Smart Money

Many prospective or current homeowners can benefit from the decades of real estate financing experience that our team provides. Below, we’ve listed some of our favorite tips that can help you:

1. Home Purchase vs. Renting
   Compare home purchase vs. renting. For many renters, the total cost of renting actually exceeds the cost of purchasing your home. After factoring in rent, common charges, rental insurance and other expenses, the total cost of renting can actually be greater than the cost of principle, interest, taxes and other costs. The benefits are often tipped towards home ownership by the deductibility of mortgage interest and many closing costs on your personal tax return.
2. Buy Now
   Some people believe that a slightly higher interest rate (or slightly higher home price) is a good reason to delay purchasing a home. In our local market, however, average price increases of 1% per month have meant that people who wait pay considerably more in both purchase price and interest (due to a higher loan amount) if they wait even a few months. Our advice is that if you find the house you want, at a reasonable price – buy it! You can always refinance later if rates decline considerably.
3. Home Equity As Your Net Worth
   Use home equity as the basis for your net worth. Most people, long after they’ve purchased or upgraded their home, realize that it has become the foundation for their personal net worth. This happens because your monthly mortgage payment acts as a ‘forced savings account’, into which you deposit money every month. As your home appreciates, the difference in value between the market price (what you could sell it for), and your mortgage (what you have borrowed) becomes part of your net worth. This amount usually grows over time, creates the basis for good credit and the ability in certain circumstances to borrow against the equity in your home. Financial advisors see home equity as an important piece in your total financial picture.
4. Beware of Rising Rents
   In the Seattle metropolitan area, rents have been on the rise – in some areas up to 30% in the past three years. This is due to the limitations on building new multi-family housing, and the increasing value of existing rental property. Landlords in the area have the luxury of passing on high levels of rent increases to their tenants. In Seattle, rent control is an unlikely possibility, so renters can expect more of the same in the next few years based on the hundreds of thousands of new inhabitants our area will have.
5. Getting the Down Payment
   Getting the down payment is easier than in the past. Today, anyone with good credit can likely assemble the down payment needed to get into, or upgrade his or her home. This can be done by using savings, the resources of other people, and a host of new programs aimed at helping people get over the hurdle of the down payment. Your Loan Officer can help you think through your options – so, if you’re not sure what to do, be sure to talk with one of our experts first before deciding you can’t get it together.