Purchasing A Home- Consider As An Effective Investment
It is a big thought to buy vs rent in Colorado, and it needs careful consideration, as most mortgage lenders will agree. But the rewards of home ownership are great. For many years, buying real estate has been regarded as a quite profitable investment. It is an attainment that offers a sense of pride, economical stability and potential tax advantages.
There are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you're helping them make their mortgage payment.
The numbers are amazing if you look at it this way. If you are paying $1,000 a month for an apartment, and you know your rent will rise 5% every year, then over the next five years you would pay your landlord $66,309. If you are presently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won't benefit when the property price goes up!
However, if you were to buy your own home or condominium, you would be well on your target toward building equity within that equal five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates fall, and this would cause your monthly mortgage commitment to decline.
In addition to building equity, there are tax advantages that come into play with home ownership. According to your tax bracket, owning a home is typically less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
There are also several first time home buyer programs in Colorado. To identify the loan program that is appropriate for you, your mortgage broker will need to analyze your monthly household income, current property and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for funding. It is also essential to let your mortgage consultant know what your future goals are, since this will help narrow down which loan program is the best fit for your long-term needs.
There are many different types of loan programs available, including "low" and "no" down payment mortgage programs. These forms of programs demand the first time home buyer in Colorado to provide less than 3 percent of the loan amount as a down payment. FHA lenders rule that the mortgage payment, combining principal, interest, taxes and insurance (PITI) should not exceed 31% of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43% of your gross income.
Housing is an expense that takes a big bite out of the monthly expense. If you are a renter and believe that "home" is more than just someplace to hang your hat, think about the advantages of buying real estate. It may be time to take the measure into building your personal net worth as a home owner.
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