Buying for the First Time

Big Island of Hawaii Home Prices, Sales Up in October“I can’t afford the down payment.”

“I have no idea where to start.”

“My income is above the threshold to qualify for first-time buyers programs.”

“There is absolutely no way I can buy while single and have college debt still.”

Every day, I hear the same excuses from clients who want to purchase their first home. These excuses, while valid for some, are myths in the buying process. The reasons to purchase over renting are discussed frequently. In the long run, buying is more cost-effective than renting (by about 35 percent in D.C.). For any buyer who lives in their property as their main residence, the Homestead exemption lowers their assessed tax value by $70,200. Not only is purchasing cheaper by the month, but it also delivers annual returns.

Let’s state the obvious: Buying a home can be a scary process for anyone, let alone purchasing for the first time. Another reality, while many do purchase with cash, not everyone has the liquidity to make a first purchase in cash. For many first-time buyers, a majority of life savings goes toward a down payment of 20 percent to avoid a less desirable loan product. For many, the words private mortgage insurance (PMI) causes fear. However, many do not realize that your PMI on a purchase with less than 20 percent down can be built into the rate of your loan. Moreover, PMI is tax-deductible when your homeowner’s adjusted gross income (AGI) is less than $100,000, and still deductible, though reduced, when above this threshold.

By Tim Savoy – Full Story at The Washington Blade