As a first time home buyer, you’re looking for home buying advice.
Buying a home will be one of the most exciting (and frightening) things you do in life. When you get into the home buying mindset, you will start to zero in on searching for homes in your area. You may even start attending realtor open houses to get a better idea of what homes are for sale in your area. It’s easy to get overwhelmed with everything that goes into buying a home.
So I want to take a step back and give you a home buying advice that you may have heard of, but not sure on what it really means.
First Time Home Buyer California
Quality of Life
When you buy your home, you will likely remain in that neighborhood for years. You may even build your family here. Your quality of life will dramatically change as you and your family build lasting relationships with neighbors and within the community. Your home will provide stability and security for you and your loved ones.
Pride Of Home Ownership
Your home is your personal haven. You can do with it as you’d like. Decorate it. Shape it. It’s yours. This sense of pride and freedom you can’t experience as a renter. You have no landlord to answer to or get approval from. You are free to relax in your yard with your pet, if desired.
Historically Low Interest Rates
With low interest rates you’re purchasing power is more. For example, when interest is at 4% you may qualify for a home loan around $490,000. When interest rate goes to 4.25% your home buying power now drops to $483,000. A full percent (from 4%-5%) your purchasing power drops to around $450,000. A full percent increase in interest drops your buying power by around $40,000.
Use the calculator below for more accurate numbers.
Why Should I Buy A Home?
Or how the value of your home or investment property will increase with time. A number of factors can play into this. Firstly, your home investment will typically grow in value over time (appreciation potential). This is an effortless way of making money on your home and potentially getting a good ROI (return on investment) should you decide to sell your home. Secondly, if you’re a real estate investor, you can do a “forced real estate appreciation”. This happens when the value of the investment property rises due to the repairs or renovations that have been completed.
Equity Buildup and Debt Pay Down
As a home owner, you will enjoy an average net worth of approximately $184,000 vs $4,000 for renters. It’s true, money that you pay for rent is gone forever. However, money paid towards your mortgage payment is building equity ownership interest in your home.
The definition of leveraging means to use “a quality or advantage” to obtain a desired effect or result. With an investment of this magnitude, where else can you get 3.5-10 percent down? When buying a home with 3.5% down of your own money, you are using someone else’s money for the remaining amount (96.5%) to leverage your net worth because home statistically increase over time.
What Are The Benefits Of Home Buying?
Tax Deduction Advantages
Property tax and mortgage interest write-offs. As a home owner, a percentage of the interest you pay on your loan and taxes may be illegible for tax deductions. You would want to be sure to check with your accountant for more info.
When you go to sell your home, married couples can generally take up to $500,000 as a gain without owing any federal income tax. Single individuals can generally take up to $250,000. Keep in mind before you go to sell your home, in order to qualify you need to have met the following:
- lived in the home as a principle residence and owned the residence for at least two years before you decide to sell
Make sure to check with your CPA or financial advisors for more information and clarity on these laws as they pertain to you.
The Real Cost of Renting
Assume you are paying $800 per month on rent. With an average of 6% rental increases per year, you would have paid around $126,536 over a 10 year period. And guess what? You have zero ownership of that property.
Why Is Home Buying So difficult?
This phrase should not be a coming out of your mouth. Home buying should be, and can be, smooth and painless. With the right Los Angeles realtor, you can have all your questions answered and be confident in moving forward when searching for homes in Los Angeles.
To get additional information, make sure to read 10 Secrets When Buying a Home in Los Angeles County. Otherwise, we hope these 9 Home Buying Advice Tips have helped you decide to move forward with your home search.
Looking To Buy Real Estate in LA?
When looking to buy or sell in Los Angeles, Craig Thomas is one of the top real estate agents who can help. Reach out to him using the contact form below with any questions. You can also learn more about real estate services in Los Angeles by Craig Thomas.