Resolve to buy a place of your own in 2014
Jan. 1 is just around the corner and millions of Americans are once again thinking about the resolutions they will make for the new year. Why not make this year’s resolution one that will last long into the future. Deciding to become a homeowner is possibly the best resolution you can make.
According to a 2012 nationwide poll, 96 percent of homeowners are happy with their decision to own, and 74 percent say that owning a home is the best long-term investment they can make.
Here are some tips to help you make good decisions for your homeownership resolution.
First, figure out how much you can afford. This depends on factors including your credit rating, your current expenses, cost of a down payment and interest rates. Don’t forget that you will need a down payment upfront and money to make monthly mortgage payments.
Check your credit report carefully. Inaccurate information on your credit report could result in lenders offering you loans with higher-than-market interest rates or denying your application altogether.
Find a lender you trust and work well with. Ask your friends, family and neighbors who own their homes for recommendations. Work with a qualified lender on getting together a budget and collecting helpful advice before buying a home.
When shopping for a mortgage, consider all your options. There are many choices in terms of a loan and not every one is right for every buyer. Don’t forget to research Federal Housing Administration (www.fha.com) programs that offer loans with lower down payments, often good for first-time buyers.
Keep in mind that there are tax advantages to being a homeowner that can help offset costs. Depending on your specific situation, often the closing costs and some other first year costs of purchasing a home are deductible. And the mortgage interest deduction (MID) enables many homeowners to reduce their taxable income by the amount of interest paid on their mortgage loan each year. More than 70 percent of homeowners with a mortgage are able to claim the MID in a given year.
The U.S. Housing and Urban Development website (portal.hud.gov) has information for home buyers, including tools to help you figure out how much you can afford, how to shop for a loan, information on how to avoid predatory lending and an explanation of the settlement process.
Finally, learn about the neighborhoods where you are interested in buying. Visit areas you are interested in at different hours, talk to people who live there, and find a real estate agent that you trust and who knows the neighborhoods you like.
Karen Nakamura is CEO of the Building Industry Association of Hawaii.