Tiffany Pesonen - RE/MAX Regal | San Ardo, CA Real Estate

It's the early years of home ownership that can make buying a house challenging. Closing costs, interest, property fees and home repairs are among the major challenges.Many people prefer to take on these challenges during their early adult years. Vigor and a fresh approach to home ownership aid with roofing, landscaping, flooring and appliance maintenance work.

Buying a house during your middle years could work

Buying a house during early adult years also gives you more time to pay off a mortgage. Take on a mortgage later in life, and you could end up making higher monthly mortgage installments. Plainly put, buying a house near retirement could cost you big, financially and physically. It could also help you to save on monthly housing costs.

You could save money on monthly housing costs because owning a home might:

  • Eliminate your need to make monthly housing payments. For example, you won't have to pay monthly rent. Pay your mortgage off early, and you could eliminate monthly mortgage payments from your budget.
  • Offer you the space and legal rights to rent out one or more rooms at your home.
  • Position you to receive tax advantages, money that you could use to add to your house's value or invest in your personal retirement.

Because lenders are not allowed to discriminate, you could be approved for a mortgage. Ask your mortgage broker or realtor about mortgage amortization schedules, homeowners association fees and property taxes. Also, find out how much houses in areas you're thinking about buying a house in are worth and how the property values have lowered or risen over the last several decades.

Property value trends in areas you want to buy a house in are important

Buy a house that has value that matches or exceeds what you pay for the house and you could earn a profit should you decide to sell the property 10 to 15 years later. Go with a 30 year mortgage and you could be responsible for paying lower monthly mortgage installments.

Just because you took out a 30 year mortgage, doesn't mean that you have to make payments for 30 years. You could pay your mortgage off in 20 years or less. That could put you in a position to reside in a house with only utilities, general maintenance and property taxes to pay.

Open to the idea of taking in renters and you could generate enough rent to cover the entire costs of your mortgage. Vet all potential renters thoroughly before you pursue this option. As it regards renters, you could also rent out one or more rooms at your house to your grandchildren while they attend college or after they graduate. Rent out the space at a lower rate than apartments rent and your grandchildren could appreciate the deal.

Above all, make sure that you can readily afford to take on a monthly mortgage. Don't just ensure that you can cover a monthly mortgage. Also, ensure that you can continue to invest in your retirement.

Rising urban rents, created by urban development initiatives, especially in major cities, may cause some people to relocate to the suburbs or to seriously consider homeownership for the first time. At its best, urban development creates business expansion, solid social and community infrastructures and easy access to public transportation and public services. Urban development can also put restaurants, historic sites and entertainment within walking distance. Those are the pluses. Zoning laws can also entice developers to raise urban rents, impacting your cost of living, whether you rent an apartment or a house. And you said that you'd never move to the suburbs or buy a house before you'd saved a hefty down payment. Save money when you move from renting to homeownership It’s not only rising urban rents that may cause some traditional renters to think about buying a house. Low mortgage interest rates, growth in large New England cities and an increase in housing values can also make buying a house attractive. Even over a short term, opportunity to pay a $1,500 mortgage on a house you could one day own outright versus paying $2,500 a month in rent that could rise in another year can quickly look like the smarter option. To counter rising urban rents, empower yourself with housing price negotiation tools. Types of housing price negotiation tools include:
  • Strong down payment (you may have to give yourself one to two years to save a good down payment)
  • Good credit scores
  • Flexibility regarding house type and location
  • Rewarding money management habits
  • Job stability
  • Knowledge about housing markets
  • Clarity around what you want in a house
The sooner you start building resources to use during housing price negotiation discussions, the more influence you may have on the overall price you pay for a house, including closing costs. Start early; be open to change and track your results. Make yourself attractive to sellers and lenders If you recently started a new job and only worked six to nine months at your two previous jobs, you may have more price negotiation power if you wait to buy a house until you've been at your current job more than a year. Signs of job stability can put you in a better light in the eyes of lenders. Despite how long you've worked with your current employer, start paying debts down. For example, you could make larger payments on credit cards, starting with credit cards that have higher interest rates. If you have student loans in default, contact lenders and set up workable payment arrangements. Reduce spending on clothes, takeout food and other entertainment. Put this money in an account that you’ll use to grow your down payment. Also, learn about current mortgage interest rates including different types of mortgages like adjustable and fixed mortgages. You could ask friends and consult local government agencies to find out what average property taxes are in areas you are considering buying a house in. After you identify debts that you are going to pay off, where you want to live, the type of mortgage you want and the average property taxes in areas you’d like to buy a house in, compare the total cost of buying and owning a house to renting. Compare immediate costs, which would include the down payment, house inspection fees, realtor commissions and any travel costs, and long term costs of owning a house versus renting. You might find that it’s cheaper to buy a house versus renting, especially over the long term.