If you’re contemplating the big decision to become a first time home buyer, it’s a great decision. It should be made with your eyes wide open and an open mind to what you’re about to do. It’s a big decision, that’s for sure, but it also is a wise one, especially if this is your first home.
You have advantages that no one else has, and you have the opportunity to jump on them as a home owner. Let’s go over just a few of the advantages to being a first time home buyer and prepare you for moving into your new home.
First Time Home Buyer Grants
This is a big advantage and a major step in the right direction towards purchasing your own home. If you qualify as a first time home buyer, you’re eligible for some incredible discounts and deep savings on the price of the home, plus some additional benefits.
We’ve already covered this in previous blogs, but here’s just a quick recap of this incredible head start to owning your dream home.
Down Payment Assistance – Through the state of California, you could apply for aid to help make your first down payment. As this is one of biggest payments you’re ever going to make, it’s a good idea to seek out some help.
Mortgage Credit Clearance – Your mortgage is, of course, collecting interest, but you can use that interest to offset your taxes with this handy tool. California allows you to apply this to your first mortgage for up to 20% of your interest applied to your tax rebate each year.
Homebuyer Education – To get more information about your first big purchase, you get free access to this online course which should walk you through just about everything you need to know. It would be worth paying for, but as a first time home buyer, you get it for free.
On top of those we’ve previously mentioned, there are also tax deductions offered by the federal government that allow you to make deductions on your first home’s mortgage payment to apply to your income tax statement.
Mortgage vs. Rent
This is probably the big debate you’re having right now if you’re considering becoming a first time home buyer. Is it worth it to pay a mortgage rather than rent? There are several articles that detail why, but the short answer is ‘yes’.
As soon as you start putting money into your own home, it converts into an investment that pays a decent rate of return once you sell it. The best part about paying a mortgage is that you can actually determine how much of an investment it is by increasing the value of your home. It’s the one investment that you directly improve. You’re making yourself money every time you make that mortgage payment.
Detractors will say you’re saving on maintenance costs and insurance when you rent, but in the long run (which is how you should be thinking), it makes sound financial sense to switch to being a home owner.
Each year, as you continue to pay off your home, you will be adding to your equity. This is the amount of value you personally have in your home. As long as you have a mortgage, the property is partially owned by the bank, but as you make the payments, you develop equity in the home, which steadily increases over time.
You can leverage that equity to get equity loans from the bank. It’s a much lower interest rate than standard credit cards, and it’s also deductible. It makes sense to make larger purchases with equity rather than credit because it works to your advantage.
While we’re speaking about leverage, your new home will become a tool that you can leverage should you start considering upsizing to a different home. You can use your first home to sell and make profit to upsize to a larger home. You wouldn’t have that leverage if you hadn’t made the decision to become a first time home buyer.
With your new leverage, you can get better products and treatment from the banks, from the IRS, and from real estate agencies because of your status as a home owner.
Working towards buying your first home can seem like a real drag. In the end, it’s worth the effort because of the immense head start it gives you in life, and how you can supercharge your savings and asset development.
The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.
* For loan examples and more information visit our disclosure page at https://www.uslendingcompany.com/disclosures/