Rent or Buy?
With every rent check you write, you're helping to build equity in your landlord's property. That money could be going toward building equity in a home of your own. Today's rates are low enough that your house payment could be lower than your rent payment!
There are many advantages to owning a home, including:
A feeling of security that comes from owning a home and the knowledge that your home is a safeguard against inflation.
Payments on your mortgage loan mean you are acquiring a major possession; instead of rent, you own more and more. The garden you plant, the permanent improvements you make - all enhance your way of living as well as the value of your home.
Your real estate taxes and the interest on your mortgage are deductible from your income tax.
Most people start on the road to financial independence through home ownership. Your principal and interest payments remain the same for the full term of your mortgage while your rent usually goes up as the cost of living increases.
Your children grow up in the neighborhood of your choice.
Better than a savings account, your home can appreciate to keep pace with inflation.
Home ownership offers special advantages that make life more enjoyable - backyard barbecues, large family gatherings during holidays, a home workshop, a chance to enjoy your family's companionship in the privacy of your own home.
How much home can you afford?
Our handy calculators can offer you valuable assistance in determining how much home you can afford and how much you can borrow.
How Much Can I Afford?
Before you go out looking for a home, you can get an idea of what you can afford by using our Finance Tools. This handy tool will help you estimate how much mortgage you can handle.
Another thing to consider is your down payment amount. Think you can't buy a house without a 10% or 20% down payment? Thanks to more lenient government guidelines and new mortgage products, many people can now get into a house for as little as 3% down-or less. There are even some special programs for first-time buyers that help with closing costs.
The Benefits of Equity
Equity is the principal part of your monthly payment that you can use as a down payment on a new home, or collateral for a home equity loan. You can use a home equity loan to finance home improvements, a child's college tuition, or a new car.
Real estate is also a great way to keep a hedge against inflation. While some homes do appreciate in value more quickly than others, real estate usually keeps pace with inflation. In fact, homes in general have been appreciating at a steady 3% a year. (Your REALTOR can provide you with the housing appreciation rates in the areas in which you're interested in buying.)
That Wonderful Thing Called A Tax Break
As a homeowner, when filing your taxes you can deduct the interest portion of your monthly payment-and that can mean big savings. You can deduct your property taxes, too.
So look at what your monthly mortgage payment will actually be, taking your tax breaks into consideration. You may find out it's about the same as-or sometimes even less-than a rent payment!
With a 5% down payment, a $100,000 30-year mortgage loan at 8% interest (8.15% APR) requires a monthly principal and interest payment of $733.76. Assuming a 28% tax bracket and $150 for monthly property taxes, the after-tax monthly payment would be about $615! (This is only an example. Please consult with a tax advisor regarding your own tax situation and current tax laws.)
Pre-Qualification vs. Pre-Approval
Pre-qualification is just a guesstimate of how much you could afford. But with a pre-approval, it's just that: getting your mortgage approved prior to going out and looking for a new home.
Your loan officer will show you which items you should bring to apply so neither of you will need to wait for various written income, asset and liability information. So you could get a loan decision in just days. And when you apply online , you can get your approval quickly!
Working With a Realtor
Sure, you can do your home search by yourself. But why? With an experienced Prudential California Realty Sales Professional at your side, finding the perfect home is easier, faster and a lot more fun. A good Realtor® can show you more suitable properties, offer valuable advice, and coach you through the entire home buying process. And you'll save time. Yet many buyers still spend endless hours pouring through classified ads, driving all over town, and viewing dozens of unsuitable properties - simply because they haven't connected with a Realtor®.
Some people think that if they have several agents looking for homes on their behalf, they'll find a house more quickly. Like most relationships, the buyer-agent relationship thrives on communication, loyalty and trust. By working exclusively with one agent, you'll improve both the process and the results.
Finding The Right REALTOR For You
Chemistry is important. So are credentials. Above all, you'll want an experienced agent who has the resources of a leading real estate firm behind him or her-a firm such as Prudential California Realty.
Some helpful hints on finding and working with a Realtor®:
- Ask friends, family members, neighbors or co-workers for referrals.
- Trust your intuition.
- Share with your REALTOR as much as possible about your lifestyle, tastes, needs and dreams for your home.
- Focus your search on a few geographic areas.
Asking the Right Questions
How well do you know the area(s) that interest me?
A REALTOR who knows the area or neighborhood you are interested in is extremely beneficial to you.
How many other buyers and sellers do you currently represent?
You want A REALTOR who will give you personalized attention, answer your calls quickly and communicate with you often. Keep in mind, though, many busy, experienced REALTORS are the most efficient.
Will you handle all aspects of my transaction or will you delegate some tasks to an Administrative Assistant?
If you choose to work with a busy agent, a knowledgeable assistant can be very helpful when you have questions or need immediate attention.
Will you give me a list of homes you sold in the last 12 months?
Contact some clients that have worked with the agent and ask them about their experience. The list should contain addresses, property types, names of sellers or buyers, sale dates and price. Ask the REALTOR for testimonials from satisfied customers.
Making an Offer
Time for nervous anticipation. You've found the home you want, and your Prudential California Realty Sales Professional says you need to act fast. Yet you want to be as calm and objective as possible. The expertise A Prudential California Realty Sales Professional can give you at negotiating time is priceless.
Negotiating The Buy
The expertise a Prudential California Realty Sales Professional can give you at negotiating time is priceless.
Be prepared for counter offers. Don't let the pressure get to you. Remain patient, and let your Prudential California Realty Sales Professional act as your liaison with the seller or the seller's agent. You may need to be flexible on price, closing date, appliances and repairs.
Beware of putting contingencies in your purchase agreement. They weaken your offer. However, if you currently own a home, your offer may need to be contingent on it selling. Or, if you're uncertain about the structural integrity of the home, you may want to have a home inspection contingency. Just be aware any contingency could take you out of the running if a non-contingent offer is presented.
Once your offer is accepted, be prepared to seal the deal with earnest money. Earnest money is usually a percentage of the home's purchase price that indicates you're serious about the purchase and indicates your good faith. It's generally applied to the purchase price when you complete the purchase, but may be forfeited to the seller if you fail to complete the purchase. Contact your Sales Associate to determine the amount of earnest money you should be prepared to pay based on your target home price.
Many first-time buyers are taken by surprise when it comes to earnest money, especially if they have to make a fast offer. Be sure to discuss with your REALTOR the appropriate amount of earnest money you should be prepared to pay based on the price range of properties you're looking at. You should have this amount available in your checking account so you can write out an earnest money check on the day you sign your purchase agreement.