The decision to transition from renter to owner has many benefits. Perhaps you are tired of paying rent without any capital appreciation? Maybe you’ve watched real estate prices rise and feel like you are missing out on a return on an investment opportunity? Maybe you believe in the idea of building a strong, stable community? Perhaps you’d like to take advantage of the low rates found in mortgages today?
The Downside to Owning a Home
Sure, owning a home means you can’t merely up and leave if you get bored with the neighborhood. Selling a home can be a very involved process, and some costs are associated with selling a home. You must also face the matter of taxes to be paid, some of which may be deductible. You may also face real estate property taxes paid for a first home and a vacation home that are fully deductible for income tax purposes. You will also have to perform maintenance on your home on items such as appliances, HVAC, the roof, yard, etc.
The Benefits of Owning a Home
Many people tend to take pride in owning their own home. Your rent payment is merely funding someone else’s investment, but homeownership is an investment that can be financially beneficial over the long term. For example, a history of on-time payments will boost your credit rating. And you’ll probably have a lot more space and room to grow, important if you plan to start a family. You will also have considerable collateral should you ever seek a loan. Best of all, your mortgage and interest rate can never go up (on a fixed interest mortgage), unlike the rent, which is likely to increase every year.
Becoming a homeowner is also a journey, but like all journeys getting there requires the right guide and a map (aka “plan”). This plan must look at your entire financial and lifestyle situation. Of course, you’ll need a real estate agent and a real estate attorney, but perhaps the most important partner is the mortgage provider. It’s all about motivation.
Here are a few more benefits to homeownership:
- Appreciation – The housing market does have its ups and downs. However, there is no sounder, long-term investment than owning a home. You can make approximately 33% of your asking price in just five years depending on your location.
- Equity – Say you buy a $200k home with $0 down and pay $7k every year. The next year your total owed is $193k, and you also have $7k in equity in the home, and this cycle continues each year until the mortgage fully paid.
- Capital Gains Dodge – Let’s say you sell that $200k home for $250k and you’ve paid off $50k when you sell it. That means you net $100k in profits. In most other investment scenarios, paying taxes is a requirement. You are eligible to evade these taxes in many home selling scenarios, which is where a mortgage broker can help.
Check out Investopedia for more benefits on home ownership.
The Secrets to a Smooth Transition from Renter to Owner
The motivation for a real estate agent is a commission, a sales quota, and possible future referrals. An attorney’s motivation is billable hours, as well as the possibility of future legal services. And the motivation for many mortgage brokers is approval for a mortgage so they can collect a commission.
As you can see, the relationship between a home buyer and a real estate agent or a closing attorney can be short-lived. But the relationship with the right mortgage broker can last many years. The right broker will work with you holistically, consulting on ways to save on fees and interest, but most of all, they will act on the financial basis of you and your family at that time and well into the future.
They may all seem the same, but you cannot just work with any lender, agent, bank, or mortgage broker. You must find a specialist in mortgage planning, much like you would treat anyone who helped you with a major investment. You want to work with someone who has your best financial interest in mind and can guide you over the life of your home ownership—finding the right mortgage specialist with the expertise to correctly advise you on how to structure and handle your new debt is invaluable in the complex, transactional finance world.
More on the Transition from Renter to Owner
Shopping for a home and mortgage expensive, no matter where you would like to live. You still must go through a variety of lending agents and you never know the hidden charges you will face. We recommend consulting an expert to guide you through the process to make sure you are getting the best deal possible.
Start the Conversation today!
If you are thinking about your transition from renter to owner, we’d love to speak with you. No risk, no high-pressure salespeople, just an opportunity to speak with experts that might help you secure the right mortgage. Go beyond a low rate but explore mortgage opportunities you can actually live with. Just tell us a little about you and your situation and we can schedule a meeting.