Benefits of Home Ownership
1) Tax Write off
a. One of the biggest advantages of homeownership and having a mortgage is the ability to use the mortgage interest as a tax write off. For the first 10+ years of a mortgage the majority of your payment is interest and tax deductable. In addition you are able to write off your property taxes!
2) Freedom of ownership
a. The ability to decorate your home the way you want it, to paint the walls any color you want. You don’t heed a landlord’s permission because you make the decisions.
3) Building Wealth
a. The wealthiest people in the world: Oprah, Hilary, The Donald, Warren Buffet, Bill Gates they all have one thing in common: They all own real estate and lots of it. They understand the value that owning a home or many homes has.
b. According to the California Association of Realtors economist Lawrence Yun the net worth of a homeowner is 46 times greater than that of a renter.
4) Fixed Costs
a. Rents on average go up approximately 3% per year. Your payment on a fixed loan never goes up. Example if you currently pay $2,000 per month rent today, 5 years from now (assuming a 3% per year increase you will be paying $2,251.00 per month. If your mortgage is $2,000 per month today, 5 years form now your payment will be $2,000.00
5) Better for children
a. “Homeownership itself is good for children,” said Donald Haurin, co-author of the study and professor of economics at Ohio State University. http://researchnews.osu.edu/archive/chldhome.htm
b. Higher test scores and less behavioral issues due to more stability, and homeowners more likely improving the living environment“Owners have more of an incentive to make improvements in their home and create a more positive living environment,” Haurin said.
c. More benefits may come from the fact that homeowners tend to stay in one place longer than renters. This stability means that children stay in the same schools, and parents and children invest more time in developing positive relationships with their neighbors and the community. This investment in neighbor and community relationships may promote positive child outcomes.
Today’s Market Condition
1) Today’s market is very competitive. The inventory in Santa Clarita is very low. Currently we have less than 450 homes on the market. In a healthy buyer market we would like to see around 1,000 homes.
2) Interest rates remain at extremely low levels and I’ll let our guest lender speak on interest rates. Low inventory + low interest rates = competitive market. Working with an experienced Realtor who can help you navigate thru today’s competitive market is critical to your success in purchasing a home.
3) As we discussed earlier rents can and are on the rise. Most renters are not aware that for the money they are spending on rent they could be homeowners.
How to compete in this market
1) Be Prepared - Get Pre-approved for a loan - The best place to begin the buying process is in a lender’s office. Not an open house. What’s the old saying? “Don’t put the cart before the horse.”
a. A lender will check your credit scores and alert you of any potential issues
b. A lender will be able to offer you different loan products that best suit your needs
c. A lender will let you know how much home you can comfortably afford.
2) In this market, having a pre-approval in hand will put you in a better position to purchase a home.
3) Engage a Realtor
a. The cost to you for using the skills and knowledge of a Professional Realtor is zero – nada – zilch.
b. Your Realtor will be able to discuss with you the pros and cons of each home you consider.
c. Your Realtor will assist you in making the best offer possible by researching recent sold properties in the area and determining the sellers motivation for selling.
d. After acceptance of your offer your Realtor will help you navigate through the mountains of paperwork associated with a Real Estate transaction, assist you in the home inspection, negotiate repairs, follow up with the lender and escrow.