Commentary

September 15, 2013

Know home-buying basics before becoming owner

LUKE AIR FORCE BASE, Ariz. – There comes a time when one may want to look at purchasing instead of renting a home and if done smartly, the advantages of owning a home can be greater than renting.

“Given a long enough time line, a good home can be an appreciating asset,” said Cory Carmichael, 56th Force Support Squadron Airman and Family Readiness Center community readiness consultant. “It also offers freedoms for which renters miss out. Other benefits include tax deductions, equity and stability.”

A good way to know if it’s realistic to begin the home buying process is if one is planning to stay in a particular area for five or more years, Carmichael said.

Once it is decided that buying a home is the best option, one should look into getting a realtor to assist in the process.

“I always recommend a first time homebuyer interview three or more realtors, then select one to help navigate the process,” Carmichael said. “Remember, the realtor will be paid by the seller and is trained to offer advice.”

He also recommends doing research online to compare prices and to make sure one is not overpaying.

There are several websites to access that show the value of a particular home as well as a comparison to similar homes in the area, said Vickie Muniz, 56th FSS A&FRC accredited financial counselor.

“Think, ‘location, location, location,’” Muniz said. “Where you buy is very important. Consider more than the geography – what city your home is located in, for instance. Instead think about location in the neighborhood. Is it on a corner lot? Or is the backyard facing a busy street? Many things factor into a home’s resale value.”

Another important step prior to purchasing a home is becoming qualified for a home loan.

After the recent real estate crisis, banks have learned that not everyone is able to pay back a home loan, Carmichael said. Banks are looking for someone who keeps their credit score high, shows financial responsibility and practices spending discipline.

“Since we have little control over the rates, although they have recently hit historical lows, shop around for the small variations offered by lenders,” Carmichael said. “While many qualify for a Veterans Affairs loan and Federal Housing Administration loans, I still prefer the 15-year conventional with a 20 percent or more down payment. I tell people to avoid private mortgage insurance, funding fees and also spend less over the long-term for their biggest asset.”

Furthermore, one should make sure the prospective house fits into their budget. Most financial institutions and financial websites provide calculators to help determine limits.

“Just because one qualifies for a $400,000 mortgage does not mean that should be the quest,” Carmichael said. “Avoid joining millions of people that become ‘house poor’ because they spend a large proportion of their total income on their home. Consider there will be other home expenses such as electricity, insurance, water and more to see if you can afford it all. Take steps now to improve your financial fitness.”




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