First time home ownership
You’ve decided it’s time to take the plunge and buy your own home. It’s a major step, and will likely be the biggest investment you make in your lifetime. The benefits of home ownership, which you’re soon to experience, can include tax breaks, equity and a sense of stability.
Some tips to help you buy your first home include:
- The better your credit, the lower the interest rate and better the terms you can negotiate on a loan. Order a credit report before you even start to look at homes so you can check your score as well as the details contained within the report. If there are any mistakes, be sure to get them fixed.
- A down payment of at least 20% will also earn you a better interest rate and mortgage terms. If you don’t have 20%, you will be required to pay for Private Mortgage Insurance (PMI). PMI protects the lender if you ever default on the loan.
- There are programs available to assist first time home buyers. Look up programs in your state at http://www.hud.gov/buying/localbuying.cfm.
- If you have any questions as to how much home you can afford, or what type of mortgage is best for your financial situation, your real estate or mortgage professional will be happy to assist you.
Moving Up
So home ownership is old hat for you? You’ve been building equity in your home for a while now, your income has increased since you first bought your home, you may have added a child or two, you couldn’t possibly fit one more thing into the basement – it’s probably time for you to move up!
Some tips for moving up include:
- As always, check your credit report and make sure everything is in order. You’ll be in a much stronger negotiating position with good credit.
- Decide how much you want to put towards a down payment on your home and how much you might want to keep from the equity in the first home.
- Determine needs vs. wants where your new home is concerned. Do you need more bedrooms? Do you want a bigger kitchen? Do you need a 3-car garage?
- Consult with your real estate professional to decide which home will meet your needs for the longest amount of time.
Make your equity work for you
Whether you’re in your first home or your fifth, you can use equity to consolidate debt, make improvements, pay for college or even purchase an investment property.
Your mortgage professional can help you understand the costs and benefits to borrowing on your home equity.
Downsizing or reverse mortgage
Now that you’ve kicked the kids out, and you’re tired of having to clean that huge house, you’d like to take advantage of the equity you’ve built. You might want to consider scaling down to a smaller house.
If you’re tired of yard work, you may want to consider a condominium or town home. Keep in mind however that you’ll be living a lot closer to neighbors (such as sharing walls!) and you’ll probably have to pay maintenance fees for the common areas that you’ll share with others.
Perhaps you’d like to stay in your current home but still take advantage of its value. Consider what’s known as a Reverse Mortgage. A Reverse Mortgage will allow you to get a lump sum, fixed payments for a particular term, or a line of credit on your equity. The amount you can get will depend on you and your spouse’s ages, appraised home value, interest rates and so on. The Reverse Mortgage doesn’t have to be paid back until you sell your home.
Home ownership can be a powerful tool no matter what your stage in life. Do your best to educate yourself about how to make that power work for you. Understand that your income, your savings and your credit rating all affect the choices you have in terms of home ownership. The stage you’re at in life can greatly affect how you’ll put that home ownership to work for you. Finally, your real estate/mortgage professional is a fantastic resource you’ll want to tap into for help in making these important decisions. |
ME
SITES
