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First-Time Home Buyer Mistakes
1. They donít ask
enough questions of their lender and end up missing out on the best
2. They donít act quickly enough to make a decision and
someone else buys the house.
3. They donít find the right agent whoís willing to help them
through the home buying process.
4. They donít do enough to make their offer look appealing to
5. They donít think about resale before they buy. The
average first-time buyer only stays in a home for four years.
Source: Real Estate Checklists and Systems,
to Own Your Home
1. Tax breaks.
The U.S. Tax Code lets you deduct the interest you pay on your
mortgage, your property taxes, as well as some of the costs involved
in buying your home.
2. Appreciation. Real estate has long-term, stable growth in
value. While year-to-year fluctuations are normal, median
existing-home sale prices have increased on average 6.5 percent each
year from 1972 through 2005, and increased 88.5 percent over the
last 10 years, according to the NATIONAL ASSOCIATION OF REALTORSģ.
In addition, the number of U.S. households is expected to rise 15
percent over the next decade, creating continued high demand for
3. Equity. Money paid for rent is money that youíll never see
again, but mortgage payments let you build equity ownership interest
in your home.
4. Savings. Building equity in your home is a ready-made
savings plan. And when you sell, you can generally take up to
$250,000 ($500,000 for a married couple) as gain without owing any
federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments
donít rise over the years so your housing costs may actually decline
as you own the home longer. However, keep in mind that property
taxes and insurance costs will increase.
6. Freedom. The home is yours. You can decorate any way you
want and benefit from your investment for as long as you own the
7. Stability. Remaining in one neighborhood for several years
gives you a chance to participate in community activities, lets you
and your family establish lasting friendships, and offers your
children the benefit of educational continuity.
Online resources: To calculate whether buying is the best financial
option for you, use the ďBuy vs. RentĒ calculator at
Tax Benefits of Homeownership
The tax deductions youíre eligible to take for mortgage interest and
property taxes greatly increase the financial benefits of
homeownership. Hereís how it works.
Mortgage interest paid (a loan of $150,000 for 30 years, at 7
percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
$12,577 = Total deduction
Then, multiply your total deduction by your tax rate.
at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56
Amount you have lowered your federal income tax (at 28 percent
Note: Mortgage interest may not be deductible on
loans over $1.1 million. In addition, deductions are decreased when
total income reaches a certain level contact your tax professional
Stress Out of Home buying
Buying a home should be
fun, not stressful. As you look for your dream home, keep in mind
these tips for making the process as peaceful as possible.
1. Find a real estate
agent who you connect with.
Home buying is not only a
big financial commitment, but also an emotional one. Itís critical
that the REALTORģ you chose is both highly skilled and a good fit
with your personality.
2. Remember, thereís no ďrightĒ time to buy, just as thereís no
perfect time to sell. If you find a home now, donít try to
second-guess interest rates or the housing market by waiting longer
ó you risk losing out on the home of your dreams. The housing market
usually doesnít change fast enough to make that much difference in
price, and a good home wonít stay on the market long.
3. Donít ask for too many opinions. Itís natural to want
reassurance for such a big decision, but too many ideas from too
many people will make it much harder to make a decision. Focus on
the wants and needs of your immediate family ó the people who will
be living in the home.
4. Accept that no house is ever perfect. If itís in the right
location, the yard may be a bit smaller than you had hoped. The
kitchen may be perfect, but the roof needs repair. Make a list of
your top priorities and focus in on things that are most important
to you. Let the minor ones go.
5. Donít try to be a killer negotiator. Negotiation is
definitely a part of the real estate process, but trying to ďwinĒ by
getting an extra-low price or by refusing to budge on your offer may
cost you the home you love. Negotiation is give and take.
6. Remember your home doesnít exist in a vacuum. Donít get so
caught up in the physical aspects of the house itself ó room size,
kitchen, etc. ó that you forget about important issues as noise
level, location to amenities, and other aspects that also have a big
impact on your quality of life.
7. Plan ahead. Donít wait until youíve found a home and made
an offer to get approved for a mortgage, investigate home insurance,
and consider a schedule for moving. Presenting an offer contingent
on a lot of unresolved issues will make your bid much less
attractive to sellers.
8. Factor in maintenance and repair costs in your post-home
buying budget. Even if you buy a new home, there will be costs.
Donít leave yourself short and let your home deteriorate.
9. Accept that a little buyerís remorse is inevitable and will
probably pass. Buying a home, especially for the first time, is
a big financial commitment. But it also yields big benefits. Donít
lose sight of why you wanted to buy a home and what made you fall in
love with the property you purchased.
10. Choose a home first because you love it; then think about
appreciation. While U.S. homes have appreciated an average of
5.4 percent annually over from 1998 to 2002, a homeís most important
role is to serve as a comfortable, safe place to live.