The Path to Home Ownership
Owning a home is a cornerstone of the American Dream. It’s also one of the largest and most important investments that most people make in their lifetimes. It’s your shelter, a tax benefit and after you have paid down the mortgage, a source of equity. Here are the top five reasons you should own a home.
1. You’ll Save Money Long-Term
In many cases, with the current low mortgage interest rates, buying may save you more money than renting. This is especially true if you’re planning to stay in the home for a long period of time.
2. You’ll Have Fixed Payments
When you buy a home, your monthly mortgage payments will remain the same throughout the entirety of the loan, provided your loan has a fixed interest rate. However, when renting you run the risk of the landlord raising your monthly rent.
3. You’ll Build Equity
When you buy a house, your monthly mortgage payments build equity and ownership in your home over time. When renting, you don’t build equity and your payments make no investment return since you don’t own the property.
4. You’ll Benefit from Appreciation
As long as the demand within the housing market remains consistent and sale prices continue to rise incrementally year-over-year, a home’s value may increase with time. Owning your home on a long-term basis may provide a profitable return on investment if you sell.
5. You’ll Get Tax Breaks
You’ll be allowed to deduct your mortgage interest when you itemize your deductions on your tax return. Consult your tax advisor for more information.
3 STEPS TO TAKE BEFORE YOU BUY A HOME
1. Save for a down payment and expenses such as closing costs.
2. Get pre-qualified by a mortgage lender to improve your negotiating power with
3. Begin to look for a home. Use a real estate agent or a real estate website to get a
sense of housing prices in your desired market.
MORTGAGE PRE-QUALIFICATION: THE FIRST STEP TO HOME OWNERSHIP
Buying your first home is an exciting milestone that requires a lot of thought and planning. Navigating the path to homeownership involves many players such as a realtor, a lender, a title company, a surveyor and an appraiser. The first step of the journey is getting pre-qualified for a mortgage loan.
Pre-qualification is simply an estimate based on unverified information you provide. This starts with an online application, after which, a Mortgage Loan Officer will call you to discuss your mortgage situation. Once you have been pre-qualified, a mortgage lender like Broadway Bank will issue you a letter outlining the mortgage amount for which you pre-qualify.
Some Realtors hesitate or refuse to show houses to buyers that have not been to a bank to get pre-qualified. Sellers want to know buyers are serious and request the letter in advance of a buyer submitting an offer on their property. In the case of multiple offers, a pre-qualified buyer has more negotiating power and is more legitimate than a buyer who hasn’t been pre-qualified.
Once you have been pre-qualified for a mortgage loan, you will need to complete an official application and provide the lender with documents to verify your financial situation and perform a credit check. A lender will then determine the mortgage amount and terms for which you qualify.
If you qualify, the lender will provide you with a pre-approval letter that outlines the amount of the loan for which you are pre-approved. The pre-approval letter lets you know what you can afford and can be an advantage when you find a home you like. You want to shop around for your loan – some lenders will offer better terms than others. Here are some things you should know when you receive mortgage loan offers:
1. Always evaluate your offer. After you receive a mortgage loan offer, you
should review it thoroughly, considering your specific needs, to make sure it is
the best offer for you.
2. Understand your loan terms. The Truth in Lending Act requires Lenders to provide
Borrowers with information about the key features, costs, and risks of their mortgage.
3. Know your costs. Within three days of applying for a mortgage, a Lender must
provide you with a Loan Estimate to help clarify costs.
Remember, purchasing your home is a big commitment – don’t hesitate to ask your lender questions about your offer. Make sure you understand the cost and terms of your loan before you commit.
Make the home-buying process an easier one by getting the right guidance. If you’re ready to get pre-qualified, give us a call at 210.283.5604. Broadway Bank can help you determine what you can afford and the financing options for your new home.
Broadway Bank invites you to join us on Saturday, June 22, at our Downtown location located at 1100 McCullough for the Home Within Your Reach event. This event provides a great opportunity to learn more about the home-buying process and have one-on-one time with our local mortgage experts.Refreshments and entertainment for the kids will be available. Visit broadway.bank/myhome to register.