As a first time home buyer you often have lots of questions and fears about financing your first property. Here are some common fears and answers to those fears.

Question: We have heard that it's cheaper to rent than buy.

A rent payment on an apartment is often lower than a house payment would be, but it is not cheaper in the long run. While your rent payment could be $100-$400 lower then a house payment, you would receive no tax shelters or equity build-up. Your rent will continue to increase while a house payment will remain the same.

Le's say that your current rent is $1000/mo and you would like to get your own home with more space for $1200/mo. If we assume a 5% inflation rate, over the next five years your rent would be $1000 year 1, $1050 year 2, $1102 year 3, $1158 year 4, $1215 in year 5. You would have paid a total of $66,300 in rent over 5 years with nothing to show for it, or you would be behind $66,300.

If on the other hand, you had purchased a home worth $140,000 over the same 5 years with an inflation rate of 5% yearly, the home would have a value of $170,170. That is a gain of $30,170 due to appreciation and your loan balance would have gone down another $6,000 for a total equity build up of $36,170.

As you are probably aware, you receive no tax write-offs as a renter. On the other hand, if you owned the home about 90-95% of the total mortgage payment made would be tax deductible. The interest and taxes are tax deductible. Therefore, with your itemized tax deduction and say a 28% tax bracket, this potentially would have saved you $18,144 in Federal Income Taxes. Renting only seems cheaper, it is actually more expensive and you do not have the pride of home ownership.

Question: We can't budget another $200-$300 per month to get the house that we want.

With the purchase of a home, you are entitled to itemize the interest on the loan and the property taxes on the home. You are allowed to claim one additional withholding allowance for every $3000 of itemized tax deductions for which you exceed the standard deduction amount. Each extra exemption that you are able to claim increases your take home pay, as your employer withholds less. Using this tax withholding technique can increase one's take home pay by $30-$500 per month, which could go a long way in decreasing your budget objections.

Question: I think I should wait for interest rates to go down, before we buy.

There is no guarantee that interest rates will go down, but I can guarantee you that over time home prices will go up. Even if interest rates do go down, but prices rise in the meantime, you would lose the appreciation and tax write-offs on the home and end up paying more for a comparable home.

As an example, let's say that interest rates go down 1% in the next year. On a mortgage loan of $150,000, this decrease would save you about $99 per month in your payment, or about $1200 the first year, but if the house appreciated 4% during the year while you wait, the same house would cost you $156,000 a year later. you would be about $5,000 behind, plus you would have lost some very valuable tax write-offs. If on the other hand, rates go up by one percent your payment would be $99 higher and the house would still cost more.

Why gamble that interest rates will go down? There is never going to be any better time to purchase then now.

If you have been thinking about purchasing your First Home then contact Heather Joubran at hjoubran@remax.net or text & call at 407-810-6304 or IM at plugoo0026.

Look forward to helping you with your First Real Estate purchase in Orange or Seminole County. Servicing Lake Mary, Sanford, Heathrow, Altamonte Springs, Longwood, Winter Springs, Oviedo, Apopka, Orlando, Maitland, Winter Park, Baldwin Park, LAke Nona, UCF area in both resale and new construction homes.