Step 1: Decide to Buy

Do you really want to pay someone else's mortgage?

If you're renting and have a stable job with some savings, and a credit score in the high 600 range, you can likely qualify for FHA or conventional financing at historically low rates. The key question you need to consider is, of course, why are you still renting? Think about it for a moment. If your reason is fear, then it may be time to let go of that fear and focus on the facts of home ownership. Here is one example.

I can't afford to buy my home

The best way to get closer to buying your dream home is to buy your first home.

Very few people can afford to buy their dream home when they buy their first home. In fact, according to the National Association of Realtors®, 69 percent of first-time home buyers in the United States compromised on some features of their first home. So you make some compromises, buy your first home, and start building equity. This approach takes you further and faster down the road to being able to own your dream home than if you hadn't purchased a home at all. Gary Keller and his wife Mary serve as a great example of how this works. They used their first home as a forced savings plan for their future dream home. They even made additional principal payments when they could to accelerate their equity buildup. Interestingly, this approach allowed them to pay off their first home in about eight years. Then, all that financial equity was available to help them build a second home - their dream home.

Purchasing your own home is a great investment that provides specific financial advantages, including equity buildup, value appreciation potential, and tax benefits. It's also a forced savings plan that you cannot get from renting! So, again, ask yourself if you can really afford to keep renting. Here is an example scenario.



Carly's $900 mortgage includes $700 of interest. Her total house payments are $10,800 annually. At the end of the year, $8,400 (12 months x $700) is tax deductible in the United States. She is in the 28 percent tax bracket, so her tax savings are $2,352 ($8,400 X .28).

Carly's actual housing costs for the year are $8,448 ($10,800 - $2,352). And Sheila has built $2,400 in equity.

Carly's friend Kevin believes he "can't afford" to buy. He pays $800 in rent each month.

Kevin's housing costs for the year are $9,600.

So, even though he thinks he's saving money by renting, he actually spends about $1,150 more than Sheila - and he's not building any equity!

Above all else, when done right, home ownership can help lay the foundation for a life of financial security and personal choice.

There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run. The most important rule for keeping your stress to a minimum is that you don't have to know everything- leave that to us with over 20 years of professional full time real estate service.