Umatilla Florida Blog

Seven Reasons to Buy a Home

    The current economic environment represents a mirror image of "The Perfect Storm". Rather than all the forces combining to create a horrible disaster, the economic conditions in place at the present time mark a confluence of factors which make the purchase of real estate the economic opportunity of a lifetime for many individuals.

    These conditions especially favor those considering the purchase of a home. Consider:

        1. Buying a home may well be cheaper than renting. With mortgage rates at or close to historic lows, monthly payments of Principal, Interest, Taxes and Insurance (PITI) could easily be less expensive than monthly rent. Consider principal and interest payments. On a $100,000.00, 30 year mortgage, the principal and interest payments are almost exactly $600.00 per month at 6.0% interest. Add to that the payments for taxes and insurance of approximately $100.00 each per month, and the monthly payment to own a home valued at over $100,000.00 is only $800.00 per month. If interest rates are lower than 6.0%, the savings will be even greater. (See #6 below).

        2. Housing affordability is at an all-time high. Housing affordability, as reflected in the National Association of Realtors Affordability Index, is now at approximately 170. This is an increase from approximately 131 in late 2008. The index indicates that the National Median Household Income is currently 170% of that needed to purchase the Median Existing Single Family Home. The reason that the index has risen so drastically is not that incomes have risen. They are basically flat. The reason is that the price of the Medial Existing Single Family Home has declined, making these homes even more affordable.

        3. Tax benefits. Homeowners are able to take advantage of two deductions from gross income not available to renters. Homeowners can deduct both the interest paid on the mortgage and the property taxes they pay each year. These two deductions usually result in a reduction of the income taxes owed at tax time. This reduction in taxes will therefore partially offset the total of the year's monthly mortgage payments.

        4. Little or no down payment. There are several programs available to the home buyer which can significantly reduce the up-front cash required to purchase a home. With the Veterans Administration (VA) and the United States Department of Agriculture (USDA) programs, no down payment towards the home is required. With the Federal Housing Administration (FHA) program, the down payment required can be as little as 3.5% of the purchase price. Each of these programs has restrictions, so a visit to a bank or mortgage company is highly recommended before beginning the search for homes.

        5. First Time Home Buyer Tax Credit. For those buying their first homes or for those who have not owned a home in the three previous years, The American Recovery and Re-Investment Act of 2009 includes a provision which privides first time home buyers a tax credit of 10% of the purchase price of the home to a maximum credit of $8,000.00. This means that an individual will get a refund at tax time equal to the $8,000.00 credit minus any federal tax owed. To take advantage of this credit, the home must be purchased by December 1, 2009. There are also some income limitations, so consultation with a tax professional would once again be recommended.

        6. Mortgage rates are at or near historic lows. Today, July 30, 2009, 30-year fixed loans were being advertised at 5.2%.

        7. Home ownership feels good.

      The home buying process is memorable and exhilirating. It does, however, present many pitfalls which can be avoided by utilizing the services of a Realtor.

    Please feel free to call me with any questions: 352-455-3684

    Geoffrey F. Presson

    Broker/Owner 

    Note: Some of the above was obtained from an article written by Christine Van Tuyl and Margaret La Grange of Prudential California Realty in Coronado, CA.