How to Become a Homeowner

Congratulations on your decision to want to become a homeowner. There are awesome benefits to this choice.

Benefits to homeownership

Rent v/s Buy

RENT

  • Higher Monthly Payments

    The main reason that rental payments may cost more than a mortgage payment is because the owner has to make their mortgage payment plus they need extra to pocket.

    Example: The owners Mortgage payment is $800/m. They charge you rent of $1200 per month. This homeowner is pocketing $400 per month of your hard earned money.

  • Equity

    When you rent you do not have rights to equity. When you decide to move, you walk away with nothing. Only your security deposit.

  • Late Payments

    Most lease agreements make rent due on the 1st of the month and late on the 5th of the month. If you have not paid your rent by the 15th of the month the property management company can evict you.

  • Taxes

    There are no tax advantages as a renter.

  • Home Repairs

    This may be the one of the only benefits of being a renter. If something breaks in the home, the renter picks up the phone and calls the landlord to fix it.

BUY

  • Lower Monthly Payments

    Interest rates are still really low.  Most banks are charging from 3%-5%.

    What’s an interest rate? The rate that is charged or paid for the use of money borrowed from the bank.

  • Equity

    What is equity? Equity in a home is the amount of money you can sell it for minus what you still owe on it.

    When you are a home owner, every time that you pay mortgage or pay on your loan, you are decreasing the amount that you owe (Paying down the mortgage) If you hold on to the property for over 2 years you have built up equity in the home. Meaning if you wanted to sell it, you could make a profit and walk away with cash.

    For example:

    You purchase a home for $100,000, Each month you pay $500. After 5 years you’ve paid around $30,000. You decide to sale your home after 5 years. Your home is currently worth $110,000 and you owe $70,000.

    Once your home sells  you’ve built up $30,000 of equity in your home and because the value has increased you could possibly walk away with around $40,000.

    Or you could refinance it and get the cash out of it.

  • Late Payments

    Most mortgage payments are due on the 1st of each month and are late by the 15th of the month. The bank usually will try to work with the homeowner understating that sometimes people may have a bad month. It’s often at least 3 months of making no mortgage payments before the bank will start the foreclosure process.

  • Taxes

    Another advantage of Homeownership is that some homeowners may qualify to deduct mortgage interest payments from their income when filing their taxes.

    This is very helpful. Always talk with your accountant about how this can benefit you.

  • Home Repairs

    When something breaks in your home, as a homeowner you are responsible for finding someone to repair it. I always suggest that my buyers get a home warranty.

    Home Warranties protect things in your home to help preventing the homeowner from having to make a major out of pocket expense to get it repaired.

How to Become a Homeowner

Step 1: Contact a Realtor

(Guess what? I’m a Realtor) Call or text me 704.617.8078 or fill out the contact form.

A Realtor will listen to your situation and will be able to guide you to the next step.  Realtors know great lenders and they also know the area  that you want to live in well. They will get you started on the right track.

Step 2: Contact a Lender or a Bank

They will ask you a few questions; they may even ask you to send in income documentation and bank statements. They do this so that they can find out how much of a house payment you can afford. They will also do a credit check. Most lenders/banks require a 640 credit score. I work with lenders that will take a 580. Once the bank receives all of your info they will give you a letter of pre-approval.

Congratulations.

Step 3: Pre-Approval

Once you get your Pre-approval letter. Contact your Realtor and tell them that you are ready to go Dream Home Shopping.

Step 3: Rejected Pre-Approval

Reasons you may have gotten rejected. Your credit scores may not be high enough, your debt to income ratios are too high, or you have not been on the job for that long.  If this happened to you, don’t quit, don’t get angry, and don’t give up.  I’m here to help you fix the problem that caused your pre-approval rejection.