The fact is, it’s much easier to buy a home today than you think.  Home prices have dropped drastically and there’s a mortgage to fit every situation.  And when you weigh the pros and cons between buying and renting there’s no question that buying by far has the advantage.  Consider the following ten social and financial benefits of owning your home. 1.  Freedom Think back to your first car.  Brand new and shiny or used with a little wear and tear, either way it was your car.  One of the first sensations that came with the car was a sense of freedom.  Instantly, you had freedom to drive when you wanted, where you wanted, and to decide who got to tag along.  No more asking for permission.  The keys rested permanently in your pocket.  That’s freedom.  Now take that sensation, multiply by 10, and what you have is home ownership. With all the benefits of owning a home, freedom tops the list.  No more asking for permission.  You are the landlord.  Paint the walls, take out a wall, add a wall, add a window, add a room, you decide.  Attach permanent fixtures and decorate in a style that matches your personality.  If you like your music loud, crank it up.  You decide.  If you want to skinny dip in the pool, go ahead.  Let the hedges grow a little higher first.  The point is, you are no longer restricted and constrained the way you were when you rented. You no longer feel as if you’re living in someone else’s home.  That’s because you’re not; you’re living in your home.  That realization provides a giant relief, a comfort you can never feel when you rent. 2.  Privacy You know what it’s like, renting that is.  It starts out nice enough.  But then you notice you can hear your neighbors through the walls.  Guess what?  If you can hear them, they can hear you.  That realization will quiet your night life.  Then the nice couple on your right brings home a bouncing baby boy, and you’re up every night for the 2 o’clock feeding.  Think that’s bad, just hope you’re not around when that baby turns two and starts using the common wall for a hand ball court.  Privacy goes hand in hand with freedom.  With privacy you are free to do pretty much what you want within your own space, within reason of course.  Home ownership gives you more privacy.  You have a buffer between you and your neighbors consisting of your yard, their yard, and a nice fence.  That buffer gives you the space to stretch out and the freedom and privacy to act out. 3.  More Space Speaking of space, in your own home you can have “walk-in” closets you can actually walk into.  You can have extra closets and pantries, attic storage, and under-the-stairs storage.  You can build extra shelves or extra rooms.  You’re going to need the extra space for your extra stuff. And what about your car; remember that car you’re so proud of.  That bright shiny paint doesn’t have to get pock marked with water spots every time it rains.  That’s because in your own home you will have a garage, a two-car garage.  That will give you some extra space for storing the things you never had room for before such as Christmas decorations, your tools, your bicycle, and the pool supplies. 5.  Amenities That’s right, POOF!  You now have your very own pool and spa where you can swim and relax anytime you want, day or night.  That’s not possible in an apartment.  You no longer need to worry about the pool closing at 10 p.m. Imagine this.  It’s the first night in your very own home.  You’ve been moving boxes and furniture all day.  It’s 10 p.m.  You’re hot, tired, and you really need to relax.  This is what you do.  Take the blow-up beach mattress, leaning against the wall in your garage, place it gently in the cool blue water of your pool, and plop yourself down.  Now, just float as you stare up at the stars.  It’s quiet, peaceful, relaxing.  And don’t forget your favorite beverage.  Now sip, float, and stare up at the stars.  It’s your pool, one of the many amenities attached to your house. There’s no limit to the amenities you can include with your home.  Would you like a patio?  No problem, you now have the space.  Be sure to include some shrubs and tiki lights; your guests will appreciate that along with the chicken and steaks sizzling on the barbeque grill, the comfortable outdoor furniture, and some great conversation without worrying about disturbing the neighbors in the next apartment. For those energetic souls there’s the garden.  You now have a yard; you can have a real garden, not a few herbs growing in a bowl on your counter.  Get down there and become one with the dirt.  Then sit back and watch your handiwork blossom, literally.  Your plants take root in the soil as you take root in the community. 6.  Stability This is the kind of living you could get used to, long term.  If something is not quite right with your home—like you need another room for your growing family—you don’t have to move.  Just add another room.  You now have roots.  You have a connection to your community.  You’re a property owner.  You have a vested interest in what happens in your neighborhood and your city.  As a result, you’re much more likely to become involved, to care about local politics, the tax situation, how you want the tax revenue spent, and a long list of other issues.  This is now your community, and you can help shape its future.  As never before you now have stability, something you can count on, a home to come home to. 4.  Security You’ve heard the saying.  Your home is your castle.  That’s even more so when you own your home.  That’s because you can add as much security as you want from a few extra door locks to a complete electronic security system including outside motion detectors and flood lights, all wired to your home security monitoring company, remotely accessed from anywhere in the world.  