You will have the ability to do a home equity loan and deduct this interest against taxes
When you rent, you're really buying a property (home or apartment) for your landlord. You are sending your hard-earned money down the drain!
Nine Steps to Purchasing Your First Home
- Planning Stage - Decide on your moving or relocation timeline. Think about your home search criteria and areas of town or neighborhoods that interest you. Do you have enough money for a down payment and for home inspection fees? If you have really good credit scores, you may be eligible for a no down payment or low down payment (3%) program. Is your credit situation right to buy a home? If not, start a serious savings program, closely monitor your spending, work to satisfy or negotiate with creditors and elevate your credit score. The Fair Credit Reporting Act allows consumers to obtain one free credit report from each of the three major reporting bureaus every 12 months. Bad credit costs you MORE money in the form of higher interest rates and may cause you NOT to be able to make smart purchases... like a home!
How much home can you afford? |
Exclusive & Official source of a FREE annual credit report online
- Find and Work with a Qualified Realtor (Buyer's Agent) - Your choice of a real estate sales agent is very important! Buyer representation is FREE. A buyer's agent is an advocate for the buyer in a real estate transaction. Look for an agent that is full-time and has a very strong sales experience background. Also, choose a sales agent that is a member of the National Association of Realtors and has additional training and/or designations. In Columbia (SC), choose Mel Coker. Mel is in the top 5% in sales volume of all Columbia real estate agents every year and loves to assist new home buyers. Mel holds the CRS (Certified Residential Specialist), ABR (Accredited Buyers Representative) and GRI (Graduate, Realtor's Institute) designations and is a member of the RE/MAX Hall of Fame.
Realtor Mel Coker |
About Mel Coker |
Your choice of a Realtor IS Important |
Ten Questions to Ask When Choosing Your Realtor
- Get Mortgage Prequalification - This is a very important step. This will be an assessment of your credit and finances. With a pre-qualification or pre-approval in hand, this can be submitted with an offer on a home. It will make your offer stronger. Many times, sellers will require this anyway. Your Realtor can make suggestions on mortgage professionals to contact.
Mel Coker's Recommended Columbia Mortgage Professionals
- Find a home - Your Realtor will assist you with selecting appropriate listings from the local Multiple Listing Service. Focusing on your home search criteria will make this process easy with your Realtor's access to this computerized database of all homes available in the local market. With home search criteria defined and MLS listings pulled, an appointment is set and then the fun part starts... viewing homes to find that first home to own!
Home Search Worksheet
- Negotiate Contract Terms - Once you find the home you wish to purchase, you will write a contract offer with your real estate agent. Your agent should pull the property disclosure report(s), tax record and comparables for you. This information will help you make an offer that is appropriate. Your offer price will possibly be less than the asking price. But, this may be impacted if you negotiate for the seller to pay some of your "closing costs." Your buyer's agent will make suggestions on your particular situation. You will need to write a check for "earnest money" at the time you write an offer. This is "good faith" money and is part of your down payment. This amount is negotiable. When all contract terms have been finalized, you have a "done" deal.
- Home Inspections - Contract terms allow you to have a home inspection completed within 10 business days of contract acceptance. I highly recommend this for a resale home and somtimes it's not a bad idea for a new home. Unanticipated issues arising from a home inspection may be negotiated with the seller for correction. You will also have termite and HVAC (heating and air) inspections completed prior to closing. Your Realtor will assist you with these inspections.
- Prepare for Closing - Your buyer's agent will assist you with all closing matters. When the contract is finalized you will need to select a closing attorney, and your agent will supply the attorney with a copy of the final contract. You will also need to finalize your selection of a mortgage professional and make a formal loan application (within 5 business days of contract acceptance). Your buyer's agent will provide a copy of the real estate sales contract to the mortgage officer. You will also need to: supply necessary loan documentation to your mortgage officer; obtain homeowner's insurance; arrange for new utility accounts; arrange for a moving company.
Tom Anderson, Closing Attorney |
Suggested Home Service Providers / Home Buying Contacts
- Closing - On the day prior to closing, you should be told by your closing attorney or Realtor of the amount to bring to closing. These funds will need to be in the form of a cashier's check or certified check and made payable to the closing attorney. Your Realtor will review the HUD-Form 1 settlement statement prior to closing for accuracy and the closing attorney will review this most important document with you at the closing table. There will be a stack of other final settlement papers to sign and most of these originate from the mortgage lender. After you sign all of the paperwork you will receive the keys to your new home!
