Typical home financing involves a buyer finding a home and applying for a mortgage, getting…
You might not view your home as an investment, but you should. Buying a home is one of the biggest decisions that you’ll make in your lifetime, but it’s not one you’ll soon regret.
Deciding when to take the plunge for the good ole American dream might sound intimidating, but we have some insightful information to guide you.
More Money in Your Pocket
Face it, renting is expensive. RentCafe.com says that renting an apartment in Eugene will cost you an average of $1242 per month for 898 square feet. Comparable homes average $225K, and using a mortgage calculator for a home in that price range finds a 30-year mortgage with a 20% down payment for a $975 monthly mortgage payment. That’s a $267 per month savings! Plus, you’re funding your future, not your landlord’s.
You can deduct the amount you paid in interest to your mortgage company when you file your annual taxes. It requires itemization of your taxes, but it’s well worth the additional time (and money, if you pay someone to figure your taxes). Because the newer the mortgage, the higher the interest payment, homeowners with newer loans tend to enjoy the greatest tax breaks. You can also deduct the points you pay for your loan, so think about buying now and you can start saving on taxes as soon as 2019.
Return on Investment
Quicken Loans says that home values have risen an average of 6.17% across the country. And they’re not expecting home values to decrease any time soon. With increases like that, who wouldn’t think of their home as an investment? Plus, every year you live in your home and make your mortgage payments earns you more equity. That’s real savings that you can liquidate if you need to pay for college, retirement, or just upgrading your home.
Interest Rates are on the Rise
Years of record low mortgage interest rates has finally given into a rise. Rates for 30-year mortgages finally broke the 4% mark in 2017. With sustained growth in the economy, experts are predicting mortgage rates could break 5% before the end of 2018. The time to buy is now!
Down Payments are More Flexible than Ever
There was a time when it was standard for banks to require a 20% down payment before financing a mortgage. While that standard still exists in many situations, there are far more options for buyers these days. Government lenders like Fannie Mae and Freddie Mac offer loans for as low as 3-3 ½%. The Department of Veterans Affairs (VA) makes mortgages available to qualified beneficiaries for zero down. Some conventional loans still require a big down payment. Considering your home as an investment, you will finance less and also get a better interest rate if you can afford the bigger down payment. That’s not at all a bad thing!
And Most Importantly?
It’s yours! You can do whatever you want! Paint your house pink. Landscape it with the flowers, trees, and shrubs that you love. Make your garage bigger. Add a deck. And remember, with your home as an investment, everything that you do to increase its value goes right into your own pocket!