Five Musts Before You List Your Home

Provided By Realty Times

We all know the social benefits of owning a home. Homeownership gives family stability, creates lower high school dropout rates, and of course gives the opportunity to create meaningful and lasting relationships.

In addition to these great pluses, owning a home can be your largest financial asset.

First, you'll have access to homeowner tax breaks, which include the mortgage interest deduction (MID), property tax deduction, and credits for green-friendly updates to your home.

What all of these deductions mean is you can save money on your taxes each year. That's money back in your pocket. Additionally, the eco updates you do will save you money in the long run on operating costs of the house. Some of these great updates can include energy efficient windows and doors, and solar panels.

You may have heard that real estate is a good investment. You may also be wondering if that is still true when home values are declining. The truth is that real estate has always been a good “long-term” investment.

The fact that many people were making bank by buying and selling real estate in the mid-2000's was more of a fluke than the norm. Twenty to fifty percent appreciation rates are not the norm. In general, during healthy economic times, appreciation averages four to six percent. The National Association of Realtors (NAR) reports that from 1972 to 2005 appreciation averaged 6.5 percent.

Today's home prices are still declining, but financial experts predict this will abate in the next year or so and yearly appreciation rates will return.

As you begin to see appreciation, you'll start to earn equity. This is one of the biggest advantages homeownership has over renting. Renting means paying money to the landlord. Once that rent check is written that money is gone. As you pay your monthly mortgage payment you're building equity. You will one day soon owe less than the home is worth. The difference in between is equity.

Homeownership also gives you a certain financial freedom and stability. You can take out a home equity loan for improvements or if you need some cash. You can sell your home down the road and use those profits towards retirement, a dream home, or even a dream vacation.

Homeownership is a great way to introduce long term stability to your life, even in uncertain economic times. Today's historically low interest rates and low prices mean now is a great time to make an investment in your future.

Homeownership Brings Real Benefits

Provided By North American Title

In August of 2010 the National Association of Realtors released a research study highlighting some of the social benefits of homeownership. Their list included:

- Homeownership stabilizes neighborhoods.

- Homeowners are more likely to participate civically.

- Homeownership produces higher life satisfaction.

- Homeownership fosters less neighbor crime.

- Homeownership and housing stability lower teenage pregnancy and public assistance.

- Homeownership fosters quality property maintenance and improvement.

Most recently the NAR released these timely reminders:

"Good jobs enable people to achieve the American dream of home ownership. And every time a house is built, bought, or sold, jobs are created-lots of them-right here at home."

- Home sales in this country generate more than 2.5 million private-sector jobs in an average year. For every two homes sold, a job is created.

- Each home sale touches 80 different occupations.

- Every home purchased pumps up to $60,000 into the economy over time for furniture, home improvements, and related items.

- Housing accounts for more than 15% of the Gross Domestic Product, making it a key driver in our national economy.

- Housing has led this country out of six of the last eight recessions.

"America needs jobs. Housing creates jobs. That's one of the many reasons home ownership matters to people, to communities, to America."

"Strong federal government support of home ownership equals strong support for American jobs. We urge the Obama Administration and the U.S. Congress as they debate the new federal budget and reform proposals for the nation's mortgage finance system to continue federal support for home ownership."

"Jobs and Home Ownership. You can't have one without the other."

Are ready to be a homeowner? Give us a call at 972-772-7000 or email us at rockwall@kw.com.

Debt Management for Homeownership

Written By Carla L. Davis
Source Realty Times

Learning to manage your finances is a great first step towards owning the home of your dreams. Whether this is your first time to buy, or you are looking to move-up, managing your debt is important.

Among the most important of the debt management qualities is holding yourself accountable. What does this mean, exactly? Being accountable means taking an honest look at your budget and your spending. The $5 latte every morning on the way to work, the cash withdrawals spent without record, or even the extra martini with dinner adds up to money spent, not saved.

An easy was to increase your own accountability is to use a debit card and online banking for all of your purchases. Online banking is offered by nearly every banking institution, and allows you to access your account anytime, anywhere. Now you'll know if you are spending $100 a month on little extras.

The next step in accountability is to create a monthly budget. On a sheet of paper write down each of your monthly expenses. These might include: rent or house payment, car payments, insurance, phone bills, cable and internet, alimony, child support, and student loans. It's time to take a hard look at what you think you are spending versus what your real expenditures are. If you can, don't forget to add up how much you spend on all the extras, such as nights out, entertainment, books, hair cuts, and household products.

If you'd prefer to use an online calculator to show you a monthly budget, consider using financial guru Suze Orman's tools at Suzeorman.com.

Next, begin to cut and adjust your spending. In this economy, everyone can take note of this tip, even if they don't have debts. Where can you cut? Experts recommend limiting your trips for eating out.

According to Christine Bockelman with Smartmoney.com, "Americans now spend roughly half their food budget dining out, and restaurants expect revenue of more than $537 billion in 2007. That's a 67 percent increase since 1997." How much is the food really marked up? Bockelman notes, "At a fine-dining restaurant, the average cost of food is 38 to 42 percent of the menu price."

Make your morning coffee at home and take it in a travel mug to work. Rent movies, instead of paying $10 a ticket for each member of the family to go see a "new to the theater" attraction. If you have the money to spend and splurge, it's fine. That's what makes our economy go round, but spending what you don't have, and adding to your already mounting debt, is no way to work your way towards homeownership.

There is a difference between wants and needs, and this is a time to re-evaluate how you define them.

Once you have freed up some cash, you can start working on paying down debts and building up savings.

It is recommended you develop a savings schedule. After you've set your monthly budget, you will know how much can be earmarked for savings each paycheck. If you can't trust yourself to make the transfer yourself, then set up automatic deposits out of your account.

A separate savings consideration is an emergency fund. Review your budget and see how much you would truly need each month to get by. Multiply that number by 8, because that is the number of months you should be prepared to survive without a job. If you need $2,500 a month to pay all of your bills, then should have $20,000 in savings. Most Americans don't have a fraction of that, part of the reason for the foreclosure crisis running rampant across the nation.

The latest statistics indicate that most Americans have a personal savings rate of less than 5 percent, but owe $8,000 in credit card debt (MSN Money).

When it comes to credit cards, don't. It's as simple as that. If you can, avoid carrying a balance on credit card. We live in a society of margins, with 43 percent of American living beyond their means, but there is something quite liberating about living on your income and no more. If you must use a credit card to carry a balance, or if you already owe, then consider paying more than the minimum each month. Not only does a minimum payment set you up for possible interest rate and fee increases, it costs a whole lot more in the long run.

Consider this equation. If you owe $10,000 on a card with an 18 percent interest rate (fairly normal), and you make minium payments, according to bankrate.com, it will take you 342 months, that's 28 years, to be rid of your debt. In that time, you will pay $14,423.30 in interest!

On the other hand, at just an extra $25 dollars a month, or a fixed monthly payment of $275, it would take you 53 months, or 4 years, to be rid of your debt. In that time, you will pay $4,563.28 in interest. This is a deal compared to the minimum payment equation.

A common question that credit card users ask, "Should I close the account when I have paid off the card?" The answer is simple. If you owe any money on open cards, then no. This will negatively affect your FICO score. This is because the ratio of credit available to credit used will shrink. If you don't owe any money on any cards, then closing cards should have no impact on your FICO score.

So, take a moment to consider your finances, and see if you really are living within your means. If not, what can you do to adjust your spending and savings to get there?

Are you financially ready to own the home of your dreams? Give us a call at 972-772-7000 or email us at rockwall@kw.com.