That’s probably a bit of overkill, but you get the point.  If you travel for business you won’t have to worry about your spouse being home alone, or walking through a dark apartment parking lot to the car.  If the wife needs milk and bread in the middle of the night, she will be safe in her car before she ever leaves the garage. As home owner benefits go, the really good stuff is yet to come.  Let’s talk about the financial benefits. 7.  Forced Savings & Investment Let’s talk money.  The money you save with buying your home versus renting is big; it can be really big.  Let’s say you rent for five years and then decide to move.  You load up the moving van, and off you go with absolutely nothing to show for the thousand dollars or so on average you paid each and every one of those 60 months.  That’s $60,000!  True, it paid for a roof over your head, but owning a home can do much more. Replay that scene, the one about moving after five years.  But this time you’ve owned your home, paying a mortgage of say $1,300 each month toward $200,000 you finance on a $250,000 purchase.  Over the 60 months you pay out $78,000 for principle and interest and another $30,000 for property tax and insurance for a total of $108,000.  Each month that portion of the $78,000 paid against the principle reduces the balance.  At the end of five years the balance on your loan is only $187,000.  You’ve paid down the balance by $13,000.  That, along with your $50,000 down payment is called equity. Additionally, let’s say your home has appreciated at five percent per year, which is well within reason and actually rather conservative in a normal market.  At the end of five years your home is worth $319,000; that’s $69,000 more than you paid for the home, which is also equity.  You sell the home and pay your Realtor his 6 percent commission of $19,000 along with $2,200 in state documentary stamps and $1,900 in title insurance, all paid at closing.  That’s a total of $23,100 in closing costs, leaving a difference of $295,900 from your sale price.  After you pay off the balance on your loan and repay your parents the $50,000 you borrowed for the down payment, you’re on your way with $58,900 in your pocket. It’s true that each month you paid $800 more than you would have had you rented, but that’s where the “forced savings” comes into play.  Over the five years you paid an extra $48,000 ($800 x 60).  That plus an extra $10,900 totaling the $58,900 went into your home “bank.”  Financially, buying is a much better deal than renting.  By buying you can save enough money to make your next down payment on your own.  And the best part, with the capital gains exclusion that $58,900 is all tax free.  But the tax benefits just keep on rolling. 8.  Income Tax Benefits One of the most well known and publicized benefits is the income tax advantage that comes with owning your home.  Remember all that interest you paid on the mortgage.  Of the $78,000 you paid out over those five years, $65,000 went to interest.  Interest on a home loan along with the property tax you pay on your home is deductible from your income thus lowering the amount of Federal income tax you pay each year.  Rent is not deductible.  There is no tax benefit to renting. Generally, the deductible interest and property tax on a home valued at over $100,000 or so can often be more than the standard deduction.  This means you can itemize thus opening up a whole bunch of additional deductions such as medical costs, charitable donations, employee expenses, and more. 9.  Borrowing Against Equity Let’s say that at the end of five years you don’t want to move, but you do need $40,000 to start your own business.  Remember that equity you have built up in your home from paying down the loan balance along with the five percent or so your home has increased in value each year.  You can tap that equity without selling your home.  Banks and mortgage companies line up to give you a home equity loan.  Generally, the interest rate on an equity loan is much lower than a personal loan.  And the interest you pay on the equity loan is also deductible when computing your income tax.  That’s a triple benefit: easy to obtain, lower interest rate, and tax deductible. 10.  Stable Housing Costs When you rent, every year like clock work, you get a little something extra in your mail box—a rent increase notice.  Unlike a fixed mortgage with which your payment can basically remain the same each month for up to 30 years, rent increases every year.  For most people the rate of increase is greater than the rate of increase for your pay, if there is any increase for your pay.  Rent can, and often does, eventually outstrip your paycheck.  A stable monthly mortgage payment is something you can count on and budget for.  That’s an important benefit for you and your family.  By owning your home no longer will you need to take food, medicine, or entertainment dollars to pay your increasing rent. Conclusion There you have it—ten really good reasons for owning your home.  And as mentioned earlier, it’s easier than you think.  For most people the biggest obstacle is the down payment.  In the example above the $50,000 down payment represented 20 percent of the purchase price.  That’s ideal—20 percent or more for a down payment.  But mortgages can be obtained for much less.  If your credit is in good shape, 100% loans are available.  That means no money down. To explore the possibilities start with your Realtor.  He or she will evaluate your situation and make recommendations.  Then you decide.  If you decide to make the move into home ownership, he or she will take care of the rest.  It’s that easy. “Almost any man worthy of his salt would fight to defend his home, but no one ever heard of a man going to war for his boarding house.”— Mark Twain

