How To Buy A Home In Today’s Market
Some buyers today have had their desire to buy dampened because they think they think they can’t. In fact, today’s market offers a unique opportunity to save by buying now. First of all, equity properties are available now with selections through all price ranges for starter homes, buy-up houses, executive properties and luxury estates. Today is a good time to start on the path to your dream home.
Also, lenders are offering incredibly attractive rates and innovative financing. That means your same income can qualify for more home today.
Buyers who act now not only can take advantage of today’s market, they also can begin to benefit from the Big Four wealth builders of homeownership.
Four Wealth Builders
Leverage. Leverage means using borrowed money (OPM: “Other People’s Money”) to control a property and receive its benefits. Here’s how leverage works. Say you’ve acquired a $100,000 house with only a 10% down payment ($10,000). Suppose the property appreciates 10% in the first year and house is worth $110,000. You’ve “earned” $10,000 on your investment of $10,000 – a profit of 100% in a year. (Financing costs would, of course, lower the net yield.) That’s leverage – a big return by using borrowed money.
If home prices rise only 3% a year in the next decade, the home you bought this year for $100,000 would be worth $134,392 in ten years. With $10,000 down, you’d realize a profit 629%; at 8% a year, you’d profit 1,159% due to your leveraged purchase.
Tax Breaks. You’ll also realize savings from the tax advantages of homeownership. A homeowner’s taxable income is reduced by tax deductions (for interest payments, points and real estate taxes where applicable). Later, any gain you realize at sale gets special treatment. No federal tax is payable on gains of up to $500,000 in the case of jointly filed returns and $250,000 for other returns provided the qualification tests are met: during the five-year period leading up to the sale date you must have both owned the property for a total of at least two years and the property must have been your principal residence for a total of at least two years. State income tax rules may or may not follow the federal rules.
Savings and Appreciation. Mortgage principal payments go into your own pocket, not someone else’s. You are saving and building equity as you pay for a home that is appreciating in value. (The amount of appreciation depends on inflation, the local economy and whatever home improvements you make.) To make the most of this opportunity you must hire an experienced, knowledgeable professional agent – like Tim Brodowski to help guide and counsel you through every step of the process.
Owner Pride. The fourth pillar of home owning involves, of course, many things besides keeping a roof over your head. You acquire, along with a structure, the responsibility for maintenance and repair. Most homeowners find the benefits of owning far outweigh the upkeep efforts – and many homeowners enjoy home improvement projects. You also put down roots and become more involved in the community. In short, you own an investment that builds intangible riches while you lock in your housing costs and avoid unpredictable rent hikes.
