1. Should I buy a home or rent?
2. What if I have debt or bad credit?
3. Large or small down payment?
4. How much money will I need at closing?
5. Are there tax advantages in owning a home?
6. Should I buy a new home or a pre-existing one?
1) Should I buy a home or rent? back to top
A new home is the best investment you can make. Owning your own home is the “American Dream”. You will enjoy, security, safety, privacy and a healthy place to live and raise your children or relax and enjoy your retirement. You will be able to add your own personal touches and colors to make the home distinctively yours.
Owning a new home comes with personal satisfaction and financial benefits. Mortgage interest and property taxes are all tax deductible. For example, if you rent an apartment for 10 years at $1,000 a month, you would have paid $120,000 and have nothing to show for it. After 10 years of paying principle and interest at 60% on a $200.000 home @ $1,200 per month, you would have paid $31,000
in principal and $111,000 in tax deductible interest. In addition your home may have appreciated at 5% or more annually. On a $200,000 home that would be about $10,000 a year. (Or about $100,000 in 10 years). So, not only could you be living in a safe, secure, energy efficient new home with your own master bath, a media room, a home office, an attached two or three car garage and a yard to play and garden in, but you would also be making money each year in appreciation. This is equity you can borrow against if needed and can be a great savings plan for your family’s future.
2)What if I have debt or bad credit? back to top
Today there are many financing programs available to assist everyone, including bad credit. If you can qualify with your current debt situation, it would be better to build new since this investment is likely to increase in price. If you wait till you are out of debt, you may never be able to build. Besides, the home price is going up and interest rates may be even higher. The end result could be increased debt by waiting.
3) Large or small down payment? back to top
For every $1,000 you put down, your payment is reduced by about $8.00. If you put down $10,000 your mortgage payment would be reduced by about $80.00. You should consider whether reducing your monthly payment is better use of your money versus paying off other debts. You can consider different mortgage programs with different interest rates or use the money to pay points and reduce your interest rate for your thirty year mortgage loan.
4) How much money will I need at closing? back to top
The type of loan you choose will determine the amount of many you will need at closing. Some loans require a little as zero down, but usually with higher closing costs. Closing costs can run between five and twenty percent of the mortgage. The closing cost, title policy and bank fees are approximately three percent of the amount borrowed and escrow amount and pre-paid fees are typically two percent of the amount borrowed.
A general rule of thumb is to figure a five percent down payment and five percent for closing costs which would add up to ten percent of the amount borrowed. Family, friends and the builder may pay up to three percent of your closing costs. The builder may do this in lieu of other promotions. Lenders may also pay up to two percent for escrow amounts if you take a slightly higher interest rate.
5)Are there tax advantages in owning a home? back to top
Purchasing a new home is the wisest buy you will ever make. The government allows you to deduct a portion of your mortgage interest along with your property taxes. The deductible amount depends on you tax bracket. Always check with a tax professional before taking any deductions. Once you factor in your tax deduction to your monthly principal and interest, you could be paying less than your rent
6) Should I buy a new home or a pre-existing one? back to top
As a home buyer, you have two options - buy a new or pre-existing home. It is a decision that conflicts many people looking for a home. Build or buy and renovate. It is a serous question. Below are some advantages to building a new home:
Appreciation
A new home is more cost efficient in the long run and will have a better resale value.
Homes usually appreciate faster in the first few years they are in existence. Six to eight years are usually the formative years and during this time they will have the most appeal and grow with the economy and the surrounding area.
Know the Builder
The quality of the home depends on the quality of the Builder. Our team of suppliers, trade – partners and the Nordenstrom Custom Homes staff are dedicated to making your home the best it can be. We are committed to meeting our customer’s needs and it shows with our reputation for quality designs, structural engineering and quality products.
Low Maintenance
At Nordenstrom Custom Homes you can select from a wide array of products with maintenance features to fit each home buyers desires. When purchasing an existing home, you may end up replacing or repairing many items, like: roofing, furnace, water heater, wiring, light fixtures, floor coverings, appliances, counter tops, air conditioners and interior and exterior paints and stains. A standard rule of thumb is for homes:
5 – 10 years old – add $20,000 to the purchase price
10 – 20 years old – add $40,000 to the purchase price
Over 20 years old – add $80,000 to the purchase price
All this just to provide up to date maintenance and cosmetic repairs without the advantage of making the floor plan distinctively yours.
Personalization
It’s just that NEW! You will be the first of everything or anything in your new home. You can make the home distinctively yours by style, product selections, colors, room arrangements, kitchen layout and your personally selected floor coverings, light and plumbing fixtures and faucets. It is a process to make the home for the way you want to live your life.
Quality Construction, safety, health and energy efficiency
Today’s home designs and product selection is a “Light Year” improvement over homes of even a decade ago. Today’s homes offer the latest in technology, safety, healthy living environments and energy efficiency. In addition, our five generations of building experience have taught us how to listen to the needs and concerns of our customers. Our construction team will do everything necessary to provide you with the best built home in Central Minnesota.
Warranty
Each new home comes with a state of Minnesota ten year warranty, giving you peace of mind. The first year covers almost everything. The second covers faulty installations of plumbing, heating and electrical systems. The third through the tenth year covers major structural defects. Plus, Nordenstrom Custom Homes offers each customer the option of extending the full warranty coverage for an additional three years. Appliances are covered under manufactures warranties.
