When mortgage rates increased last month, millions of Americans questioned if they had missed their window of opportunity for homeownership. Now is still an affordable time to buy a home. If you’re still contemplating homeownership, here are fifteen of the most commonly asked questions by first-time home buyers. The answers may surprise you.
Many folks contemplating homeownership wonder why they should buy a house instead of rent one. When it comes to owning your own home it’s important to think of your home as an investment. When homeowners pay their monthly mortgage payment they are building equity in their home. Homeowners can deduct the cost of their mortgage loan interest from their federal income taxes. And the same holds true for most state taxes. Deducting interest saves you lots of money over the long term with the interest you pay making up most of your monthly payment for the majority of the years of your mortgage. Property taxes can also be deducted. Over the years your home’s value will have appreciated which benefits you when it comes time to sell. When you rent the check you write each month is gone forever and you haven’t built any equity nor can you deduct mortgage loan interest on your federal or state taxes.
Many first-time homebuyers ask about HUD homes and if they are a good investment. When a homeowner can’t any longer make their mortgage payments on a HUD-insured mortgage, the lender forecloses and HUD (Housing and Urban Development), an agency of the U.S. federal government, pays the lender what is owed on the loan. HUD owns the home and then sells it at market value as quickly as possible. In many cases, a HUD home can be a good deal.
First-time homebuyers with bad credit and not a lot of money for a down payment are often afraid to ask if homeownership is even a possibility. First-time homebuyers in this situation should contact Homestead loan officers who can work with you to help you sort through your options.
Single parents also have concerns about first-time homeownership and inquire about grants or programs available for single parents. It helps to become familiar with the home buying process and to work with a well-respected real estate broker. Getting pre-qualified for a mortgage will allow you to know your price range which is extremely important since single parents don’t have the benefit of two incomes when it comes to qualifying for a loan. A Homestead loan officer can direct you to local homebuying programs. In some cases, single parents have worked with their mayor’s office or the county executive’s office for supplemental financing to help qualify them for their home mortgage.
First-time homebuyers also ask if they should use a real estate broker and how they can find one. There are so many financial particulars involved with home buying and a good real estate professional can make things much easier by guiding you through the process. An experienced real estate broker who is well-acquainted with an area you are interested in can provide information about the school district, the safety of the neighborhood, the number of children in the area, traffic volume, etc. They can narrow down your home search by keying in your preferences to the multiple listing service, with immediate access to homes that match your criteria as soon as they are put on the market. This saves you time driving around. When you’re ready to make an offer on a home a real estate broker will lead you through the contract paperwork step by step and answer your questions.
In “The Fifteen Most Commonly Asked Questions by First-Time Homebuyers Part II,” we’ll discuss down payments, loan qualification, working with Homestead mortgage, and mortgage costs.