First-Time Homebuyer


Now is the perfect time for ready, willing, and able prospective homebuyers to make a move into the housing market in Oregon.  Here are a few bullet points about the current market:
  • Interest rates are still very low which increases the home value a buyer qualifies for. 
  • Oregon home values are going up which means homeowners can capitalize on their home appreciation through equity.  
  • Rental demand is up which is driving monthly rents up.  Rents are projected to increase at a faster pace than home appreciation this year.  Homeowners won't have to deal with landlords increasing the rent.  However, those who own rental properties, will be able to capitalize on the high rental demand.
Homeownership has historically been a great investment.  The average net worth of a homeowner is 36X greater than a renter's net worth.  When you add these three factors to the market, homeownership is an even better investment!


Renting is Hazardous to Your Wealth
How much rent do you pay?

It is amazing how much money you give to your landlord.  Why not put that money toward something of your own?  Below is a chart showing what’s paid to a landlord over time.
 


Your Rent Payment Compared to a Mortgage
If you aren’t paying your own mortgage, you are paying the landlord’s

Rents keep rising in the Portland-metro area which has made it more affordable for many to purchase a house rather than rent.  If your rent payment was a mortgage payment (principal and interest, property taxes, homeowners insurance, and mortgage insurance) what home value would that equate to?


These numbers assume an FHA mortgage (3.5% down) at an interest rate of 3.5% (APR 4.311%) with credit scores at or above 660 on a single family residence.  The property taxes and homeowners insurance used in these calculations was based on a factor of the sales price, 1.2% and 0.2% respectively.


Purchase vs Rent Comparison Chart
Comparing the advantages and considerations



Homeowner Tax Deductions
For year ending 2014

Below are four of the biggest homeowner tax deductions for 2014. Tax deductions are a great benefit to homeowners and can make it cheaper to own than rent. Homeowners will receive a 1098 report from their lender with details about the below deductions. Other deductions may apply such as home office use and energy-efficient upgrades but those are less common.


Mortgage Interest Paid

Annual mortgage interest is tax deductible for first mortgages, second mortgages, and home equity lines of credit (HELOC). Mortgage interest can also be deducted on second homes (vacation homes). Some restrictions apply on HELOCs, homeowners with mortgage debt beyond their property’s fair market value, second homes, and loan amounts over $1 million. 


Discount Points

If you purchased or refinanced in 2014, you may have paid discount points to obtain a lower rate. One full discount point is equal 1% of the loan amount. The IRS classifies discount points as prepaid mortgage interest. In conjunction with a purchase, the entire amount of discount points can be deducted in that year. However, a refinance must typically amortize this over the life of the loan.


Property Taxes

Annual property taxes paid each year are also tax deductible for homeowners. Most homeowners include paying their property tax bill within their mortgage payments. If so, your lender will issue a statement with this full amount on your 1098 report. If you purchased a property in 2014, you will want to keep track of your settlement sheet (HUD-1) which shows taxes the seller had already paid before you took ownership. This won’t get reported on the 1098, so don’t forget to include this amount.


Mortgage Insurance (MI) 

This tax deduction is back for homeowners who paid MI in 2014. MI is required on loans purchased or refinanced with less than 20% equity.  The amount of mortgage interest paid will be reported on your 1098 report. This is a great benefit to all homeowners who pay MI. A 20% down payment is one of the biggest obstacles for first-time homebuyers and this deduction helps alleviate part of the higher cost of a lower down payment.

More Reasons



KCM Crew

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