Buying a home doesn’t have to be an arduous task. It is possible to go through the process smoothly, worry free, and end up with a home you adore. All it takes is a little patience along with understanding and acceptance of the below points.

First and foremost, understand that you will be dealing with professionals—real estate agents, mortgage brokers, attorneys, inspectors, appraisers. These are all people who make a living at what they do. Your agent will have developed a network of professionals. He or she will know which to use and which to avoid. And that brings us to the first point.

Get Yourself an Agent

Buying a home without a buyer’s agent is probably the single biggest mistake you can make. You’re out roaming the communities, and you come across a home that looks appealing. You call the number on the Realtor sign for the price. You soon find yourself talking with the listing agent who is full of information about the home. The agent offers to be there in a few minutes to open the door. The agent arrives, shows the home, you fall in love, and soon you’re signing a contract.

What’s wrong with this picture? The thing that’s wrong is there’s no one watching out for your interests. The listing agent works for the seller, and it will be the seller’s interests that come first. No one is there to negotiate price. No one is there to ensure the contract contains the various contingencies that protect your interests. No one is there for you.

Okay, all of that might be true, you say, but using just one agent means the commission will be lower, saving the seller money, which he or she can pass on to you. Wrong! The amount of commission is set at the time the seller signs a listing agreement. Whether there is one agent involved or two, the commission stays the same. If you deal with the seller’s agent, that broker and agent keep all the commission. Using a buyer’s agent does not cost you one dime more. Your agent will share in the commission negotiated between the seller and the seller’s agent.

What’s the first thing you do when you’re in the market for a new home? That’s right, select an agent to help you find the home and represent your interests. What’s the second thing you’re going to do?

Decide on Features Before You Look

How many bedrooms will you need? How many baths? Do you want an exclusive dining room or will a dining area be okay? How much social space will you need or want? Is a media room an absolute must? How about a pool? How about location? Should the home be constructed of block, brick, or is frame okay?

These are the kinds of questions you should ask yourself. Sit down with your family and evaluate your current living conditions. What has to change? What would you like to change? Make a list of the characteristics you seek divided among needs and desires. Needs are a definite. Desires are negotiable.

Balance the list with your budget; decide what has to go and what can stay. Then give the final list to your agent. Your agent will search the Multiple Listing Service and identify the homes that meet your criteria. And then it’s time to view the homes selected.

This process will save a lot of time and gas expense. You will not waste time and grow weary looking at homes that don’t meet your criteria. But you’re not quite ready to look yet.

Get Pre-approved for a Loan

If you will be financing the purchase of your new home, you will need to get pre-approved. First, let’s understand the distinction between pre-qualification, pre-approval, and loan commitment.

Prequalification does not usually involve an analysis of your credit or your ability to actually make the payments. It involves only a quick estimate based on information you provide. Prequalification doesn’t really mean very much. Pre-approval means a lender has taken an in-depth look at both your credit and income and rendered you qualified for a loan. The lender will discuss with you the maximum amount of the loan, the loan programs for which you qualify, and the interest rates offered for different types of loans. With a pre-approval letter from a lender, you will know the maximum you can afford for a home. With pre-approval it’s time to shop. But keep in mind that a pre-approved loan is not guaranteed. The lender still must qualify the home you select.

