To Buy or Not to Buy
To buy or not to buy, that is the question. Considerations for first-time home buyers in this market
Buying your first home is a major step. There’s a lot you need to know to make the right decisions – and also to avoid making the wrong ones. And that’s particularly true in this current buyers’ market when there are so many homes available and sellers have such diverse motivations.
The good news is that if you know what you’re doing, or if you’re working with a highly-experienced REALTOR® who does, this market offers fantastic opportunities to get a great home at a great price.
Also, be aware that “first-time buyer” doesn’t necessarily mean someone who has never owned real estate before. Under the terms of the current Federal tax credit (see below) and other State programs, “first-time buyer” refers to those who have not owned property within the past three years. For details, speak with your local REALTOR®.
Owning Versus Renting Without question, owning a home comes with responsibilities and risks that you don’t have to worry about when you rent, such as a mortgage, taxes, homeowner’s insurance, maintenance, and repairs, to name a few.
However, financial advisors – not to mention homeowners themselves – say there are far more advantages to owning:
- Historically, it has trended that over time, you’ll lose money by renting instead of owning your own home. Why not build up equity in a home instead of paying your landlord’s mortgage?
- Although there are periodic market drops, historically owning a home has been a prime financial investment
- You can take advantage of many ongoing tax benefits, like deducting the interest on your mortgage and property taxes from your income tax
- Owning a home isn’t just a good investment in financial terms, it’s also an investment in a higher quality of life – particularly if you have a family or if you’re planning one
- There is a special kind of pride in the ownership and upkeep of a home that you won’t get with renting
At the end of the day, it just feels good to own your own home. You can decorate it any way you like, renovate or build additions, personalize your landscaping
Do You Qualify To Own? There’s only one way to find out: go to your bank and/or another lending institution and allow them to perform a credit check and analyze your financial situation generally.
You might be surprised because the pity is that there are many renters who financially qualify to own their own homes, but don’t realize it. Are you in this category? It would be a shame if you wanted to own your own home but didn’t know you could – particularly in this perhaps once-in-a-lifetime buyers’ market.
Also, keep in mind that you may be eligible for loans insured by the Veterans Administration (VA) or the Federal Housing Administration (FHA).
Is It A Good Time To Buy? Generally speaking, if you’re financially qualified, your timing couldn’t be better. In fact, few markets have ever offered the kinds of opportunities that currently exist for first-time home buyers, because:
- Home prices are down generally
- Mortgage rates are historically low. You might be able to lock-in at a very low rate on a 30-year mortgage!
- There is a large listing inventory generally – i.e. plenty of homes to choose from
- There are many foreclosed homes and distress sale listings available at greatly reduced prices
- There are many builder liquidations – i.e. new homes – available at greatly reduced prices
(The information above is based on market conditions at the time of this printing.)
Also, as part of an economic stimulus package approved by the U.S. Congress and signed by President Obama in February 2009, first-time home buyers are eligible for an $8,000 tax credit if they purchase a home by November 30th, 2009. As of this writing, senior members of Congress are working to extend – and perhaps increase – this tax credit into 2010.
Additionally, many States and local jurisdictions have programs to supplement the Federal tax grant.
So the bottom line is that if you are currently renting but really want to own a home, this is a fantastic time to buy. And again, you may qualify to buy and not know it. So talk to a knowledgeable, experienced REALTOR® about your options. Your REALTOR® will not only be able to guide you towards getting all the financial support you qualify for, but you’ll also get the scoop on the many and various great real estate opportunities currently available. Not only that, but in case you didn’t know, all the work that a REALTOR® does to help you find, finance, and purchase a home won’t cost you a penny – it’s all paid for by the seller! Please don’t hesitate to call if we can be of any assistance to you