Are you renting, but would rather be a homeowner?
You crave a piece of the American Dream, homeownership, but all the news reports, political pundits and talk shows are painting that real estate is crumbling. You experience the flip flop syndrome plaguing some of the Presidential candidates; first you want a home that is all yours, one where you can hang as many of those prized photographs depicting happy, memorable times; or painting the walls the perfect shade of pinkish orange that reminds you of the sunset you witnessed sitting on the whites sandy diamond beach in paradise; or you want to recreate your grandmother's garden; or, no its having that workshop where you can create your heart's desire. Home is a place where you can turn up the stereo when your favorite song is playing and you can sing and dance like your starring in Madison Square Garden and the best part there is no one to complain and yell "turn....it....down." Home is a permanent place not just a six to twelve month lease.
Real estate is declining...prices are falling....foreclosures......all very scary. We just experienced a very hot historical market. People experienced double digit gains yearly. It seemed happy days would last forever then the Fed begin to raise the prime rate, oil barrel prices went over the $100 mark, housing prices rose faster than income, expensive ARM unconventional loans began to reset and mortgage monthly payments rose, in some cases over $500 a month, and the Iraq War looks as there is no end. Consumer confidence plumits, they spend less money, and the ripple effects of a depressed housing market spreads, unemployment rises over 5% and it looks like a recession could be in the future. Prospective homeowners are fearful but all people need a roof over their head.
The question is do you want the roof over your head to belong to you or someone else. Homeownership is not a short term investment and according to the National Association of Realtors a home's value will double every ten years. Typically if a home's value increases in the three to six percent range, that is considered great; well at least until the double digit trend we just left behind. Back to reality: single digit increases are very acceptable.
Homeownership still makes sense. From a financial prospective, a home is an investment; it offers tax savings and one can build equity. The rent payment you make of $1500 is equivalent to a $1875 mortgage payment. How did I arrive at that? Take your rent payment and multiply if by your tax rate, for example $1500 multiplied by 1.25 (tax rate is 25%) and that equals $1875. The mortgage interest, property tax and mortgage insurance are deductible.
How do you find someone who you can talk to about home buying? Ask friends, family or co-workers if they know an experienced knowledgeable realtor, an honest mortgage banker/loan officer or housing counselor. What is a housing counselor? A housing counselor has received training about all aspects of homeownership: home type assessment, home buying process, household spending plans, mortgage qualification to financing, how large a payment can one realistically afford, credit and credit repair, home inspection, and home maintenance. Housing counselors typically work for non-profits or government housing agencies. Note: very few realtors have this type of comprehensive training. If you can find a Realtor that has both spheres of knowledge: real estate and housing counseling- grab them!
I am a Realtor, certified Financial Literacy Educator and Housing Counselor. I have actively pursued housing, financial and counseling knowledge since 2001 resulting founding Housing All Teachers and Housing Essential Personnel in 2002. I want to be my clients Realtor/Friend for life. I continue to have a relationship with my clients well after the real estate transaction is over.
If you have questions, please feel free to contact me by email pamelastruss@remax.net or you can call me at 703-216-1933.
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