The Sale and Purchase Contract you sign when you make an offer on a home will include terminology that requires you to obtain a financing commitment or approval letter within a certain number of days. This terminology refers to actual loan commitment. A lender issues a loan commitment after it approves both you and the particular home you’ve selected.

Before you start looking for a home, you should speak with a reputable mortgage broker or lender to determine the maximum amount of money you can spend based on your financial situation. This preapproval will save you lots of time, energy, and heartbreak.

Imagine finding the home of your dreams, perfect in every way, only to later determine you don’t qualify for enough of a loan to buy the home. You can’t afford it. You’ve wasted time, energy, and your heart will be broken because your dream home is not to be. You’ll have to look at homes much lower in price and probably lower in amenities. Having to step down is very disheartening.

This situation happens every day. It happens because buyers do not determine their financial limits before they start looking. Before you do any looking, select a Realtor, have him or her recommend a good lender, and then get pre-approved.

By the way, obtaining a pre-approval letter from a particular lender does not obligate you to that lender. You can use any lender for the actual loan. And this brings us to the next point.

Shop Around for a Mortgage Broker or Lender

Different lenders offer different programs with different rates and fees. And these programs, rates, and fees change periodically. You can save a lot of money by shopping around for the best deal. When you do compare lenders make sure you compare common elements. Compare apples to apples.

It’s not enough to just compare rates. Lenders can more than make up for lower rates with higher fees. You can get a lower rate and end up paying more than you would had you gone with a reputable lender with slightly higher rates. It pays to shop around.

This is another reason why you should be represented by an agent. Your agent can recommend two or three good lenders. Chances are your agent will not be recommending one of the Internet mortgage brokers with the super low rates. These guys are notorious for charging exorbitant fees. And that’s only if they are actually able to come through with a loan. Many real estate closings have failed to occur because the financing failed to materialize. Failed financing brings up another important point.

Understand Contract Contingencies

With regard to the contract you sign when you make an offer on a particular home, where do you stand if financing does fail to materialize? Again, this is another reason to be represented by an agent. Your agent will ensure that any contract you sign contains contingencies that protect you.

A contract can contain any number of contingencies covering a wide variety of situations. A contingency allows for the cancellation of the purchase contract if something—the contingency—happens or fails to happen. There are three standard contingencies that should always be included: financing, inspection, and appraisal.

A contingency for financing would only apply if you will be obtaining a loan for the purchase of the home. The contract will specify certain loan parameters: rate, term, and type of loan. And you will be required to apply within a certain number of days to the lender of your choice. If either you or the home does not ultimately qualify for the loan, with the parameters you specified in the contract, you can cancel the contract and get your deposit back.

It usually takes several days, perhaps weeks, to obtain a lender’s loan commitment. For a variety of reasons, financing can fail to occur even after the buyer has received a pre-approval letter. It could happen because of something in your financial history that was not discovered immediately, or it could happen because the house itself is found unqualified. Financing has been known to fall apart the morning of closing. But with the financing contingency you are protected.

The contract you sign should also contain a provision that allows you to have the home inspected and to cancel the contract should you not be satisfied with the results. The contract will specify that the inspection be conducted early, usually within seven days or so from the execution of the contract. You will be obligated to find an inspector and schedule the inspection. Your agent will usually handle the details. With a properly formatted contingency, if the inspection discloses anything you can’t live with, you will have the right to cancel.

You should also have the right to cancel if the home does not appraise at the purchase price or more. Usually, the lender will insist on this contingency; this is part of qualifying the home for the loan. The lender will arrange and schedule the appraisal. An inspector will examine the interior and exterior and then compare the home with current market values to arrive at an appraised value. You can cancel if the appraised value is below the amount you offered—the purchase price specified in the contract. However, even if the appraised value is below the purchase price, you will have the option to make up the difference with your own funds or to negotiate with the seller to lower the price.

