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Advantages Of Purchasing A Home Rather Than Renting
It is a big thought to buy vs rent in Colorado, and it requires careful consideration, as most mortgage lenders will agree. But the advantages of home ownership are great. For many years, buying real estate has been viewed as a highly profitable investment. It is an attainment that offers a sense of pride, economical stability and potential tax advantages.
There are certain responsibilities associated with owning a home. Landlords will frequently argue the benefits of renting, and for obvious reason. If you are renting, you're helping them make their mortgage payment.
The numbers are incredible if you look at it this way. If you are paying $1,000 monthly for an apartment, and you know your rent will go up 5% every year, then over the next five years you would pay your landlord $66,309. If you are at present renting a house, you may be paying much more than that each month. Either way, you get no equity by shelling out this monthly housing expense and you certainly won't benefit when the property price goes up!
However, if you were to buy your own home or apartment, you would be well on your target toward building equity within that equal five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never get higher. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates fall, and this would cause your monthly mortgage commitment to decline.
In addition to building equity, there are tax benefits that come into play with home ownership. According to your tax bracket, owning a home is usually less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you check the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
There are also a number of first time home buyer programs in Colorado. To identify the loan program that is suitable for you, your mortgage broker will need to analyze your monthly household income, current resources and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the details of your credit score, will determine how much house you can afford and what interest rate you will pay for a loan. It is also essential to let your mortgage consultant learn what your future goals are, since this will help narrow down which loan program is the best fit for your long-term needs.
There are various types of loan programs available, including "low" and "no" down payment mortgage programs. These varieties of programs demand the first time home buyer in Colorado to give less than 3 percent of the loan amount as a down payment. FHA lenders rule that the mortgage payment, containing principal, interest, taxes and insurance (PITI) should not exceed 31% of your gross income, and the PITI plus other long-term debt (car payments, etc.) must not exceed 43% of your gross income.
Housing is an expense that takes a big bite out of the monthly expense. If you are a renter and sense that "home" is more than just someplace to hang your hat, consider the advantages of buying real estate. It may be time to take the measure into building your personal net worth as a home owner.
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