What is a starter home? It’s by far the most important home purchase you will ever make and the foundation of your real estate future. Many Americans have not purchased their first home for three primary reasons. They feel that they are financially unqualified; do not realize the investment potential of ownership; or, are waiting to buy their dream home.
FINANCIAL QUALIFICATIONS: The three biggest affordability issues are usually the down payment, the monthly payment or bad credit history. The good news, help is available. First, visit a mortgage lender to fully understand your home buying capability. Ask about down payment assistance from the State of Illinois. Make sure that you understand what must be addressed to improve your chances to obtain a desirable mortgage. A good lender will be able to counsel on all these matters.
INVESTMENT POTENTIAL: Since the Tax Reform Act of 1986, home ownership has become the single biggest tax shelter available to most Americans. Mortgage interest and property taxes are still 100 percent fully deductible from your taxable income. Because of the leverage factor, the increase in home values gives you a very nice return on the actual cash invested in a home. The build-up of equity through inflation and a decreased loan balance provides a “forced savings account” that enables owners to build personal wealth.
WAITING FOR THE DREAM HOME: Start now and you will be into your dream home in no time. Get on the bottom rung of home ownership as soon as possible and work your way up. The money accumulated through home ownership, coupled with the growth of your personal earnings, enables you to buy better quality housing with each purchase. Personally, I bought my first home when I was only 20 years old. And now after four moves, my wife and I enjoy our dream home that we designed and built to raise a family 28 years ago.
ADVICE: Don’t be discouraged or ignorant about your chances to become a homeowner. Investigate the possibilities. Talk to a realtor about the availability and price of homes and a lender about your financial situation.
