Do you want to be a homeowner? Are you worried about timing? After reading this article, you will better understand why it is time to buy. Let’s look at a few factors, the amateur experts and the news media failed to tell you.
· Prices are down. Are they at the bottom? There is no possible way to predict the absolute bottom in any market, but they are down and in many areas are showing signs of leveling and even climbing. As you read down, you will see that timing the bottom; may be one of the lower priorities when deciding to become a home owner.
· Interest rates are historically low. This is the most important point to consider. If mortgage interest rates climb by only 1%, mortgage payments will increase by something closer to 21%. That was such an important point, that I need to repeat it. If the interest rates climb by only 1%, mortgage payments will increase by something closer to 21%. While you are waiting for prices to drop by a percent or two the payments may climb 20% or more. Even if you believe that you are in a more challenged area that prices may drop by as much as 5% or 10%; if you wait you may lose.
· Have you heard about the renter’s penalty tax already passed by Congress? Am I scaring you? If you are renting, you should be scared. Did you know you are already paying it? They are not calling it the renter’s penalty tax, but that is exactly what it is. Our politicians are calling it a tax credit for home owners. While you are waiting, the government is reaching in your pocket and grabbing out a big stack of bills. They are penalizing you for renting in a huge way. The interest part of your mortgage payments (which is the majority of the payment) on your primary home is tax deductable. That means you will not have to pay taxes on that part of your paycheck each month. To get a better picture of what that means to you, talk to a tax professional. (Not your amateur expert friend or hairdresser).
· If you rent, you do not control of your future. If your landlord sells your home you may be moving. If the landlord chooses, the rent may go up. If you own and take out a fixed rate mortgage, you know what your payments will be for many years. If prices go up, your mortgage payment, unlike rent will stay exactly the same.
· When prices go up your landlord gets to keep the equity. All profits to be gained down the road go to your landlord and not to you, if prices climb. So of course you ask; what if prices go down? You lose nothing. Ok, I know you doubt me with that statement. Let me explain. As long as you own the home, you will not take any losses or gains based on the value of the home. You can only lose on the value, if you sell while prices are down. If prices drop you will continue to take advantages of homeownership with the only impact being possible lower property taxes. If you sell then and only then, is when you win or lose on the equity. Even then, if you are relocating; you will take advantage of the lower prices on the other side. No loss.
I hope after reading this article you have a little more clarity about why it s the right time to buy.
Here is my last tip for potential homeowners. Get professional help. Do not try this on your own.
1) Get a full time professional Realtor®. Someone who is an expert in the areas you are interested in. Not a part time agent who does this on the side. Someone who will protect your interests. In most cases you will get their services for free. Sellers normally pick up their fees. Your Realtor® will let you know when you are looking at exceptions to that rule.
2) Get a top loan officer from a local, funding lender. Someone with a good reputation in your area. Someone that will be there to walk you through the process and be there to explain any documents you sign. Your Realtor® is a good source for a referral. They will know loan officers in your area and can share their experiences with you.
3) Start now! It is time to buy!
Good Luck and Happy House Hunting!
Randy L. Prothero, REALTOR®
Broker-in-Charge, ABR, AHWD, CRB, CRS, e-PRO, GRI, MRP, SFR
Team Leader - "The Prothero Group"
Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area. His luxury home listings sell faster and for more money.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.