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| People often ask, "Why is homeownership
important?" It is important as the money that is spent
on rent is being given to a third party rather than the money
becoming equity — the value in your home. |
More than two thirds of the US population are home owners but
this number is low in New York: actually, much lower. The home
ownership in New York is just about 34% and the rate of home ownership
of our community — hmm let's not go there. There are just
a handful here in New York. One could probably count them on our
fingers and some toes.
Think that you might want to own a home someday? Here goes. I
am no expert but here are some tips that might help you in the
process. Most people believe they could never own a home. They
worry about the cost and whether they have a credit that is strong
enough: the down payment costs and the like. The whole possibility
makes one lose heart. Do not dishearten.
People often ask, "Why is homeownership important?"
It is important as the money that is spent on rent is being given
to a third party rather than the money becoming equity —
the value in your home. You can also deduct mortgage interest
and property taxes from your federal tax income and in some states'
income tax.
To become a homeowner takes time but it is worth it. Before one
goes about the process of dreaming to become a homeowner he should
ask the following questions:
- Do I plan to live in the house for a minimum of 2 years long
enough to build some equity?
- Do I have enough money saved to pay the mortgage?
- Do I have enough money to pay the closing (when the house
is bought/ sold, the buyer signs the documents) costs?
- Do I have a steady source of income? A regular job for the
last two years?
- Are the bills paid on time?
- Can I afford to pay for maintenance and the mortgage?
If you answered yes to many of the questions above you should
begin to look into options of home buying.
How much can I afford to spend?
For a general idea of your buying power, multiply your gross
income by 2.5. For example if your household income is $40,000
then you might qualify for a $100,000 home. Your monthly mortgage
payment should be less than, or equal to, a quarter of your
gross monthly income.
How much money do I need to buy a home?
You will need money for:
- Down payment
- Closing costs
- Other related costs such as maintenance, mortgage payments
etc.
Down Payments vary from 3-20% value of the property. A Private
Mortgage Insurance may be required if the down payment amount
is less than 20%.
The closing costs range from 2-7% of the property value that
is used for insurance, taxes and various other costs.
The other face of home ownership:
While home ownership has its advantages, there may be some
downsides to it. The monthly housing costs can increase, as
the monthly mortgages may be more than rent. You may talk with
a law consultant to see how ownership affects your tax situation.
Ownership comes with various duties, which include repairing,
painting, and various maintenance issues. Ownership can reduce
mobility. And sometimes the value of property can depreciate
owing to various economic problems.
