Rent or buy? What works best for you?

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First time home buyers have a lot to consider this summer when making the decision to rent or buy a home: interest rates are at all-time lows and prices are at or near their lowest in years.

Still, deciding whether to buy a home or rent an apartment can be a complicated decision. How do you know what’s right for you? Potential buyers should ask themselves several key questions before making this important decision.

1. What will monthly costs be, and can I afford the payments?
Keeping mortgage payments under 30 percent of your monthly income is a good rule of thumb. If you can’t keep mortgage payments below that, you may be better off renting for awhile.

2. What other debt do I have?
Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of monthly income. Talk to your lender and they will help you get ready to buy a home. 

3. What is my credit score? Can I qualify for a good interest rate?
A high credit score indicates strong creditworthiness, and that qualifies you for better interest rates on a mortgage. Maxing out on your credit lines and paying bills late will lower your credit score. The impact of a credit score on interest rates can be significant. For instance, a borrower with a score of 760 could pay nearly two percentage points less in interest on a mortgage than someone with a score of 620. Lower interest rates also mean lower monthly payments. If your credit score is low, you may want to delay buying a home until you can improve your score. Work with your lender, they can tell you what to do to improve your credit score. Don’t have a lender? Ask your Realtor, they can refer you one or more lenders that they work with.

4. How much will taxes, monthly maintenance, or other fees cost?
Owning a home means you’ll have to pay real estate taxes and other costs like insurance and maintenance. On the other hand, owning a home brings big tax savings at the end of the year. 

5. How many years will I stay here? Generally, the longer you plan to live someplace, the more it makes sense to buy. You’ll build equity in your home and have the satisfaction of knowing it is yours and you can paint or redecorate any way you want. There have also been studies that show children do better in school if the parents are homeowners.

If you need any help with this decision, your Realtor or Lender can provide you with a Rent vs Buy analysis form.  

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Energy Efficient loan with NO monthly payments!

Yes, that’s right, no monthly payments. You can get an energy efficient loan for Solar, heating and air conditioning systems, attic and wall insulation, windows and several other energy efficient improvements. 

The criteria for this loan is pretty straight forward. You must be the property owner, current on your mortgage, current on your property taxes and not had a Bankruptcy within 5 years. There is no credit check required. No monthly payments as the payments are due when you pay your property taxes. You can get 10, 15, 20, and even 30 year loan payments depending on the life of the improvement. This loan does not need to be paid off if you sell your property as it goes with the property.

Locally only Placer County is doing this type of loan, but the other counties are looking into possibly starting it too. The web site for more information is www.Mpowerplacer.org

This is a great program if you plan on staying in your current home and want to remodel or if you are thinking of selling an older property but don’t have the cash to upgrade the property with energy efficient improvements.

Ever heard of Energy Efficient Mortgages?

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These are mortgages that mean comfort and savings whether your buying, selling, refinancing or remodeling your home. It is easy to use, federally recognized, and can be applied to most home mortgages. EEM’s provide special benefits when purchasing a home that is energy efficient or can be made efficient through the installation of energy saving improvements. With lower utility bills you will have more money in your pocket each month. You can afford to allocate a larger portion of your income to housing expenses. You can pay for the energy improvements easily through your mortgage.  Your lender can increase your loan to cover the energy improvement costs. Monthly mortgage payments increase slightly, but you actually save money because your energy bills will be lower.

Buyers benefits

  • Qualify for a larger loan on a better home
  • Get a more comfortable home
  • Save money every month from day one
  • Increase resale value of your home

Sellers benefits

  • Sell your home more quickly
  • Make your house affordable to more people
  • Attract attention in a competitive market

Remodeling/Refinances

  • Get all the EEM benefits without moving
  • Make improvements that save you money
  • Increase the potential resale value of your home

Energy efficient homes costs less to own than non-efficient homes. You may want to check out Energy Efficient Mortgages if you are interested in saving money.  

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