Homebuying 101

General Homebuying

Just starting out? Take a look at our general homebuying information, which walks you through how to start looking for a home to getting a real estate agent.

Questions & Answers

What are the tax benefits of buying a home?

While buying a home means you can have the kitchen of your dreams, there can be tax benefits to taking the plunge: property tax, for example, can be fully deductible, and you may be able to claim tax deductions on some of your closing costs. In addition, the mortgage deduction allows many to deduct any interest paid on your mortgage from your taxes. This deduction can be very helpful in the early years of home ownership, when your interest payment is often the largest part of your monthly payment. You should consult your tax professional to determine exact tax savings.

What are the benefits of buying a home?

Buying a home yields many benefits, such as the ability to customize your new home and leave increasing rent prices behind. In addition, you’ll build equity in your home with each monthly payment, making your home an investment that could pay off in the future.

Is buying a foreclosure smart for a first-time homebuyer?

Generally, first-time home buyers will see a lot of competition when purchasing a foreclosed home. In addition, foreclosed homes typically require many costly repairs, some of which may not be easy to see for inexperienced buyers. So while the selling price may be low, it can be difficult for any buyer to budget for these repairs.

If I have enough cash to buy a house, is it best to buy it outright or take out a home loan?

The choice to pay cash outright or take out a loan depends on your situation, particularly in terms of liquidity and financial goals.

Pros of Paying In Full With Cash

• Will save you interest on a mortgage loan

Cons of Paying In Full With Cash

• Could tie up cash needed for unanticipated expenses, such as damage to your property or medical bills

• May not allow you to meet your financial goals, such as saving for retirement While many sellers will accept cash offers over offers funded by a mortgage, it’s important to choose the option that’s best for you.

What should I evaluate when looking for a home?

Location plays a big role in a home search, whether you’re considering proximity to work or quality of the local schools. In addition, it's helpful to have a general understanding of the amenities you’d like (and can afford) in a home, such as hardwood floors, a kitchen island, or a three-car garage. If you're working with a real estate agent, letting him or her know know exactly what you’re looking for will help you narrow down your search. It’s also wise to understand what repairs may be required soon after you move in, such as installing a new roof. Though enticing, a home with brand new appliances and granite countertops might not be worth the cost when less expensive, basic repairs can be just as effective.

How do I know when I am ready to buy a home?

Buying a home is an exciting endeavor, but it’s important to make sure you’re organized and have considered your options before you take the plunge. First, look over your finances to make sure you’re comfortably paying your bills as well as saving for retirement and an emergency fund. If you’re able to save for a down payment and ready to make monthly mortgage payments on top of that, you’re on the right track.

Next, consider job stability and how long you’d like to stay in the area. Generally, if you have a steady income and are planning to stay for at least 3-5 years, it might be time to purchase a home. And making that commitment means you’ll be able to customize your place, such as choosing a new paint color or installing a swimming pool—but those customizations come with a price tag. It’s important to make sure you’ll have the funds to maintain your new home and improve it as you see fit.

How do I know when I am ready to buy a home?

Buying a home is an exciting endeavor, but it’s important to make sure you’re organized and have considered your options before you take the plunge. First, look over your finances to make sure you’re comfortably paying your bills as well as saving for retirement and an emergency fund. If you’re able to save for a down payment and ready to make monthly mortgage payments on top of that, you’re on the right track.

Next, consider job stability and how long you’d like to stay in the area. Generally, if you have a steady income and are planning to stay for at least 3-5 years, it might be time to purchase a home. And making that commitment means you’ll be able to customize your place, such as choosing a new paint color or installing a swimming pool—but those customizations come with a price tag. It’s important to make sure you’ll have the funds to maintain your new home and improve it as you see fit.

What affects resale value?

The major factors that affect resale are:

• Repairs needed

• Improvements made that could increase the value

• Local housing market

• Value of houses in your immediate neighborhood

It’s wise to check out the local market’s history, as some cities have experienced major fluctuations in the housing market, and this can have an impact on your home’s resale value. The National Association of Realtors provides data about home sales in the United States and can be helpful when looking for a home.

What goes into a home's resale value?

The resale value takes into account many factors, such as the home’s size, layout, condition, and amenities. It also includes the home’s location and the area’s schools, local transportation, and medical facilities.

How do I determine the resale value of my home?

When determining your home’s resale value, there are two routes you can take. The first is requesting a comparative market analysis (CMA) from a realtor, typically free of charge. The agent will base the home’s resale value on a walk-through of your home, as well as on active and expired market listings in the area. The final analysis will include the home’s selling price, detailed information about the home, and comparable properties. While the CMA will give you a good idea of your home’s resale value and reflects its current market value, it can also be somewhat subjective, based on the realtor’s experience and familiarity with the local market.

Your second option is to have your home appraised by an independent professional appraiser for a nominal fee. While it will cost you, the appraisal is an accurate representation of your home’s value, though it won’t necessarily represent the home’s list price. Generally, homes aren’t listed for more than their appraised value.

What is resale value?

Resale value is the amount that your home will likely be listed for should you choose to sell it. Knowing your home’s resale value allows you to easily compare it to other homes in the area, as well as determine the potential return on your real estate investment in the future.

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