2 Are you unsure about becoming a HOMEOWNER? Thinking that you can t afford to BUY a home? Are you worried about whether homebuying is a good INVESTMENT? Buying a first home can be an intimidating process. But the first step is deciding if: I want to own a home; I can afford to own a home; owning a home makes sense for me financially and emotionally. If you are still struggling with those decisions, here are some facts that might help you take that first step towards becoming a homeowner.
3 You Can t Afford NOT to Buy a Home! Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3.5% per year. If that trend continues, that means that an apartment or home renting for $1,000 per month will cost more than $1,300 a month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $140,777! Year Monthly Rent Total (avg. increase 3.5% per year) Annual Rent 1 $1,000 $12,000 2 $1,035 $12,420 3 $1,071 $12,855 4 $1,109 $13,305 5 $1,148 $13,770 6 $1,188 $14,252 7 $1,229 $14,751 8 $1,272 $15,267 9 $1,317 $15, $1,363 $16,355 Total Rent Paid Over Ten Years $140,777
4 Tax Advantages of Owning a Home Result in Savings None of that $140,777 is returned to you, either through savings or as an investment. Homeownership, on the other hand, has tax advantages over renting a home, and those advantages can help you save money. For many homeowners, part of the monthly mortgage payment comes back to you in tax savings. Here s an example: You purchase a home that costs $200,000. Your downpayment is $10,000 (plus closing costs expenses incurred to actually process the transaction). You finance the balance with a 30-year fixed rate mortgage at 5.5 percent interest. Your monthly payments (not including utilities, maintenance, insurance, etc.) are: Monthly Mortgage & Tax Payments mortgage $1,079 property tax tax rate*) 208 Total Monthly Payment $1,287 tax savings per month (assuming a 25% income tax bracket) mortgage interest tax deduction $216 tax deduction for property tax 52 Total Monthly Tax Savings $268 Total Monthly Cost After Tax Savings $1,019 *property tax rates vary by city and county Owning your own home reduces your federal income tax bill by $268 a month. In addition, as you pay down your mortgage loan and as home prices rise, your equity the wealth you have in your home increases.
5 Annual Costs Homeowner Renter Total Annual Costs annual mortgage/rental payment $12,948 $12,000 real estate taxes 2,500 0 Tax Deductions/Equity Builders mortgage interest deduction 2,592 0 tax deduction for property tax mortgage principal accumulation 2,559 0 appreciation no growth 0 0 loss* -2,000 0 below trend growth** 1,200 0 average growth*** 9,000 0 Annual Costs Less Equity Gains $12,000 no growth 9,673 loss* 11,673 below trend growth** 8,473 average growth*** 673 * assumes a 1% annual depreciation ** assumes a 0.6% annual appreciation *** assumes 4.5% annual appreciation Buyers Come Out Ahead Given that price growth has recently deviated from its usual pattern of increase, the table above considers four different price growth scenarios, including a loss. You may be surprised to see that the homeowner still comes out ahead of the renter even if there is a decline in the home's value over the next year. Extraordinarily low interest rates and lower prices have ushered in some of the best affordability conditions in a generation. Further, special tax advantages exist for buyers who purchase before July 1, Tax laws change, so ask your REALTOR or tax advisor for current information. Homeownership is a Good Investment for Qualified Buyers For the majority of Americans, their home is their largest financial asset and a major player in their investment portfolio. The NATIONAL ASSOCIATION OF REALTORS estimates that home value rises, on average, by 4.5 percent a year. That s a steady return on investment; one s own home is a much less volatile asset than stocks, bonds or mutual funds, even when the recent downturn is considered.
6 As an example, let s look again at that $200,000 home. Unlike your rental unit, your home should appreciate over time. Instead of assuming average growth, we assume that prices are flat in the first year of ownership and pick up, but only slightly, in the second year. In the third year of ownership, your home has appreciated to a modest $210,858. After ten years, assuming a return to an average 4.5 percent appreciation rate*, your $200,000 home will be worth $286,948. Not only do you earn a rate of return on your original purchase price, you also get a return on any subsequent appreciation. * Average price appreciation from 1970 to 2008 was 6.0% Appreciating Returns Year Price Growth Home Value 1 0.0% $200, % 201, % 210, % 220, % 230, % 240, % 251, % 262, % 274, % 286,948 Total Appreciation After Ten Years $ 86,948 Homeownership Builds Wealth for Households The Federal Reserve Board estimates that homeowners net worth has ranged between 31 and 46 times more than that of renters in the years 1998 to In 2007, the median net worth for homeowners was $234,200 compared to $5,100 for renters. Even though that difference will surely narrow as a result of house price declines since 2007, median homeowners will likely still have substantially greater net worth than median renters." How do you build up your net worth? As a homeowner, you build wealth in two ways: through paying down the principle on your mortgage and through those appreciating returns on your home. We ve already seen how your $200,000 home could be worth $286,948 in ten years. In addition, you are paying down the principal on your mortgage. Remember that $200,000 you borrowed at 5.5 percent over 30 years that debt amount is decreasing every month and every year as you make payments.
