Is home buying a good investment?
I just want to give you some examples of why I believe home buying is a great investment. I know this is not the time to talk about home buying as an investment in this down market. But I still believe that buying a home, even in this market is still a good investment. I am going to give an example of this.
How much does it cost to buy a home? I mean out of pocket expense? I want to use 2009 as an example. Now most loans are FHA loans or federal housing association type loans. So I am going to use this as an example. I am all so going to use nice round numbers. In my example the house price is $100,000 dollars. In order to get a loan you are going to need a 3 % down payment. That is going to be $3000 dollars. You will probably need to bring some money for the closing cost. Lets say on adverage 2500 dollars to help with the closing cost on a $100,000 dollar house. So we have a total of about $5,500 dollars into the house.
Most people would say that we are down $5,500 dollars but this would not be actually correct. The Us government is giving a $8500 dollar credit to buy a house this year. So now we are up $3000. We do have a mortgage payment to make. Lets say that its total is $850 as an example. Well no matter where we live we are going to have to pay that any ways are we not. So we are now up $3000 so far in our investment.
I do want to consider this a long term investment. So I want to see were we might be in 10 years. On day one we are up $3000. Where would we be at after 10 years. Most houses in our life time have doubled in value every 10 years. So we should be up another $100,000. Our total profit after 10 years if the market works how it has historically is $103,000.I don't know of any investment or business that has a track record like this. As long as your in it for the long haul I believe Buying a home is a good investment.
With over 10 years of experience, Colorado Mortgage Financing provides many services to assist you in your residential property financing needs.
Financing a home can be a confusing and intimidating adventure. Unfortunately, too many people embark on this task without the correct information and preparation. In this case, such people often find that even when they make it through the process of securing a loan, they made mistakes along the way and end up a bad position. However, with a small amount of effort put forth on the front end, you can enter the home financing process confident that you will get just what you need. Here are a few Tips for Successful Financing.
Be Prepared for the Journey
Whether you're trying to secure a purchase or a refinance real
estate loan, you must follow a rather strict timeline. Depending on
your level of preparedness, the process can be either smooth or rough.
Before proceeding through the home loan process, start by taking the
time to understand the system and make educated decisions.
Get Pre-approved
A loan prequalification or pre-approval is vital to the loan
process, since it allows you to obtain an estimate of your borrowing
power. We highly suggest that you not skip this fast,
easy, free step. With a written pre-approval (including a certificate
guaranteeing you a mortgage to a specified amount), you won't waste
time looking at homes you can't afford. Rather, you can focus your time
and energy shopping for YOUR ideal home.
Know Your Finances
Determine how much you can afford to spend. While you may qualify for
one amount, it might be too high for your actual budget. Set a monthly
dollar amount that you feel comfortable committing to. Don't forget to
figure in additional costs, such as insurance and taxes, interest, and
principle.
Shop Around
Look for the best loan costs, considering topics, such as:
Apply for a Loan
Gather all the documents required to verify your loan application:
Additionally, be prepared to supply your lender with financial documents, such as paycheck stubs, bank account statements, and tax returns. Check with your lender or broker for more information.
Secure Your Rate
Interest rates change daily. Locking your rate in writing
guarantees you a certain rate and terms for a specified period of time.
Lock in as many costs as you can. Push for setting the lock at the time
of application, not at approval.
Close the Loan Process!
Depending on local loan process requirements, this step can be
performed in person or by using a 3rd party escrow service. If
everything proceeds smoothly and according to your established
agreement, you'll sign many papers, exchange much money, and walking
away a new home owner!
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