Buying a Home

Many millennials are expected to enter the housing market in the next year with the interest rates still low. However, while it may be a good time, it does not necessarily mean that it’s the right time for you to make the investment. If you’re currently weighing your options when it comes to home ownership, here are some things to consider before you decide put the money down.

Are You Struggling With Student Debt

It’s possible to invest in a home when you’re still paying down student debt, but if you’re also struggling with a low-paying job and a high debt load, it may not be the right time to buy. Instead of trying to make ends meet to pay a monthly mortgage payment, it might be a better decision to pay off some of your debt, lower your interest costs and consider investing later on. This will also enable you to afford more home when you decide the time is right to buy.

Do You Have A Down Payment?

It can be a good testament to your financial ability if you want to purchase a home at a young age, but having a down payment is one of the most important things to have on hand when it comes to investing. If you’ve come up with 20% of the purchase price, this will allow you to avoid mortgage loan insurance. If you don’t have this amount, however, or much of anything saved up, you may want to create a budget in order to save up for your down payment.

Are Your Ready To Commit?

Many people romanticize the idea of buying a home since it’s something that really belongs to them, but it’s important to be prepared for the monthly mortgage payments, home maintenance and all the other fees and responsibilities associated with home ownership. It’s great if you want to invest, but if you want to travel or explore different job opportunities or even continue your education, an investment commitment may not be the best choice.

It can be a great financial benefit for your future to invest in a home at a young age, but it’s important to ensure you’re ready for the commitment by having your debt paid down and having money saved.

Are you thinking about buying that perfect new home? Whether you’re buying for yourself or a new home for a family, there will be many costs involved. Let’s take a look at 3 budgeting tips that will help make home ownership on a single income easier.

Get A Full Picture Of Home Ownership Costs

Buying a home is never as simple as paying a mortgage payment each month. So, as with most budgets the first place to start is a full consideration of everything involved.

On top of your mortgage, what other monthly costs will come up? Consider utilities like electricity, phone, cable, water and others. You’ll be responsible for property taxes, so find out how much other local owners are paying. If you’re buying into a community, you may have to pay monthly fees to a homeowners’ association.

When you’re visiting open houses and talking to owners, be sure to get a full picture of their monthly costs. It will help you build a responsible budget.

Keep Your Credit As Strong As Possible

It might sound obvious, but keeping your credit or FICO score spotless is important. Buying a home on a single income means that you’ll need a mortgage. Depending on the home you’re buying, this might be significant. Your credit score is one of many factors your lender will use to assess you, but it’s the most important. So keep those bills paid on time and avoid any black marks on your credit report.

Plan Ahead For Unexpected Budget Shocks

Don’t forget to think ahead at events that — while unlikely — may shock your finances. Having one income means that you’re one negative health event away from being out of work. What happens if the income-earner gets sick, fired or laid off? Is there other work nearby, or would you need to move? Consider the different types of insurance you can get on your mortgage and home. And how much you’ll need to put away in a ‘rainy day fund’ each month. While it might be a bit more of a struggle, it’s still possible to buy a home on a single income.

Most people do not look forward to tax time, whether they get money back or not, but as a homeowner there are a lot of things you can do that will help to reduce your taxes and get you a refund. If you’re getting prepared to invest in a home and are wondering how it can benefit you, here are some deductions you’ll want to watch out for.

Minimizing Mortgage Interest

One of the best benefits of having a home is that you can actually deduct mortgage interest at tax time and save considerable money as a result. While the amount you receive will depend on your interest rates and the type of loan you have, this can make a significant dent in the amount of your monthly payment when all’s said and done.

Deducting Property Tax

Property tax is another fee that comes along with home ownership, and it can be a rather debilitating amount depending on where you live. While you have the ability to deduct this amount on your primary residence, you also have the option of doing this if you happen to own a vacation home. This is not only a benefit for money savings, but can be a boon for future home investment too.

Capital Gains Credit

Many people stay in a home for a few years and then invest in something larger, and the Capital Gains Exclusion is a great way to take advantage of tax-free profits on your home. While you’ll have to live in the primary residence for at least two years to take advantage of this deduction, you will not have to pay any capital gains tax up to a certain amount.

Line Of Credit Reduction

If you happen to have either a line of credit or a home equity loan, you can also deduct the interest off the amount paid for a refund on your taxes. In addition to the lower rates provided by these loans, you can also save on interest when tax time comes around, making it a considerable benefit.

Most people do not look forward to doing their taxes, but if you’re a new homeowner you may not be aware that there are many financial benefits associated with buying a home.