Home Buyers Guide
"This will have everything you need to know when considering buying a home."
Why Own A Home Or Condominium?
To Hedge Against Inflation
Real estate values rise when construction and land cost rise. Even if annual inflation is only 4%, the cost of a $100,000 home will increase $4,000 a year or $333.33 a month.
To Reduce Taxes
Interest and taxes on a home purchase are tax deductible. The actual monthly cost of buying a home is much less than the check you send to your mortgage company. For example: On an $100,000 home with $5,000 down and a mortgage of $95,000 (30 years at 7%), the monthly payment for principal, interest, taxes and insurance is $760. Of this, the first month's interest will amount to $554. If you're in the 28% tax bracket, your federal income taxes will be reduces by $155 a month. This makes your true monthly interest cost $399. Real estate taxes will be about $100 per month and this will reduce you federal income taxes by an additional $28 per month.
To Obtain Leverage
If you put $4,000 down on an $80,000 home that increased 4% in value within the next year, you have a gain of $3,200 on you $4,000 investment. This is an 80% return - thanks to leverage.
To Build Equity
The equity buildup in your home can be used to back a note. Or you can re-mortgage your home ( the net proceeds are tax-free).
To Avoid Rent Escalations
As inflation increases on real estate values, rental property doubles over a period of time and rents will increase accordingly.
How Much Can I Afford?
Do You Know Your Paycheck Gets BIGGER When You Buy A Home?
A large portion of the mortgage payment is tax-deductable interest. While some people prefer getting money back from the IRS, other prefer to increase their allowable deduction and get the "tax-saving dollars" to help them make the mortgage payments.
What Can You Afford?
Start by determining how much you can invest in the down payment. Second, figure out how much you can afford in monthly payments.
Your monthly mortgage payment covers principal, interest, property taxes and insurance; often referred to as PITI. If you buy a condominium or a home in an area governed by a homeowner's association, your monthly cost would also include association dues, condominium fees and perhaps mortgage insurance.
Most lenders feel that the PITI payments should not exceed 28% of the gross monthly income..or no more than 36% for PITI and monthly debt repayments combined. Factors that can change these percentages might be other outstanding long-term debts, alimony and /or child support payments, the size and age of your family and the other household budget items.
What About The Closing And Its Costs?
Do You Know Your Paycheck Gets BIGGER At The Closing Or Settlement?
You will review and sign the mortgage note, lender forms and the settlement sheets. You will be expected to pay the balance of the down payment and your part of the closing cost with a cashier's check or certified check.
Closing costs vary widely but the buyer's cost usually average between $1,000 and $1,500. They must cover such things as loan origination fee, mortgage insurance premium, survey, appraisal and credit report. You may also make and advance deposit in escrow for the property taxes and insurance credit report. You may also make an advance deposit in escrow for property taxes and insurance.
How Is The Purchase Negotiated?
Submit An Offer
You've discovered your dream home, and you're eager to buy it at the best possible price. You submit a signed Offer to Purchase.
If the seller accepts your offer, this will be the sales contract. So before you sign it, be sure you and you Tucker Sales Associate have read it carefully and understand every detail. Be sure any verbal agreements made with the seller are written into the contract.
Some of the things you many want to put in your contract include a contingency of financing, which specifies the total loan amount and exact financing terms; a contingency on an inspection of the property by qualified experts; and conveyance of personal property such as drapery rods, chandeliers, appliances or any other item not permanently attached to the structure.
When you sign the Offer To Purchase, you must also submit a deposit to indicate that you are bona fide and earnest buyer. That's why your deposit is called "earnest money".
What About Condominiums?
Buying a condominium is just like buying a home. You are the owner with a clear title, a mortgage and all the benefits of home ownership. In addition, many communities offer amenities which most home owners couldn't afford - a clubhouse, swimming pool, tennis courts. The upkeep of these facilities plus grounds management and maintenance are covered by a fee. A complete list of these costs should be reviewed prior to purchase.
What Do REALTORS® Really Do?
Simply, they make sure the buyers and sellers they represent get the most for their money. A REALTOR'S® business is based on referrals.
A REALTOR® knows the market...knows the value of locations throughout the area...understands the complexities of a real estate transaction and makes sure you understand all that you need in order to make wise decisions. Whether you're looking at builder's homes or condominiums, pre-owned homes, the services of a REALTOR® will not add to your cost.
A Sales Associate of the Tucker Company is prepared to make your home-buying experience pleasant and efficient. Tucker Sales Associates are professionals ready to help you - just as they help thousands of others make home buying dreams come true.
We're in your neighborhood. Open 7 days a week! the Tucker Company has 15 sales office locations within and surrounding the Metropolitan Indianapolis area. In addition, there are 25 out-state independently owned and operated affiliate offices. This network provides more than 1,000 real estate professionals to meet our clients needs throughout Indiana, and beyond.