November 23rd, 2011 12:48 AM by Scott Bray
Recently on Sunday November 6th AmeriBest was quoted about how First Time Buyers can prepare to buy a new home in the Florida Today Real Estate section.
Rates again the lowest in 50 years & with tax refunds coming up soon - now truly is the best time to PREPARE to buy. So please call us to get ready now! We'll have you in your new house in the next 90 Days!!
Here's the article to read from the Florida Today Newspaper:
Section F Sunday, November 6, 2011
Current market ripe for renters to turn into owners
BY ANNE STRAUB
FOR FLORIDA TODAY
Developments
in the housing
market
in recent years have
increased the number of
people renting, rather than
owning, their home. But
most renters – backed by
those in the housing industry
– plan to move on
to homeownership.
That’s a good move, say
local real estate agents and
lenders.
“Why give the landlord
your paycheck?” asked
Scott Bray, vice president
of residential lending for
AmeriBest Mortgage. He’s
seeing a lot of renters who
are tired of paying rent and
instead are buying their
own home.
That’s a more rewarding
option, he said, and also
financially smart.
Home prices have
dropped to the levels of
the 1990s – yet today’s
buyers get to purchase at
those prices with today’s
dollars. Also, interest rates
are at even lower levels – 4
percent or less – the lowest
since records started being
kept. The psychological
drive to own a home adds
pride of ownership to the
equation, and you get a tax
writeoff on top of it.
“I don’t know what’s
left,” Bray said.
Some reasons that renters
are trying to buy:
Low cost. Buyers that
Bray works with are paying
current rents of $650
to $1,250. That’s easily
within range of a monthly
payment on a mortgage.
“I’m sure I can get 90
percent of those people in
a bigger house than they
have now for less than
they’re paying now,” he
said.
Potential buyers put off
by the need for a down
payment should still investigate
their options. FHAbacked
loans require just
3.5 percent of the purchase
price up front, and buyers
can use money gifted by
a parent or other source.
Many lenders also working
with government agencies
that offer down payment
money.
A couple examples,
from Bray:
Consider renters who
are paying $1,000 monthly
and decide to buy a home
priced at $120,000. They
could get an FHA-backed
30-year loan at 4 percent
interest for a monthly
principal and interest payment
of $558.
Property taxes, hazard
insurance and mortgage
insurance would bring the
monthly payment up to an
estimated $930. That’s less
than their monthly rent,
plus as owners they get tax
advantages and potential
appreciation.
If they bought a
$70,000 home at the same
interest rate, their principal
and interest payment
would be $325, and estimated
property taxes,
hazard insurance and
mortgage insurance would
bring the total to $590.
“Some of the most
inexpensive small apartments
I see my clients renting
are well over the $650
per month rent level. They
could buy a nice $70,000
home and still have a
lower estimated mortgage
Current market ripe for
renters to turn into owners
payment, plus the chance
for income tax deduction
and home value appreciation,”
Bray said.
Tax savings. Rent goes
to landlord for the privilege
of living in the home,
and offers nothing more.
Homeowners not only
build equity, or ownership,
in their home, but
much of their payment is
tax deductible.
When tax time
rolls around, they can
deduct mortgage interest
payments and property
taxes from their income.
So they don’t pay income
tax on the money that
goes to those expenses.
That benefit alone can
amount to two months
of free rent a year, Bray
estimated. He recommends
that potential
buyers consult with their
tax professional before
making a move.