7 Year Home Price Mortgage Debt Net Worth 1 $200,000 $187,441 $12, , ,737 16, , ,880 28, , ,863 41, , ,675 54, , ,308 68, , ,750 82, , ,992 97, , , , , , ,120 After the first year, you now only owe $187,441 on a home that is worth $200,000. As home price growth returns to a normal level the amount of wealth that you net from appreciation will increase. At the same time you pay your mortgage reducing your outstanding debt. As your debt decreases and the home value increases, you accumulate wealth from the value of your home. In addition, over this tenyear period, you will have a significantly lower after-tax payment for housing. Each year as your home appreciates and you continue to pay down your mortgage debt, you increase your own net worth. Why Not Wait? You may wonder whether it is worthwhile to wait to purchase your home until prices are at their lowest. Prices are not the only factor that should drive your decision. Currently, interest rates are at generational lows that greatly improve the affordability of homes. Further on the annual cost table, you can see that even if home prices decline, the possible tax savings of owning a home lead to a lower cost for the buyer, not the renter. Also, there are special, additional tax benefits for first time home buyers that may be available for a limited time only. Finally, and most importantly, when you have made the decision to commit to homeownership because you are financially ready, market conditions are a secondary concern. In fact, the NATIONAL ASSOCIATION OF REALTORS 2008 Profile of Home Buyers and Sellers found that more than four in ten buyers purchased a home because the buyer was ready to make the commitment to homeownership.
8 Homeownership It s NOT Just About Money The numbers tell the story examples should ease your mind about the financial aspects of becoming a homeowner. But there are other, less monetary, benefits to homeownership that may partially explain the fact that buyers buy when they are ready. Several research studies indicate that homeownership adds to the value of communities, has positive effects on children, and even contributes to increased voter participation rates. Homeownership: The American Dream More than two thirds of American households own their own home. They know the benefits of homeownership, from the accumulation of home equity, tax incentives, and the pride of owning a place of their own. They also had to take that first step of deciding I m ready to be a homeowner. REALTORS assisted many of today s 75 million homeowners in both their decision to buy and their first home purchase. REALTORS are real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS and who abide by the Association s strict Code of Ethics and Standards of Practice. They can help guide you to first-time homebuyer programs in your area, as well as assist you in searching for and buying your home. For more information on NAR s suite of products designed to educate real estate professionals and their clients about relevant legal, ethical, environmental, research and marketing topics, contact us: NATIONAL ASSOCIATION OF REALTORS. All rights reserved. Item # A REALTOR VIP Publication (02/09 BFC)
Faculty and Staff Home Buyer s Guide Table of contents Welcome Welcome Should I buy or rent? Renting vs. Buying Comparison Pre-approval Process Mortgage Programs 3 4 5 6 7 The University Housing & Relocation
THE IMPACT OF THE FIRST-TIME BUYER ON THE ILLINOIS ECONOMY $ WHY IT MATTERS AND HOW TO BRING THEM BACK INTO THE MARKETPLACE A As the U.S. housing market continues its rebound, many buyers and lenders are
SMART INVESTOR With interest rates and sales prices at historically low levels, it might be the right time to make the move and turn your investment dreams into a reality. RE/MAX NORTH CENTRAL Outstanding
Preparing for homeownership What we ll cover 1. Getting ready for homeownership 2. Mortgage basics 3. What you need to buy a home 4. Finding the right home 5. Resources 2 Getting ready for homeownership
Your Guide To Home Financing You re buying your first home. We have an easy mortgage solution. When buying a home, the world of mortgages can be intimidating and overwhelming. The key to feeling good about
Financing Opportunities For First Time Home Buyers The Petix Group Park Avenue Realtors February 13, 2010 Michael Catalino/Senior Mortgage Consultant TOPICS TO BE COVERED FHA USDA SONYMA General Qualifications/Income
Tangerine guides to personal finance Taking possession What to watch for when buying your first home Buyers are often surprised that newly-built homes might need additional work too 2 Like no other purchase
How to Avoid The Five Biggest First-time Homebuyer Mistakes Mistake #1 Failure To Examine And Repair Any Credit Problems Prior To Applying For Your Loan Many potential new home buyers have no idea what
