Second, home ownership offers incredible tax breaks
not available to those who rent. For example, with today's interest
rates around 7%, home loan payments are lower than they have been
in a long time. But keep in mind that most of your payment in the
beginning is interest, and that interest is 100% deductible for
you. That makes your effective borrowing rate around 4.5%!
Third, consider your new home purchase a forced
savings plan. You may as well be paying yourself instead of a landlord.
Although most of your payment in the beginning is interest, the
principal repayment starts building up right away. And this money
goes into your pocket, not someone else's.
Ideas for Cash at Closing
Anxious to buy a new home, but just can't save enough cash for a
down payment and closing costs? Take advantage of today's great
real estate market.
First, consider selling stocks, bonds or other assets
that you may have put aside. For most people, the best investment
they ever make is purchasing their home.
Another option is to use your income tax refund.
If you are one of those people that receives a check from the government,
put it to good use. A down payment on your new house is probably
the best way to spend it.
The final strategy involves borrowing against the
cash value you have built up in a life insurance policy someone
sold you ten years ago. It's probably not doing you much good sitting
there in the policy, so you might as well put that money to work
in your house.
How can I lower my payments?
Talk to your agent about a seller-financed buy-down. In most cases,
lenders will let a seller pay an up-front fee called a buy-down
which has the effect of lowering your monthly payments for one to
three years. This can cost anywhere from one to three percent of
the loan amount, but it allows you to qualify based on the lower
payments in the first few years.
How to Shop for your Loan
Shopping for a lender is one of the most important aspects to consider
when purchasing a home. There are thousands of mortgage lenders
in the Metro Atlanta area. The only way to know that you are getting
the best loan available at any given time is to shop and compare.
The first thing to do is seek advice from professionals
you trust or turn to a friend who has recently bought or refinanced
Next, call each lender and request the same thing:
A good faith estimate of rate and total closing costs for a thirty
year fixed rate loan with zero discount points. A good faith estimate
is a federally required form that shows all the costs you're likely
to encounter upon closing. Now you can compare all loans fairly.
Finding the sales associate
Using the right agent can have a very positive impact on the buying
process. So here are some tips for finding the agent or broker who
can provide the best service to you:
Get recommendations from the people you trust. Find
a neighbor or friend who had a good experience with their agent,
and ask them questions about their experience. Where did they buy,
and how long ago did this take place? What did their agent do to
make the home buying process easier? How many other agents did they
consider before making their final selection?
If you've already selected a specific area you're
interested in, drive through the neighborhood and look for signs.
An active agent in the area should be familiar with details you
need to know. However, this should not be your only basis for selecting
Spend some time interviewing agents to find out
about their professional skills. Do they live in the area? Do they
have kids in the school system? Don't be shy. Speak up and ask all
the questions you want.