Are you ready to own your first home? Becoming a homeowner is an exciting experience, but also comes with a great deal of responsibility. Buying a home might be the largest purchase you ever make, so it’s important to understand what to expect. When buying a starter house, there are several factors to consider like location, price and negotiation. But don’t worry – all of that planning will be worth it once you receive the keys to your new home!
If you’re ready to take the leap and purchase your first home, here are a few things to consider:
- Know how much you can afford. Not only will you have a mortgage, but you’ll need to add property taxes, insurance premiums, and other expenses into the mix.
- Secure a realtor. This should be done after you have selected where you want to live and how much you want to spend on a home.
- Know your credit score. Your credit score plays an important part in obtaining low-interest financing for your home. Check your credit report and fix discrepancies before speaking with a lender.
- Avoid large purchases. Accumulating debt prior to financing a home may impact your debt-to-income ratio and how much you can borrow from a lender.
- Research financing options. You have your down payment, but the remaining amount of your home will need to be financed. Save time and money by shopping around to see which lenders are offering the best interest rates in your area.
- Don’t wait. Houses don’t sit on the market forever. If you wait, you may miss out on your dream home.
With your home purchase, you’ll be eligible for new tax breaks on things such as:
- Mortgage interest. You can write this off on your tax return and deduct interest on up to one million of the debt owed on your home.
- Real estate taxes. You can deduct the property taxes that you have to pay each year.
- Home improvements. Small improvements will increase the value of your home. You can’t write these off on your tax return now, but they’ll pay off in the future when you sell.
- Energy tax credits. Opt for qualifying energy-efficient equipment in your home and save. Thirty-percent of the cost of solar and geothermal installations can be claimed.
Disclaimer: Tax Lounge is an informational source for industry news and related topics. We take every effort to provide honest and accurate tax information, but this information should not be a substitute for professional tax advice. Use our office locator to find your local tax office or subscribe to our free newsletter.