6 Things You Need to Know Before Buying a House
There’s nothing as exciting as purchasing your first own home. These are the first time home buyer incentives to take advantage of before making a purchase.
There are a lot of things you need to consider from the location of the house to mortgage rates. Since purchasing a home is one of the most significant financial decision you’ll make in your life, you need to ensure you’ve done everything right.
In this article, we’ve provided you with a list of six things that you need to know before buying your dream house.
Mortgage Rates Are Fixed
Based on a report by the U. S Census Bureau, more than 64% of households own a home and pay mortgage regularly.
Many people prefer mortgages over renting. They believe renting is more expensive. But depending on your unique situation, renting can be cheaper. Therefore, you need to consider certain factors before opting for a mortgage.
Renting a house is often a headache for most people. They have to pack and leave within a short period if the landlord raises the rent to a level they can’t afford.
Landlords may raise the rent or impose new restrictions once your lease agreement ends. Subsequently, you might spend lots of money when moving from one house to another.
But when you’re a homeowner and have a fixed mortgage rate, you don’t have to worry that your monthly payment will increase unexpectedly.
As a matter of fact, your monthly payments will reduce every year since inflation makes a fixed mortgage payment cheaper.
There are Incentives for First Time Home Buyers
If you are a first time homebuyer there are special programs and incentives you will be able to take advantage of. Some of these incentive programs include:
- FHA loan – helps first time buyers with low credit scores
- VA loan – helps new home buyers who have served or currently serve in the military
- USDA loan – provides financing on rural and farm properties
- Fannie Mae and Freddie Mac – offer home ownership loans with as little as 3% down
- State programs – various financial assistance programs that vary state by state
These government incentives can make it much more affordable for a first time home buyer to afford the property of their dreams.
You’ll get a Property Tax Deduction
Owning a home means you can claim a property tax deduction every tax season.
When you’re living in a rented property, your landlord pays the property taxes every year before transferring the cost to you. As a tenant you can’t claim property tax deductions. One major advantage to owning is that you can deduct the total value of property taxes on your tax return each year.
According to the 2018 tax code, property holders can deduct up to $10,000 in property taxes each year. Also, most states let you deduct property taxes on your state income tax return.
Even though you can no longer subtract an unlimited amount of property taxes, claiming the property tax deduction will save you hundreds of dollars.
You Can Deduct Mortgage Interest
Apart from deducting property taxes, you can also deduct mortgage interest. According to the U.S tax code of 2018, property owners might deduct interest paid on mortgages to $750,000 or less in value.
Although it wasn’t always like this, the tax code introduced in 1913 by the tax foundation placed no limit on the amount of mortgage interest homeowners could deduct.
But as time went on, new laws were enacted to limit the amount of mortgage interest owners could claim.
Freedom to Customize Your Home
When you’re a homeowner, you can customize your home in any way to meet your needs. You can renovate the rooms, change the roof, paint the wall and even add an extension.
But when you’re living in a rented property, any minor customization you make on the property can result to hefty charges, expensive lawsuits or eviction.
Some landlords can charge you over $100 per nail hole they find in the house when you move out. Others can won’t let you hang certain types of picture or even use certain types of furniture.
But if the house is yours, then you can invest in modifying it without having to deal with unrealistic restriction imposed by landlords.
No Landlord Problems
Most people usually have a hard time dealing with landlords. It’s no surprise to hear that a renter has moved out because of a terrible relationship with the landlord or property manager.
Landlord usually have unrealistic restrictions that can make it hard to live in a place. For instance, some can restrict the number of guests you can have over, while others can prevent you from owing a pet.
However, when you own a home, you won’t have to worry about drama brought about by landlords. You can make your own decisions without having to get approval from anyone.
As we said earlier, investing in a property is a big financial decision. Therefore, it’s crucial to weigh your options carefully before making a final decision. We recommend researching mortgage rates before you visit any homes. Having a sense of what current mortgage rates are will help you understand whether you can afford a home and how much it will cost.