Useful Information For Home Buyers
Pros and Cons of Ownership
How can you tell whether owning a home would benefit you? A good way to find out is by considering the ways homeownership can affect your life.
- Build equity — your wealth will increase as you gain more home equity
- Gain tax advantages — mortgage interest is tax deductible as per IRS code
- Stabilize your payments — monthly payments are relatively steady if your loan has a fixed interest rate, while your landlord can increase the rent
- Have a secure place for your family to live — a home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home
- Gain a sense of community — homeowners often are more involved in the well-being of their communities; many homeowners work together for better schools and less crime
- Maintenance costs — it takes work and money to keep a home in good condition
- Ties up your cash — selling the house may not be possible during the first few years of ownership; moving is more difficult and complicated and you may not have as much flexibility in choosing a new job location
- Can fluctuate in value — there is no guarantee that your home will increase in value; it could decrease in value
- Obligates your finances — when you buy a home, you are obligated to a set monthly payment
In the early years of your mortgage, the majority of monthly payments go toward paying the interest. Over time, an increasing amount goes toward reducing the mortgage balance or “principal.” As you make payments, you reduce the principal and increase your share or “equity” in your home’s value. If your home “appreciates” — increases in value over time — equity builds even faster. Building equity — or savings — in your home is important.
Gaining tax advantages
When you own a home, you can deduct mortgage interest and property taxes from your federal income taxes and some state income taxes. These deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the payment. After calculating your tax savings, you may find that it’s cheaper for you to buy than rent. Keep in mind that to gain these tax advantages, you must file an annual income tax return with the U.S. government, even if you’re not a U.S. citizen.
Tax Info for First-Time Homeowners http://www.irs.gov/publications/p530/index.html
What You Can and Cannot Deduct http://www.irs.gov/publications/p530/ar02.html
Stabilizing your payments
If you choose a fixed-rate mortgage, you’ll pay the same monthly principal and interest for the entire term of your loan. (The payment can go up slightly if your property taxes and insurance costs go up.) Unlike renting, your monthly payment will stay the same month after month, even when inflation leads to higher prices.
Having a place for your family to live
When you own a home, you can be secure in knowing that your family and if need be your relatives will have a place to live. When you rent, you may not always be able to renew your lease.
Achieving a sense of community
Maintaining the value of your home gives you a reason to care about your neighborhood conditions. You may want to get involved to ensure the well-being of your community, and you may feel a sense of belonging.
Summary of Fees
If you are securing a loan to purchase a home, your lender will provide a Fees Estimate initially and later a Good Faith Estimate. Fees vary widely depending on your lender, and as such, are impossible for me to accurately summarize without lender input. It is slightly easier to give an estimate of closing fees to a cash buyer.
Please note, fees vary depending on the title company chosen. In Lee County, it is typical that the SELLER determines the title company & pays for title insurance- this summary assumes that is the case. Of course, you can negotiate this when submitting an offer.
- Recording Fees: $30
- Patriot Act Name Search/Lien Search: $25-$50
- Settlement Fees: 0-$495 (This varies )
- Transaction Fee: $399
Taxes & Assessments are pro-rated based on closing date
Fees for wire transfers & FedEx shipping may apply if utilized