Why rent when you can own

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• Why rent when you can own?

own?
Prepare now to buy your first home and invest in
your future!
This orientation presented by
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This short presentation will

• Encourage you to look at the obvious and not so
  obvious benefits of home ownership
• Help you organize yourself so you can move toward
  home ownership

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You will learn about

• The advantages of owning vs. renting
• How to prepare to buy your first home
• Todays buyers market
• Considerations for your first home
• The advantages of working with real estate
  professionals

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Perhaps you are renting now for these reasons

• You have a low monthly payment
• The landlord takes care of all maintenance and
  repairs.
• You dont like yard work.
• You travel a lot.
• You like to be flexible. You can easily move when
  you want to.

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So why would you want to own a home rather than
rent?
Lets look at the advantages of home ownership.
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Purchase Price 200,000
Lets imagine you purchase a home for 200,000.
You make a down payment of 3.5 toward the
house, and borrow the remainder using a typical
FHA loan
Purchase price 200,0003.5 down
payment -7,000Base loan
193,000 FHA financed mortgage ins
3,377 Total final loan amount 196,377
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The loan amount of 196,377 is called the
principle. Your monthly mortgage payments to your
lender would include

• Payment on the principal loan amount
• Interest you pay in order to borrow the money

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With interest rates historically low at 5 or
even below, your monthly payments on principal
and interest would probably come to somewhere
around 1,054, or even lower.
Principal plus interest payment 1,054
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At first, the amount you pay on the principal is
relatively low, and the amount you pay in
interest is relatively high. For example, your
first payment might show these amounts in
combined principal and interest

• First payment after purchasing home
• Payment on principle 236
• Interest _at_ 5 818
• Principal plus interest 1,054 plus taxes
  and insurance

Based on 35,000 per year income and 25 Federal
Tax
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But remember some of every payment goes toward
paying off the principal amount.
With each monthly payment, you are paying 5
interest on a smaller and smaller loan amount.
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In addition to making monthly payments toward
principal and interest, monthly mortgage payments
to your lender would include

• Any applicable property taxes for the area
• Insurance on your home
• Mortgage insurance

So after adding these, your monthly payment would
probably look something like this
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Example for Monthly Payment
For 200,000 home purchase

• Principle (portion increases over time) 236
• Interest _at_ 5 (decreases over time) 818
• Taxes (1) 167
• Insurance 35
• Mortgage insurance 88
• Total 1,344

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But heres the great news -- you can deduct the
interest paid each year from your Federal income
taxes.

• Interest 818

• Principle (portion increases over time) 236
• Interest _at_ 5 (decreases over time) 818
• Taxes (1) 167
• Insurance 35
• Mortgage insurance 88
• Total 1,344

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In fact, when you buy a home, you may deduct some
of the costs from your yearly taxes.

• Potential deductions
• Interest Payments
• Property tax
• Mortgage insurance

See your Tax Preparer
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Estimated First Year Tax Savings
So you could enjoy tax savings something like
these

• Monthly payment 1,344
• First year deductions lt12,813gt
• (Interest, taxes and mortgage insurance)
• Estimated 1st year tax savings lt3,202gt
• Projected Monthly savings 267
• Net Payment 1077
• Adjusted with tax benefits

Based on 35,000 per year income and 25 Federal
Tax Rate See your tax preparer
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Now lets compare what happens during5 years
of renting versus 5 years of making mortgage
payments.
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As you rent, you risk the chance of yearly rent
increases
1,000 per month rent this year may become 1,020
per month rent next year and may continue to
increase each year!
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But most home mortgages allow you to pay the same
amount as long as you hold the mortgage.
But remember that you can deduct the interest on
your income taxes! So, based on a 25 income tax
rate, you may only be paying 1,077 per month
after taxes 1,344 - 267 (tax
savings) 1,077
See your tax preparer to learn how you would
benefit with your income and tax situation.
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If you factor your tax savings, your payments are
less.
See your tax preparer to learn how you would
benefit with your income and tax situation.
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Lets compare cumulative mortgage and rent
payments after FIVE YEARS
See your tax preparer to learn how you would
benefit with your income and tax situation.
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And when you total your cumulative mortgage
payments after the tax deduction benefits, you
can own while paying close to the same as your
rent!
64,620
62,450
See your tax preparer to learn how you would
benefit with your income and tax situation.
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The biggest advantage of purchasing a home is
that you build equity. With each payment, you own
more and more of your home, as you pay off your
loan balance, for example
When you rent year after year, you lose the
valuable opportunity to contribute to your own
wealth.
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Home owners share these traits

• Discipline to pay monthly
• Ability to see beyond present circumstances
• Ability to act
• A lifelong commitment to protecting their
  investment

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Whats in Your Future?