TALK with an Associate in Capitol Federal s Customer Service Center 888-8CAPFED. EMAIL your questions to Capitol Federal securely online at capfed.com/contact. VISIT any one of Capitol Federal s convenient
REAL ESTATE REPORT 3RD QUARTER 2015 SOURCES: BUFFINI & COMPANY, INDUSTRY FACTS MEDIAN DAYS ON THE MARKET: 39 Days in April 2015 vs. Home sales in April reached a seasonally adjusted rate of 5.04 million,
THE MORTGAGE INTEREST DEDUCTION Frequently Asked Questions Prepared by the National Low Income Housing Coalition Updated April 2013 Owning one s home is a strong American value. Most Americans consider
How to Sell Your House Fast If you are reading this report then you are interested in selling your house as fast as you possibly can. Usually this is because you are in foreclosure, are behind on payments
We ll help you open the door. The Citizens Guide to Home Financing Lori Customer Table of Contents Before you look 4 The costs of purchasing a home 4 Getting a head start: Pre-approval 6 Choosing a mortgage
Thank you for taking the time to download our Homebuyer s Kit. TJC Mortgage knows that you have options when choosing a mortgage company to assist with your home purchase and we want you to know that we
Steven Young, Jr's. REAL ESTATE REPORT WINTER 2015 Steven Young, Jr's Real Estate Report PAGE 1 INDUSTRY FACTS MEDIAN DAYS ON THE MARKET: 56 Days in September 2014 Existing home sales in September increased
Summit Branches are located in Rochester (7), Seneca Falls (1), Buffalo (3), Syracuse (5) and Cortland (2) Home Buying Seminar A presentation by The Summit Federal Credit Union What We Will Cover Today
Rethinking Home Ownership Policy for Low-Income Families Informing Tenure Choices and Improving Financing Choices and Outcomes J. Michael Collins University of Wisconsin Madison A Home For Everyone 2013:
The Homeownership Department Smart Move Recapture Guide Revised April, 2011 Illinois Housing Development Authority 401 N. Michigan Avenue Suite 700 Chicago, IL 60611 1-877-456-2656 www.ihda.org Introduction:
Overview Over the past decade, Strongbrook has established a reputation as an industry leader in assisting clients with placing and managing real estate within their investment and retirement portfolios.
Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA About the Author Ray Meadows is the president of Berkeley Investment Advisors, a real estate brokerage and investment advisory firm. He
hometrends The State of the Market December 2013 A letter from Joseph A. Horning, President of Shorewest, REALTORS Southeastern Wisconsin s solid real estate market started to slow in October; sales of
Delaware State Housing Authority DSHA Homeownership Loan Programs DSHA is committed to following all aspects of the Fair Housing Act in our efforts to promote responsible homeownership and obtaining competitive
Adults Version Instructor guide 2003, 2012 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. ECG-714394 Welcome to Wells Fargo s Hands on Banking program! This fun, interactive, and engaging financial
FIRST-TIME HOME BUYERS SEMINAR Everything you need to know to make buying your first home easy and affordable. Presented by: ERA Woody Hogg & Associates Logan S. Ryan, REALTOR WHY BUY? Tax deductions Stable
BACK TO BASICS: A SAVINGS APPROACH TO HOMEOWNERSHIP Homeownership is a core American value. It epitomizes the American Dream and the be a springboard to the acquisition of other important assets like a
Home Buyer Education Getting Ready to Buy a Home. Are you ready? Member FDIC 1 Topics We ll Cover Today Getting ready to buy Budgeting Buying your home Getting a mortgage loan The mortgage loan process
First Home Program Affordable, fixed rate mortgages Dear Future Homeowner, MaineHousing s First Home Program makes it easier and more affordable to buy a home of your own. There are many reasons to consider
Illinois Association of REALTORS 522 S. Fifth Street Springfield, IL 62701 www.illinoisrealtor.org www.yourillinoishome.com HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs
Helping to make buying a home more affordable What we ll cover 1. Are you ready to be a homeowner? 2. Overview of programs to help make buying a home more affordable 3. Types of programs available to you
Owning a Co-op 10 questions to ask before you buy So you want to own a Co-Op! If you re a first-time homebuyer, this is probably one of the biggest financial decisions you have ever made. As rents escalate
Fannie Mae National Housing Survey What Younger Renters Want and the Financial Constraints They See Copyright 2014 by Fannie Mae May 2014 Table of Contents Research Methodology... 4 Executive Summary.....
