It is a big decision to buy vs rent in Colorado, and it requires careful consideration, as most mortgage lenders will agree. But the advantages of home ownership are striking. For several years, buying real estate has been considered a quite profitable investment. It is an achievement that offers a sense of pride, economical stability and potential tax advantages.
There are certain responsibilities associated with owning a home. Landlords will commonly argue the benefits of renting, and for apparent reason. If you are renting, you're serving them make their mortgage payment.
The numbers are amazing if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will rise 5% every year, then over the next five years you will pay your landlord $66,309. If you are at present renting a house, you may be paying much more than that each month. Either way, you get no equity by paying this monthly housing expense and you surely won't benefit when the property price goes up!
However, if you were to purchase your own home or apartment, you would be well on your way toward building equity within that equal five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never get higher. In fact, you would have the choice of refinancing to a lower rate of interest at some point in the future should interest rates fall, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax benefits that come into play with home ownership. Depending on your tax bracket, owning a home is usually less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you estimate the tax advantages of various loan scenarios, and share this details with your tax consultant to get feedback on your behalf.
There are also several first time home buyer programs in Colorado. To find the loan program that is appropriate for you, your mortgage broker will need to evaluate your monthly household income, current resources and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the record of your credit score, will decide how much house you can pay for and what interest rate you will pay for funding. It is also important to let your mortgage consultant learn what your future goals are, because this will help narrow down which loan program is the best fit for your long-term needs.
There are several different types of loan plans available, such as "low" and "no" down payment mortgage programs. These forms of programs require the first time home buyer in Colorado to give less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, containing principal, interest, taxes and insurance (PITI) should not exceed 31% of your gross income, and the PITI plus other long-term debt (car payments, etc.) must not exceed 43% of your gross earnings.
Housing is an expense that makes a big bite out of the monthly expense. If you are a renter and feel that "home" is more than just someplace to hang your hat, consider the advantages of purchasing real estate. It may be time to take the measure into building your personal net worth as a home owner.
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