- Move and Celebrate! - The negotiated contract states when you get possession of the home and can start moving in (usually the day of closing). The moving part can be mildly stressful, but you now OWN your home! You have achieved the American Dream! You've made a smart move financially! Congratulations!
A Home Ownership Affordability Example
"You Can't Afford NOT to Buy a Home"
I'm using "conservative" examples... Starting out with a $900 per month rent payment for a home or apartment (typically a 3 bedroom/2 bath unit) and comparing this with a $125,000 home purchase.
Rent Example... - Remember, when you pay rent, you're buying a property for someone else!
Start out paying $900 per month for an apartment or home. Assume an average rent increase of only 2.75% per year. In the first year you will pay $10,800 ($900 X 12). In year 10, you will be paying $1149 per month for a total that year of $13,788. The total amount of rent paid over 10 years will be $122,388. The average monthly rent paid over 10 years is $1020. You have received NO tax deductions for the amount of interest and taxes you have paid in your "rent" payment and have NO (ZERO) equity (ownership). This is a POOR choice!
Home Ownership Example... - The Smart Choice!
With a $125,000 home purchase price (97% financed on 30 year fixed rate mortgage at 6%), the initial monthly payment (principal, interest, insurance, PMI) is $915 per month. In the first year you will pay $10,983. In year 10, you will be paying $948 per month. Note that the home ownership payment has increased much less than the rent payment! The reason is that the largest part of the payment to own, for principal and interest, is "fixed" and does not increase over time. The total amount paid over 10 years to own is $111,723. This is a savings of $10,665 over 10 years attributable to smaller increases on house payments over rent payments.
When you own, you will be able to deduct the following on your federal and state tax returns: mortgage interest, property taxes, and PMI payments (in certain situations). Assuming a combined tax rate of 25% for federal and state taxes, the actual savings on taxes over 10 years is $21,284. Yes, your government really does encourage home ownership through tax benefits!
Finally, over 10 years, your home value will increase to $160,000 assuming an annual appreciation rate of only 2.5%. The mortgage balance has been reduced to $101,469 (from $121,250). So, now you have additional built-in equity savings of $58,531. Your total savings in this real-life rent vs. buy example over 10 years is $90,480!
YOU MUST SEE THIS! Printable in PDF format.
Rent vs. Buy Comparison - Look at the HUGE Savings when you buy a home!
Cool and Important Home Ownership Facts!
Do Financially Successful people pay rent or BUY a home? They BUY a home!
Home Ownership Builds Wealth - The Fedeal Reserve Board estimates that HOMEOWNERS have a net worth almost 36 times more than that of renters! In 2004, the median net worth of homeowners was $184,000 compared to $4,000 for renters.
Research studies indicate that home ownership adds to the value of communities and has positive effects on children.
Finish the Course.
Select Mel Coker as Your Realtor of Choice.
Receive Special Benefits.
Thanks for taking the time to read my Guide to Buying Your First Home. Buyer Representation from Mel Coker is FREE! Your choice of a buyer's agent is very important. Mel has the experience, professionalism and desire to serve you. Contact Mel Coker NOW to get started.
How to contact Mel Coker...
Office: (803) 223-6214
Cell: (803) 318-2007
Click here to complete my Contact Registration form. Be sure to mention you finished my Homebuyer's Toolkit course.
Learn more about Mel Coker's experience and qualifications...
Mel Coker IS a Realtor and offers FREE buyer (client) representation. (all real estate sales agents are not Realtors). Mel Coker holds the CRS, ABR, GRI, and SRES designations. Mel Coker has sold over $62 million in sales volume and is a member of the Greater Columbia Circle of Excellence, RE/MAX Hall of Fame and the RE/MAX Platinum Club.
On the Internet:
About Mel Coker |
All Agents Are Not the Same!
Primary Real Estate website |
Mel's RE/MAX Search for Homes website |
Mel's Columbia Blog
Special Benefits from Mel Coker
You WILL professional and friendly service from Mel Coker. Also, I will enroll you in my exclusive Lowe's Realtor Benefits program. I will email a Lowe's 10% off coupon and an email with access to the HGTV video series. You will also get a regular Lowes magazine mailout with special home maintenance tips.
Finally, please mention to me that you completed reading my First Time Homebuyer's Guide, and I will provide a $150 Lowe's shopping certificate after closing.
Home Buying = Wealth Building
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First Time Home Buyer * Guide to Buying a Home * How to Buy a Home
Buying Your First Home * Stop Paying Rent * Home Ownership Benefits
Columbia, SC Home Ownership * Columbia, SC Real Estate