New Homebuyers Guide: Top Reasons to Buy Your First Home
Ready to buy your first home? It’s an exciting and monumental step, but it can also be a daunting one. Looking for straightforward information?
Lyon and Shea came together to help demystify the home buying process, answer your questions and take some worry away. Here are the top reasons why owning is better than renting.
- Owning your home can actually save you money. Owning a home allows you to take a home mortgage interest tax deduction. That means you can deduct all of the interest you pay on your mortgage each month from your taxable income at the end of the year. You pay less in income tax, while you’re also investing in property. Did you know, your property taxes are also tax deductible?
- You’re making an investment. Currently, you may be paying rent to a property owner. What if you took that money each month and invested it? The U.S. Department of House and Urban Development states, “Home equity is the largest single source of household wealth for most Americans,” and according to the National Association of Realtors, “The average homeowner’s net worth is 31 times that of a renter.”
- Your monthly payment is locked in. Unlike rent, which rises with inflation and costs of goods, a fixed mortgage payment locks in your monthly payment at today’s low interest rates. It’s protection for homeowners to ensure an agreed upon payment for the long-term.
- Mortgage rates are at a historic low. Even with the recent interest rate increases in 2013, rates are still at historically low levels. That means that your mortgage payments will be lower.
- As a homeowner, you only answer to yourself. Owning a home is a freeing experience. You don’t have to worry about a landlord selling the house your renting, suddenly ending your lease or the long time it can take to have items repaired. You are in control of your own destiny and it’s all on your terms.
- Your space is actually yours! Paint the wall a crazy color, change the flooring, hang shelving — the sky’s the limit. If you own a home, you aren’t forced to abide by rules and contracts put in place by landlords, so you’ll have the opportunity to let your creativity run wild!
- Establish a track record. Owning a home opens up opportunities for future credit options, as on-time payments can help establish a positive credit track record.
- You’re living the American Dream. More than just a financial investment, homeownership is a sign of financial stability and has been known to increase civic engagement and create a sense of belonging. A lot of people will never forget that “I’ve finally made it!” feeling when they purchased their first home. It’s a big step, and one you’ll feel proud you made.
Considering your first home purchase? Before you get started, here are some common terms you’ll need to know. You’ll also find it useful to get pre-qualified, so take a look at our three easy steps.
New Homebuyer Glossary:
- PITI = Principal, interest, (property) taxes & insurance
- DTI = Debt to income ratio
- MIP/PMI = Mortgage insurance premium/private mortgage insurance
- FICO = Fair Issac Corporation
- Gross Income = Your income before taxes used to qualify
Pre-qualification is required by every potential customer to be eligible to purchase a home. Below are a few steps to follow.
- Complete an online application on the community loan officer’s website and authorize a copy of your credit report to be obtained.
- Send your supporting income and asset documents via scan or fax to the community loan officer. 1) Two current paycheck stubs; 2) Two year’s W-2s and federal tax returns (all schedules); 3) Most current asset statement (all pages) showing sufficient funds for down payment, closing costs and reserves.
- Your community loan officer will contact you to review your application and discuss your pre-qualification status.
Once you’re pre-prequalified, you can start determining which of Rancho Mission Viejo’s Neighborhoods are best suited for you. In the meantime, start exploring the Rancho Mission Viejo floor plans.