• Living in your own home
• Building equity
• Controlling future payments
• Living in your landlords home
• No equity built
• No income tax savings

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Just like anything else, real estate is subject
to the supply and demand rule of economics.
Heres another good reason to buy now

• Supply
• Homes on the market (new existing)
• Demand
• People who want to buy them

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And just like any other commodity, demand for
real estate goes through cycles.

• Sellers Market Cycle
• Hard to find houses
• Prices going up

• Buyers Market Cycle
• High supply of homes
• Homes on market longer

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What kind of a market is it now?

• Are homes selling quickly?

NO!

• Are there a lot of homes on the market?

YES!
BUYERS Market!
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As someone who doesnt own a home now, you also
enjoy these advantages in purchasing your first
home

• Home prices are very low yet you you dont have
  to sell a home to buy a home.
• Interest rates are historically low around 5.
  (Interest rates have been as high as 15 in the
  last 25 years.)
• You may be eligible for a Federal Income tax
  credit worth 8,000 for first time home buyers.

Resources for more information provided at the
end of this presentation.
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Whats your reason for waiting?

• Down payment?
• Poor credit?
• Too much debt?

If so, you are NOT alone!
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You can start overcoming any challenges right
now!

• Obtain a copy of your credit report from the 3
  national credit unions Experian, Equifax and
  Transunion
• Find and correct any errors
• Choose the best way to improve your credit scores.

More details and sources provided at the end of
this presentation.
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OR you can use the free services of a home loan
professional to help you

• Get your credit score rating for you
• Find out how much of a loan you can qualify for
• Estimate a good monthly home payment for your
  circumstances
• Examine the mortgage types to find the best for
  your situation

More details and sources provided at the end of
this presentation.
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A home loan professional can help you understand
all types of home financing and help you qualify
for one.

• Conventional
• Fixed
• ARM
• Government
• FHA
• VA

More details and sources provided at the end of
this presentation.
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Maybe youve already decided you can afford to
buy a home.

• How do you go about finding

the right home
for you?
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Simplify the process by using the services of a
professional real estate agent.

• Find one real estate agent that can meet your
  needs
• Work only with an agent that will respect your
  needs and is responsive to you

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Choose the geographical area youd like to live
in, but be willing to look in other areas for
comparison purposes.

• List the attributes
• Prioritize
• See what neighborhoods fit your list
• Be realistic
• Look at what your money buys in each area

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Consider the advantages of different types of
homes and neighborhoods

• Older homes
• New construction
• Single family homes
• Attached homes (condos, townhomes)
• Energy efficient or green built homes

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Carefully consider your abilities and lifestyle

• Are you willing to purchase an older home that
  might have maintenance issues? As homes get older
  they generally require more maintenance.
• If you purchase a new home, does the builder have
  a good reputation? Is there a warranty on the
  newly constructed home?

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Carefully consider your abilities and lifestyle

• Do you like to do yard work, or do you prefer a
  home with a small yard or even no yard so you
  have more time for other things?
• Does the community have an HOA (Home Owners
  Association) that takes care of maintenance in
  common areas or exterior maintenance? Is the fee
  sufficient to protect your investment?

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Consider whether you want a green built home.
Green built have one or more of these traits

• A variety of energy-efficient features, such as
  effective insulation, high performance windows,
  tight construction and ducts, efficient heating
  and cooling equipment, and ENERGY STAR certified
  lighting and appliances. These combine to give
  you monthly savings on your utility and water
  bills!

• Cleaner indoor air quality as a result of proper
  construction techniques used before you move in.
  Materials in the cabinets, carpet and paint do
  not off gas pollutants into your new home!

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So lets review how you can start down the path
of home ownership and find the home of your
dreams
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• Find a professional real estate agent who can
  save you time and money

• Get qualified with a reputable lender

• Determine where you want to live and in what type
  of home

• Find the home of your dreams!

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Why not enjoy the advantages of home ownership?

• Pride of ownership
• Freedom and control
• Home appreciation
• Tax advantages
• Builds equity and retirement savings
• Living your dream

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RESOURCES for more information

• Contact Evergreen Home Loans for more information
  on getting qualified for a loan
• www.evergreenhomeloans.com
• For more information on the 8,000 tax credit for
  first time home buyers, visit
• www.federalhousingtaxcredit.com
• For information on choosing a realtor, visit
• www.realtor.com
• To directly contact the three national credit
  unions
• EXPERIAN www.experian.com
• EQUIFAX www.equifax.com
• TRANSUNION www.transunion.com
• To learn more about energy efficient homes
• www.energystar.gov

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