Benefits of Owning
For many of us, home ownership seems like a world away. But today, owning a home is closer than you think! And, no matter how you look at it, owning a home is almost always better than renting. Here's why...
From our point of view, there are 4 things to consider when deciding to stop renting and start investing in your future:
- Down payment and monthly payment - What's the difference between paying rent and paying a mortgage?
- Interest Rates - How do interest rates affect a mortgage payment?
- Location and Monthly Expenses - How far is my commute?
- Tax Benefits - What are the tax benefits for homeowners?
Down payment, Monthly Payments and Interest Rates
While we listed them separately above, a monthly mortgage payment is a combination of several things.
Unlike visiting an apartment community and getting flat rates for the available apartments (This 2-bedroom apartment is $1,000 per month), there are many variables involved in what a monthly mortgage payment will be. Just like a car payment, a mortgage payment is calculated by the cost of the home, how much you put down, the interest rate on the loan and the length or type of the mortgage (15, 30, 40 or even 50 years...conventional, interest only, etc.)
30 years ago there were only about 2-3 different mortgage loans available to home buyers. It was a challenging situation for everyone. Today, they are many different types of loans available for every type of buyer. So, if you're ready to make the jump from renting to owning, there has never been a better time...with so many mortgage options...to make the jump! There is a mortgage program for you!
Location and Monthly Expenses
When deciding to rent vs. own, many people overlook their own monthly expenses. Often-times renters are a considerable distance from their job. This results in higher monthly expenses for auto fuel and even auto insurance. That's right, your auto insurance company may be charging you more per month because you rent.
In addition, living in West Texas presents interesting challenges because of our weather. The distance from your job to your home may be the difference between making it into work (and making money) or making it home.
Because our homeowners chose a Banner community with many features like a pool and playground, our homeowners enjoy the same amenities just outside their front door.
We suggest you review what you spend every month on your car to drive to and from work. An easy calculation is miles driven times $.40 per mile (For example - 200 miles driven per month to and from work at $.40 per mile = $80 dollars per month. That should give you a number that includes fuel and maintenance) Then, contact your insurance agent and ask them what your auto insurance will be if you own a home versus rent one. You might be surprised...
When it comes to taxes, homeowners are allowed significant deductions not available to renters. Mortgage interest and property taxes can be deducted from your federal income taxes. In fact, according to the IRS, homeowners earn an average deduction of over $1100 in income tax each year!! Allowing for tax deductions, a $1000 mortgage payment will really only "cost" you about $838, at a 28% tax bracket. Compare that with what you're paying in rent now.
Where to Go From Here
Although we have tried to make this section as easy to understand as possible, we have thrown you a few curves. Conventional loans, interest only loans, property taxes, 28% tax bracket...this can all be very confusing and even more difficult to write about. The time to talk with our mortgage professional is when you decide to stop renting. Even if your credit is less-than-perfect, our preferred lender can help you with a mortgage that makes sense for you. Remember, our lender's job is to work with you to help your dream of home ownership come true.