Benefits of Home Ownership

Homeownership in Hoboken, NJ can bring with it many blessings. Yet, the idea of caring for and maintaining a home, as well as affording a mortgage can seem daunting, but let's review some of the many reasons that homeownership can be beneficial.

The most obvious benefit is building wealth. The U.S. Department of Housing and Urban Development (HUD) notes that home equity is the largest single source of household wealth for most Americans.

What is home equity? Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property. Let's say you have a balance of $100,000 left on your home's mortgage, but the property appraises for $150,000. You now have $50,000 worth of home equity.

And let's not forget about appreciation. While there is no set year-to-year rate that is considered normal, reports indicate that you can expect around a 6.5 percent average value increase in your home each year.

The National Homeownership Strategy cites that through homeownership, a family invests in an asset that can grow in value and generate financial security. This is what sets homeowners apart from renters.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth. The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth.
The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

$8,000 Tax Credit is to YOUR advantage

The “American Recovery and Reinvestment Act of 2009,” which was signed into law last week by President Obama provides an $8000 tax credit for first-time Passaic County home buyers.

Important Facts To Know:

-It is a tax credit to home buyers, not a loan as in last year's program;

-It is only for first time home buyers, defined as someone who has not had an ownership interest in a principle residence in the 3 year period prior to the date of the 2009 purchase;

-The buyer must remain in the home for a minimum of 3 years;

-It is applicable to purchases between January 1, 2009 and December 1, 2009; and

-Full credit is available to those with adjusted gross income of $75,000 or less ($150,000 for married filing jointly). The credit is phased out entirely for those with adjusted gross income over $95,000 ($170,000 for married filing jointly).

If you bought a home last year under the old $7,500 tax credit rules, those rules still apply to your 2008 home purchase.

Tips on refinancing your mortgage

If you are thinking of refinancing your mortgage, remember to shop around, compare loan terms and negotiate with lenders. Refinancing allows you to switch to a different mortgage with terms that you think are more beneficial. If your credit score has improved, you may be able to get a loan at a lower rate. Or you may want to refinance for a longer term to lower your monthly payments. (suggestion from a seasoned real estate professional like myself, at least 3 or 4 opinions are necessary).

Be prepared however to pay closing or settlement costs to refinance. Lenders are required by federal law to provide a "good faith estimate" of your closing costs within three days of receiving your loan application.

A refinancing calculator that I use for my clients is located at www.federalreserve.gov