Home Buying—Learn Whether It Is  A Good Time To Purchase Your Home?

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If you are considering purchasing a home or refinancing—you can go to quickenloans.com or lendingtree.com along with local mortgage lenders in your area—to determine what loan will best suit you—and your family.  You can compare closing costs, APR's and Par rates to determine what loan will best serve your—and your family's long-term interests.

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Many Real Estate and other Financial Professionals often recommend that potential home purchaser’s sell off their assets, use creative financing, use owner financing, borrow against their assets, get a loan from parent’s and relatives, bring in a partner, lease purchase, use 100% financing and other creative means in order to purchase a home in a “buyer’s market” when purchasing their first home.

Over the years I have found this approach to be unwise. However doing some of the above in the right market could lead to a successful purchase and home owner enjoyment and I have seen it work out quite well for many purchaser’s.

However, I have also seen many purchaser’s who utilized the above approaches lose their home and/or struggle when they hit a financial bump.

A better approach and one that I recommend is to pay off your debt, establish your emergency fund, and save consistently to come up with your down payment and closing costs.

Be sure to have your retirement savings plan, education funding plan, and insurance needs in order prior to purchasing your first home. Don’t put the cart before the horse.

You may miss out on better priced properties and lower interest rates but you will be in much better position to enjoy and keep your home than if you chose some of the (in many cases) ill advised options stated above.

In addition to having steady income and a down payment you must also “truly” recognize and understand the responsibilities that come with home ownership.

Always purchase (begin) with the (end) sale in mind. You must know your expected time horizon before you decide to move on the front end.

If you do purchase your home the right way there can be many benefits. If you “buy right” it can help you and your family accumulate wealth.

You can use leverage (low down payment relative to your loan amount) to obtain your home—besides you have to live somewhere anyway.

There are tax advantages as well—as interest, PMI/MIP, loan discount points, and property taxes are deductible on your federal tax return which can help reduce your effective borrowing rate even further.

In addition, if you purchase properly and sell at a later date you may be able to totally or partially exclude the gain from taxation.

In addition, interest rates are still fairly low making it a great time to buy if you are properly in position to do so.

Rarely is an adjustable rate loan, a short-term buy down (a temporary reduction in the interest rate charged by the lender in exchange for a fee paid at closing by the purchaser) appropriate for a first-time home buyer.

However, there are exceptions and times where it may be appropriate.

Use caution when selecting these types of loans and always be properly prepared to deal with those types of loans—and any loan for that matter—in various financial and life scenarios.

A fixed rate loan will give you peace of mind by having payments (usually the principle and interest portion) that will never increase.

However, be aware that your monthly housing payment can and normally will go up due to increases in your fair market value, additional special assessments, increases in your hazard insurance and increases in your property taxes.

On rare occasions your monthly housing payment could also go down due to decreases in market value, decreases in your hazard insurance, and decreases in your property taxes.

In short, base the time frame that you decide to purchase your home on your individual and family situation and financial circumstances, not what everyone else is doing, or the craze of the moment.

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Learn how to apply the— “Keys to Success”—in your life

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