Guide to Buying Your House Choosing a mortgage is one of the biggest financial decisions you're likely to make. Each lender has its own set of rules and guidelines. These vary for products and your individual
MMI Omnibus Survey Homeownership Top-Line Results and Suggested Story Lines Methodology: Cynapsus and Money Management International (MMI) developed a series of questions on the topic of homeownership,
Guide to Homeowners Mortgage Support This leaflet tells you about Homeowners Mortgage Support (HMS) and explains where to get more information. This leaflet explains: what Homeowners Mortgage Support is
Benefits of investing in the Stock Market There are many benefits to investing in shares and we will explore how this common form of investment can be an effective way to make money. We will discuss some
Guide to Homeowners Mortgage Support This leaflet tells you about Homeowners Mortgage Support (HMS) and explains where to get more information. This leaflet explains: what Homeowners Mortgage Support is
The Wheel of Financial Fitness NAME: DATE: Earning enough to fund my needs and wants Budgeting Investing Saving 0 10 Communicating and working together on money issues Preparing for Emergencies Sticking
SPECIAL REPORT How To Sell Your Home In 9 Days Or Less No Commissions! No Fees! You may discover the perfect solution by reading this report. If you are like many home owners struggling to sell your home
A HOME FOR YOUR FAMILY 7 Budgeting for Home Ownership Perhaps you are just beginning to think about buying a home sometime in the future. Or maybe you have already found a home you would like to buy. Whether
Virginia Housing Market and Foreclosure Status Virginia Foreclosure Task Force September 17, 2013 Virginia Housing Development Authority Overview 1. Looking back: Market conditions and foreclosure trends
Technical Series Paper #09-03 Trends in Household Wealth Dynamics, 2005-2007 Elena Gouskova and Frank Stafford Survey Research Center - Institute for Social Research University of Michigan September, 2009
22.1 An Introduction to Stocks and Bonds There are many different ways to invest your money. Each of them has different levels of risk and potential return. Stocks and bonds are two common types of financial
Introduction Trading in shares has become an integral part of people s lives. However, the complex world of shares, bonds and mutual funds can be intimidating for many who still do not know what they are,
Maximizing Returns on Equity Why and How In this newsletter I will explain some financial management concepts that provide a framework for maximizing your wealth accumulation over time. Proper application
Lakeside Bank has met the financial needs of Chicago for nearly 40 years. With our competitive products and services to meet your every need, you can count on Lakeside Bank to help you achieve both your
Paragon 5 Financial Calculators User Guide Table of Contents Financial Calculators... 3 Use of Calculators... 3 Mortgage Calculators... 4 15 Yr vs. 30 Year... 4 Adjustable Rate Amortizer... 4 Affordability...
