four
years.
Reprinted with permission
from Real Estate Checklists and Systems,
www.realestatechecklists.com |
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10 Tips For
First-Time Homebuyers |
1. Be picky, but don't
be unrealistic. There is no perfect home.
2. Do your homework before you start looking. Decide
specifically what features you want in a home and which
are most important to you.
3. Get your finances in order.
Review your credit report and be sure you have enough
money to cover your downpayment and your closing costs
4. Don't wait to get a loan. Talk to a lender and get
prequalified for a mortgage before you start looking.
5. Don't ask too many people for opinions. It will drive
you crazy. Select one or two people to turn to if you feel
you need a second opinion.
6. Decide when you could move. When is your lease up? Are
you allowed to sublet? How tight is the rental market in
your area?
7. Think long-term. Are you looking for a starter house
with the idea of moving up in a few years or do you hope
to stay in this home longer? This decision may dictate
what type of home you'll buy as well as type of mortgage
terms that suit you best.
8. Don't let yourself be house poor. If you max yourself
out to buy the biggest home you can afford, you'll have no
money left for maintenance or decoration or to save money
for other financial goals.
9. Don't be naïve. Insist on a home inspection and if
possible get a warranty from the seller to cover defects
within one year.
10. Get help. Consider hiring a REALTOR® as a buyer's
representative. Unlike a listing agent, whose first duty
is to the seller, a buyer's representative is working only
for you. And often, buyer's reps are paid out of the
seller's commission payment.
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