Is your tax return an excuse to buy
some new clothes and trendy gadgets, or could it be something more?
It’s tax season, or refund season or extra
spending-money season… whichever you prefer. Before you blow your tax credit,
stop and consider this: your refund could be just what you need to stop paying
rent, up your personal equity and get yourself into a new home. Don’t believe
me? I can see your hesitation, but let me break it down for you.
If the average
American receives between 2k-3k back in taxes, we have a great starting
place for most home-buyers. The usual down payment for a home-buyer is between 5% & 20%
of the purchase price, with a conventional loan. However, if you qualify for a FHA (first time home buyer’s program) loan, the down payment can be as low as 3.5% of the purchase price!!
Let’s take a home that costs $100,000.00 to make math simple. With an FHA loan, that means $3,500.00 down; so the question is: 3.5k toward Apple, H&M and Delta, or 3.5k
toward becoming a homeowner? I think the answer is pretty easy!
"You might be
thinking that being a homeowner is still not a viable option for you
because of the long-term cost of owning a home. While owning a home is a
great responsibility, it often time makes more sense financially
to pay a mortgage than rent" says Stephen Perrigo, Senior Loan Originator at VanDyk Mortgage.
Let’s use the same $100,000.00 home for the sake of easy calculations. If you obtain a loan at 3.5%, which is a standard rate today for a 30 year fixed loan (if you don’t know what this means, take a look back at my blog, When Should I Refinance My Home? ), your monthly payments will total $440.91 (for the Principle & Interest part of the payment). Is that less than what you are paying in rent right now? Not only is it more than likely less, it also isn’t just being put into someone else's pocket!
Let’s use the same $100,000.00 home for the sake of easy calculations. If you obtain a loan at 3.5%, which is a standard rate today for a 30 year fixed loan (if you don’t know what this means, take a look back at my blog, When Should I Refinance My Home? ), your monthly payments will total $440.91 (for the Principle & Interest part of the payment). Is that less than what you are paying in rent right now? Not only is it more than likely less, it also isn’t just being put into someone else's pocket!
"While
there are other monthly expenses with buying a home (Real Estate Taxes,
Home Owner’s Insurance & Mortgage Insurance) the typical costs for
these other expenses monthly doesn’t
exceed $500.00, making your total payment on a $100,000 home LESS than
$1,000.00 a month. This is STILL likely less than your paying for rent. And
when You’re an Owner? YOU earn the appreciation on the home, as your
value increases (5-6% per year) yearly! NO
MORE paying Someone Else’s mortgage… Pay Your Own!!" Says Stephen.
If you are thinking that this all sounds great, but you would need a house that is worth more than 100k to accommodate your lifestyle, the payment on a $200K Home INCLUDING the Taxes & Insurances typically doesn’t exceed $1,500.00 Mo. That’s equal to most apartment rents, and MUCH less than the typical Home rental, for the same price home!!
What if your tax return isn’t enough for the down payment on a house? There is still great news. You may qualify for down payment assistance, or be eligible for a CREDIT from Your Mortgage Lender, toward your Closing Costs!! This is something I will explain in further depth in my next blog, so stay tuned!
Another option is
to plan ahead. Maybe you are interested in making a larger down payment to
avoid PMI (Private Mortgage Insurance,
usually higher with FHA loans), you can always create a separate savings
account and put this year’s tax return in it to use toward a down payment in
addition to your refund next year. Always smart to have a plan for the future!
If you are thinking that this all sounds great, but you would need a house that is worth more than 100k to accommodate your lifestyle, the payment on a $200K Home INCLUDING the Taxes & Insurances typically doesn’t exceed $1,500.00 Mo. That’s equal to most apartment rents, and MUCH less than the typical Home rental, for the same price home!!
What if your tax return isn’t enough for the down payment on a house? There is still great news. You may qualify for down payment assistance, or be eligible for a CREDIT from Your Mortgage Lender, toward your Closing Costs!! This is something I will explain in further depth in my next blog, so stay tuned!
Another option is
to plan ahead. Maybe you are interested in making a larger down payment to
avoid PMI (Private Mortgage Insurance,
usually higher with FHA loans), you can always create a separate savings
account and put this year’s tax return in it to use toward a down payment in
addition to your refund next year. Always smart to have a plan for the future!
In
the meantime, if you have any questions please contact one of the Real
Estate Professionals at Regal Homes and we will be happy to help. We have extensive
experience working with home-buyers and will be able to help you create a specialized
finance plan that makes sense for you. It always helps to have a great team
behind you that can help you open the door to your dreams!
Read More:
- http://money.cnn.com/2015/01/13/pf/taxes/taxpayer-refunds/
- http://www.bankrate.com/finance/mortgages/7-crucial-facts-about-fha-loans-1.aspx
- http://lifehacker.com/5816641/use-separate-accounts-for-simple-bucket-budgeting
This blog brought to you in part by VanDyk Mortgages
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