By the KCM Crew
Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year he released a paper on homeownership – The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.
Here are the five reasons, each followed by an excerpt from the study:
1.) Housing is typically the one leveraged investment available.
“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”
2.) You’re paying for housing whether you own or rent.
“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”
3.) Owning is usually a form of “forced savings”.
“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”
4.) There are substantial tax benefits to owning.
“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”
5.) Owning is a hedge against inflation.
“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”
We realize that homeownership makes sense for many Americans for many social and family reasons. It also makes sense financially.
Visit www.keepingcurrentmatters.com for more articles
If you’re not familiar with the USDA 100% financing program, I am happy to inform that there is money available for PURCHASE transactions. If you have any clients looking for primary residences in the Tahoe Area, this could be a great low (NO) down payment option.
· 1 loan – 100% financing
· No mortgage insurance
· 30 year fix
· Current market rates
· Owner occupancy required
· Maximum Income limits:
o $79,550 (1-4 person family)
o $105,000 (5-8 person family)
· Credit: There is no minimum credit score, but credit is very much considered in the evaluation of overall credit worthiness. 700+ is a good place to be.
· Property: Must be in what the USDA considers a “rural” area. Fortunately, Truckee qualifies. Properties can be verified here: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
· Debt to income ratios: 41%
· US Citizenship
· Residential properties only. May not be used for income production.
· Home must be structurally sound, functionally adequate, and in good repair.
Partner, Mortgage Consultant CMPS
O’Dette Mortgage Group
530-550-5725 (Tahoe office)* 11209 Brockway Rd.. #304, Truckee, CA 96161
Tips for Summer Time Clean Up
Here are some routine maintenance methods to help you maintain your home in better shape and make sure everything is in working order.
Things like soil and leaves remain on your driveway and can cause everything to have a darker brown color rather than the fresh bright color that it used to appear to be. Cracks need to be filled and it is a good idea to seal the driveway each year to prepare for the next winter. www.lakesidesealing.com or www.shaffersealing.com
Trees and bushes need to be trimmed back so they will be simpler to work with after they start developing. Move around any sticks, foliage, or rocks that are in the way. Pull weeds and bag up all pine needles/pine cones so that they do not inhibit growth. Add new soil to flower beds and start watering as soon as your weather allows it. www.rocknrose.com or www.tahoelandscaping.com
Get your roof and shingles looked at to ensure there hasn’t been any damage or lifting, holes or leaks that may have occurred during the winter months. You could employ someone to do this. www.mountainroofing.com or www.tahoeroofing.com
Now is a good time to clean and care for your outside windows. There are several professionals that can do windows that are too high for an average ladder. Once they are cleaned up, inspect them. If you see any cracks you will want to replace these windows prior to the fall. www.laketahoewindowcleaning.biz