24
Jun
By Mike Pfefferman
Mortgage Tips

Renting vs. Owning the National Homeownership Month Edition

June is National Homeownership Month and there is no better time to look at the long-term financial benefits of owning a home compared to renting. As a mortgage professional, I often speak with clients who are unsure whether to keep renting or make the leap into homeownership. The decision can feel overwhelming, but when you break down the numbers and look at the bigger picture, the advantages of buying a home are clear.

Monthly Payments Are an Investment Not an Expense
When you rent, your monthly payment goes straight to your landlord. You are covering their mortgage, not building anything for yourself. With a mortgage, your payment builds equity. A portion of what you pay each month goes toward owning more of your home. Over time, you are investing in your own future instead of someone else’s.

Take a $1,800 rent payment for example. That adds up to more than $21,000 per year with nothing to show for it at the end. Now compare that to a $1,800 monthly mortgage payment on a $275,000 home with a fixed interest rate. Not only are you paying toward ownership, but your home’s value is likely to increase over time.

Stability in Payments and Lifestyle
One of the biggest financial frustrations renters face is rising rent. Landlords can increase rates annually, making it hard to plan for the future. With a fixed-rate mortgage, your principal and interest payments stay the same for the life of the loan. This consistency makes budgeting easier and protects you from inflation-related cost increases.

Homeownership also brings lifestyle stability. You do not have to worry about a landlord deciding to sell or end your lease. You have the freedom to settle in, decorate how you want, and create a true sense of home.

Tax and Financial Benefits That Add Up
Owning a home may also offer valuable tax advantages. Mortgage interest and property taxes may be deductible depending on your situation. Homeowners may also qualify for other deductions or credits, especially in the early years of a mortgage when interest payments are higher.

Additionally, the equity you build can serve as a financial cushion. Whether you use it to fund education, make home improvements, or consolidate debt later on, that equity can be a smart asset over time.

Wealth Building Over the Long Term
Historically, real estate appreciates in value. Even with market ups and downs, home values tend to increase over the long term. That means that in addition to building equity through your monthly payments, you may also gain value simply by owning your home.

Renters miss out on this opportunity. While their housing costs continue to rise year after year, homeowners often see their wealth grow.

Celebrate Homeownership by Exploring Your Options
National Homeownership Month is the perfect time to ask whether renting is still serving your long-term goals. If you are ready to explore what homeownership could look like for you, we would be happy to help you review mortgage options, estimate your buying power, and create a plan to make owning a home a reality.

13
Jun
By Mike Pfefferman
Mortgage Tips

Creative Strategies for Saving on Closing Costs

When you are budgeting for a new home, it’s easy to focus on the down payment, but do not forget the closing costs. These fees typically range from 2% to 5% of the home’s purchase price and cover things like the appraisal, title search, loan origination, and other administrative expenses. For many buyers, especially first-timers, they can feel like an unwelcome surprise.

The good news? There are creative, effective ways to reduce these expenses and make homeownership more affordable.

1. Negotiate With the Seller

In a buyer-friendly market, you may be able to negotiate for the seller to cover part (or all) of your closing costs. This is called a seller concession, and it can be a powerful tool when structured correctly in your purchase agreement. Keep in mind that there are limits based on loan type and how much you’re putting down, so it’s important to strategize with your mortgage professional and real estate agent.

2. Ask About Lender Credits

Some lenders offer credits that can reduce your upfront closing costs in exchange for a slightly higher interest rate. While this might mean paying more overtime, it can be a smart move if you’re short on cash now and plan to refinance or sell within a few years.

3. Shop Around for Services

Not all closing costs are set in stone. Fees like title insurance, pest inspection, or the survey can vary depending on the provider. Ask your lender for a Loan Estimate early in the process and compare quotes from multiple providers for the services you’re allowed to shop for. A few calls can save you hundreds.

4. Use a First-Time Buyer Program or Grant

There are local, state, and even national programs that offer down payment and closing cost assistance to qualified buyers. Many of these are aimed at first-time buyers, veterans, or low-to-moderate income households. These programs may offer grants or forgivable loans to help reduce out-of-pocket costs.

5. Roll Costs Into the Loan (If Eligible)

For some loan types, like VA or USDA loans, you may be able to roll certain closing costs into your loan balance. While this increases your total loan amount, it can ease the upfront burden when cash is tight.

6. Plan Your Timing Carefully

The day you close can impact certain prorated costs like property taxes or prepaid interest. Closing at the end of the month, for example, can lower the amount of prepaid interest you owe at closing. Small timing tweaks can add up to big savings.

Closing costs do not have to catch you off guard or break your budget. With a little planning, negotiation, and the right guidance, you can minimize what you pay without sacrificing the quality of your loan or service.

Give me a call to discuss your goals and explore which strategies might work best for your situation!

12
Jun
By Mike Pfefferman
Mortgage Tips

How to Leverage Home Equity for Financial Freedom

If you’ve owned your home for a few years, chances are you have built up equity, maybe more than you realize. But what exactly is home equity, and how can you use it to build wealth, reduce debt, or increase financial flexibility?

We will discuss how homeowners are turning their built-up equity into tools for financial freedom, and how you can, too.

What Is Home Equity?
Home equity is the difference between what your home is worth and what you still owe on your mortgage. For example, if your home is valued at $450,000 and you owe $250,000, you have $200,000 in equity.

With rising property values in many areas, homeowners have gained significant equity in recent years, and that equity can be used to support your financial goals.

3 Smart Ways to Use Home Equity

  1. Consolidate High-Interest Debt
    One of the most common uses of home equity is paying off high-interest credit card balances or personal loans. A home equity loan or HELOC (home equity line of credit) typically has a much lower interest rate than unsecured debt. This move can reduce your monthly payments and help you get out of debt faster.
  2. Invest in Your Home
    Using your equity to fund home improvements or upgrades can increase your home’s value while making your space more enjoyable. Think kitchen renovations, adding a bathroom, or energy-efficient upgrades. These improvements often deliver a return on investment while improving your quality of life.
  3. Fund Life Goals
    Whether it’s helping a child with college tuition, starting a business, or creating a cushion for retirement, your equity can be tapped to finance major life events or opportunities. While it’s important to weigh the risks, using your home’s value as a tool for growth can be a smart financial move with the right planning.

Ways to Access Your Equity
There are several options available:

  • Home Equity Loan: A lump sum with fixed payments, great for one-time expenses.
  • HELOC: A revolving line of credit you can use as needed, like a credit card.
  • Cash-Out Refinance: Replace your current mortgage with a new one for more than you owe and take the difference in cash.

Each option has pros and cons depending on your goals, current mortgage terms, and long-term plans. That’s why it’s essential to talk with a mortgage professional who can guide you through the best strategy for your situation.

Use It Wisely
While tapping into your home equity can be empowering, it’s not free money. You’re borrowing against your most valuable asset, so it’s crucial to have a clear plan and a purpose for the funds.

Curious about how much equity you’ve built up? Let’s review your numbers and explore smart strategies to put that equity to work.