Understanding Investment Leverage Understanding Investment Leverage What is investment leverage? Each year, more and more Canadians are taking advantage of a simple yet powerful wealthcreation strategy
STUDENT MODULE 10.3 RENTING VERSUS BUYING PAGE 1 Standard 10: The student will explain and compare the responsibilities of renting versus buying a home. Buying a House Hank and Peggy decide it is finally
Housing Affordability Analysis in Support of a Development Impact Fee Study Town of Fort Mill, South Carolina Final Document February 23, 2015 The South Carolina Development Impact Fee Act (Code of Laws
BankFirst Mortgage Services Thank you for taking the time to educate yourself on your new mortgage loan. We understand that it is a difficult process for new home buyers. We ll be happy to answer any question
Pitt County Community Development Down Payment Assistance Program Insert Product Photograph Here Overview The HOME Down payment Assistance Program is designed to assist potential low income, first-time
Commercial Real Estate Investment: Opportunities for Income Generation in Today s Environment Prepared by Keith H. Reep, CCIM Real Estate Investment Consultant In this white paper 1 Advantages of investing
Welcome Your Home Buying Dreams are Within Reach Few things in life compare with the pride and satisfaction you get from owning your own home. Whether you re a first-time buyer, moving up or downsizing,
CLIENT INTAKE FORM Date: Complete this form prior to your appointment. Please print clearly. If you are unsure of any information, leave it blank. It is okay to approximate amounts and include attachments
Homebuyers Information Guidebook Comparing Buying and Renting Getting Your Financial Picture In Focus Developing a Budget Determining Your Housing Needs and Wants Finding and Choosing a Real Estate Agent
TEACHER GUIDE 10.3 RENTING VERSUS BUYING PAGE 1 Standard 10: The student will explain and compare the responsibilities of renting versus buying a home. Buying a House Priority Academic Student Skills Personal
CONTRACT FOR DEED What Homebuyers and Sellers Need to Know to Achieve a Successful Outcome Copyright 2012 CONTRACT FOR DEED Is it the right option for me? This publication is intended to provide advice
PROJECT 3 CASH FLOW AND BALANC E SHEETS INSTRUCTOR OVERVIEW Financial statements are compilations of personal financial data that describe an individual s current financial condition. Financial statements
Advantages and disadvantages of investing in the Stock Market There are many benefits to investing in shares and we will explore how this common form of investment can be an effective way to make money.
USDA Home Loans What is a USDA Home Loan? USDA Home Loans provide up to 100% financing for a home purchase or refinance. These loans are guaranteed by the USDA and are serviced by direct lenders that meet
2015 Salt Lake Housing Forecast A Sustainable Housing Market By James Wood Director of the Bureau of Economic and Business Research Commissioned by the Salt Lake Board of REALTORS By year-end 2013 home
Housing and Mortgages - Affordable Housing Housing and Mortgages on Affordable Housing. Retrieved May 31, 2012, from http://www.mortgageloan.com/affordable/ Guide overview: Part 1: Advantages of Mortgages
Why home values may take decades to recover by Dennis Cauchon, USA TODAY 200 180 160 140 120 100 80 The history of housing as an investment 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974
The buying process a summary 01 - Establish your budget 02 - Mortgage offer in principle 03 - Instruct a solicitor 04 - Register with all the estate agents in the area 05 - Find a property 06 - Mortgage
Allianz Life Insurance Company of North America Understanding fixed index universal life insurance Protection, wealth accumulation potential, and tax advantages in one policy M-3959 Understanding fixed
Teacher's Guide $ Lesson Five Buying a Home 04/09 buying a home websites Buying a Home is a major life milestone that requires some thoughtful planning and know-how. Students need to understand all aspects
Actions to Take Before Buying a Home Today As the housing downturn has shown, homeownership is about more than buying a home you have to make sure you can keep the home over the long term. If you re thinking
Effect on Net Worth of 15- and 30-Year Mortgage Term John R. Aulerich 1, The choice between a 15-year and 30-year fixed-rate mortgage term is evaluated considering the borrower s income tax rate, ability
the reverse review the reverse review NAVIGATING CHANGES FROM CORDRAY S CAMP PG. 17 THE INDUSTRY WITHOUT WELLS fargo AND Bank of america PG. 28 + GREGG SMITH SITS DOWN IN OUR HOT SEAT! Building your checklist
Mueller Affordable Homes Program Details and FAQs This information is provided as a general resource and is not intended to fully describe or disclose all requirements or restrictions of the Mueller Affordable
How To Make A Fortune* November 3, 2010 * My compliance team cautions you that this is a tongue in cheek title Pershing Square Capital Management, L.P. Disclaimer The analyses and conclusions of Pershing
he Utah Housing Corporation offers six exciting loan programs to assist low- and moderate-income homebuyers with the purchase of a home. All loan programs offer reasonable interest rates and three of the
Succession Planning Case Studies Prepared by NCFC Business Consulting INTRODUCTION The following are brief descriptions of how some intergenerational business succession plans have been implemented. These
VHDA Homeownership Program Guidelines for Realtors & Lenders Updated 04/04 2 Benefits of a VHDA Loan: Creative financing programs Reduced interest rates Lower monthly payments More house for less money
Long-term affordable homeownership: Program design and research findings Brett Theodos February 12, 2015 AN INTRO TO LONG-TERM AFFORDABLE HOMEOWNERSHIP Shared Equity Homeownership: A Quick Intro Allows
Your consent to our cookies if you continue to use this website.