Get a Market Analysis

Speaking of price, before you make an offer on any home, make sure your agent conducts a comparative market analysis. Even if the seller’s agent analyzed the market when the home was listed, that could have been months ago. The market can change drastically in a matter of months. Also, it’s more likely than not that the home was priced at the high end of the market range for that particular home. After all, it’s the seller’s agent’s job to get the highest price possible. A current analysis will give you something substantial on which to base your offer.

Arrange Homeowner’s Insurance Early

If you are financing the purchase of your home, your lender will require that you provide proof of property insurance. But the lender does not dictate when you obtain the insurance, only that you have proof at closing. Insurance should be secured early in the process, normally right after the home inspection is completed, and you’ve decided to follow through with the purchase.

There are lots of reasons why a home may not be insurable. The home may be too old with electrical and plumbing not up to code. The home may be located in an area that is hard to insure, such as a coastal region. In areas prone to rapid climatic changes—such as Florida—insurance coverage can be delayed if there is a large storm brewing. Since such a storm can develop in a matter of days or even hours, it is a good idea to obtain the insurance coverage as soon as possible. That way you are covered should a storm develop just before your closing. Home purchases have been delayed or even cancelled because property insurance could not be obtained in time for the closing.

However, even if you forget to arrange insurance early, not being able to obtain coverage should be another contingency in the purchase contract. This clause would cancel the contract and get your deposit back should you be unable to obtain insurance.

Get a Home Warranty

No home is perfect. Even brand new construction can have flaws. A home warranty, obtained for a few hundred dollars, can end up saving you thousands. A standard warranty covers electrical, plumbing, heating and air conditioning systems, along with major appliances.

In your offer, ask the seller to pay for the first year. Three or four hundred dollars is a small price to pay for getting the home sold. If the seller refuses, ask your agent to chip in the dough. Again, it’s a small price to pay for getting a deal through.

Don’t Assume This Will be Your Last Home

When you search for a home, perhaps your number one criteria should be resale. On average, people move every five years. Very few people these days remain in a home long enough to pay off the loan, especially a thirty year loan. At some point you will probably need to sell. Consequently, the home you select to purchase should be a home attractive to a large segment of the population.

Pick a home in a good location. A home located directly on a busy street will probably not be attractive to people with children. A quiet neighborhood would be a good choice. A cul-de-sac would be even better.

Homes with odd features—disjointed floor plans, weird shapes, and outdated characteristics—may be interesting but probably will not appeal to the mainstream.

Less than three bedrooms and two baths is probably not a good idea. Even single buyers usually don’t assume they will be alone forever. Marriage and children are always a possibility. Enough room for family and friends to visit will be of value. Even if you don’t need the extra space, purchase your home with the next family in mind.

Don’t Make Your Home Too Unique

Your favorite color is purple. But save that color for your stuffed animals and bubble gum. Don’t paint your home purple. Don’t even paint the front door purple. Paint with neutral colors. It will save you from having to repaint before you can put your home on the market.

And by all means, stay away from odd colored semi-permanent aspects of the home. A dark blue tiled shower may be a real conversation piece; potential buyers will certainly talk about it. But they probably won’t buy. With the semi-permanent aspects—bathroom and kitchen tile, counter tops, cabinets, doors, and windows—stick with the more neutral colors and desirable materials.

Be Honest

Be honest with everyone you deal with. If you have flaws in your financial history, be upfront. If your income is less than you would like it to be, accept the reality. Think of these things as hurdles to be overcome and challenges to make you better. Problems can be solved but only if you recognize the problems. Being less than completely honest will only add to the problems.

Conclusion

Having the buying process run smoothly to a successful conclusion in which everyone is happy with the outcome is not magic. It can happen in every transaction. Start your buying process by selecting the right Realtor. Interview several. Ask in depth questions. Determine the one who is familiar with the market, skilled and experienced, excited about doing the job, and dedicated to making you happy. The right agent will be more interested in your satisfaction than in his or her commission. You can trust that he or she has your interests at heart. Listen to your agent’s recommendations. Follow his or her advice.