In times past, it was a given that renting was a brief stop on the way to homeownership. The events of the last two years may have caused some renters to get cold feet, but buying a home is still a good investment. Author David Bach noted that "the average homeowner is worth 35 times more than the average renter." Does this mean that the home will appreciate 200% in five years? Probably not. When the home is affordable and is financed so that there is equity from the start, a person has something solid that they own, that can improve the quality of life for themselves and their families. It will be the major part of the investment portfolio of many people. It offers tax benefits.
Unlike many other types of interest, mortgage interest is still deductible on income taxes. Many times, especially on new construction, there are state and local tax abatements and other incentives to buy. Recently, the government offered first time buyers an $8,000 credit to purchase a home. This does not have to be repaid; while it cannot be used toward the downpayment, it can ease the transition into home ownership. There are also a number of first time buyer assistance programs available thru local and state government programs. Here in Colorado we have CHFA (Colorado Housing Finance Authority, CHE (Colorado Housing Enterprises), CHAC (Colorado Homeowner Assistance Corporation), as well as city and county programs. Give me a call if you want more info on these programs.
Some may put off buying out of fear that they find themselves overwhelmed like many who are now entangled in the current mortgage mess. At the moment, mortgage rates on conventional loans are historically low and require down payments - a different lending environment than was the norm a short time ago. Homeowners who got into mortgages with equity are in a more secure position than many who are in trouble today. Those who approach home buying with common sense and realism will get themselves pre-qualified and then buy something that is 10-20% less than what the bank will lend.
Just a couple years ago, some renters may have viewed housing prices as high enough to keep them out of the market. Now, homes are approaching a more affordable level in most parts of the country, especially in Denver. Because there is a large inventory of homes on the market, new buyers have many choices from a pool of homes sold by owners at market value, plus many foreclosures and short sale homes. Buyers have more negotiating power not only to tweak the price but to request improvements and help with closing costs. There are so many nice homes available that buyers will not have to overextend themselves to get what they need and want.
If you are thinking of buying but not sure how to navigate the Denver real estate market, now is the time to call on the Bandy Home Team. We are full service realtors who can help you find your Denver dream home and guide you through the maze of home buying in Denver and surrounding communities.
Marianne Bandy
Comments(1)