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When deciding whether or not to buy a home for the first time, it is essential to compare the benefits of buying versus renting. Renting provides the liberty to move when the lease expires rather than having to wait until you sell your home. Renting allows you to avoid the cost of maintaining the property and requires less cash up front; however, homeowners have the freedom to remodel as they choose. Also, renting throws away money that could be building equity. When you own your home, your monthly mortgage payment not only pays for you to live in the house but is also an investment.  Although you generally invest 5% - 20% percent of your own money and 80% - 95% of the bank's money, you receive the benefit of 100% of the house appreciating each year.
When you sell your house, you receive money that you would not have received when you are renting. Plus, you can deduct items on your taxes, including interest on your mortgage and property taxes. Provided that you choose a fixed rate mortgage, you lock in a consistent payment, while renters should expect a few rent increases over the years.
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Vacation Home: The InvestmentInvesting in a second home has several benefits. First, you get the same financial rewards that come with home ownership; tax-deductible interest and property taxes are most always deductible. In addition, you may be able to use the home as a source of rental income. If you choose to rent out your vacation home, it can help offset the costs of ownership. Second, you can deduct the mortgage interest you pay on your second home. To the IRS, a second home is one that you personally use at least 14 days per year, or at least one day for every 10 days it’s rented out.
You can use the equity you have built up with your primary residence source to help buy your vacation home. With home values in many markets much higher now than they were a few years ago, many owners have experienced rapid equity growth; leveraging that equity to invest in a second home may be a smart financing strategy. There are several things to consider when buying a second home. You need to decide what you want to get out of your second home. If you are hoping to help offset the cost of your second home by renting it put a portion of the time, make sure you find out about rental demands in the area you are looking to purchase. Do you want something close by so that you can go regularly, or do you want something a little farther away for longer extended weekends? What do you want to do when you get to your second home? Are you looking to be in the hustle and bustle of the city, or do you want to enjoy the peace and quiet of a secluded spot? The environment, location and proximity you prefer are important factors when looking for your second home. Search Arizona homes for sale. There are several ways to determine the market value of your home, including an Automated Valuation Model, Comparable Market Analysis and Appraisal. An Automated Valuation Model is an electronic appraiser that provides a Homes Sales Valuation Report by entering your property address. A Comparable Market Analysis is generated by comparing prices of similar properties in your area that have recently sold, are currently on-the-market or were taken off the market unsold. Unlike a Comparable Market Analysis, which is often obtained at no cost, an Appraisal is completed by a professional appraiser specifically for your home and costs between $300 and $600. After inspection, the appraiser will determine the value of your home based on its condition, location and a Comparable Market Analysis of sold properties in your area.  Abandon your Personal Bias In order to determine the market value of your home, you must objectively establish what someone else would pay for your house. This means setting aside your emotional attachment to the many wonderful memories you have shared in your home. Some things to consider when determining the price of your home: total square footage, floor plan, construction quality, condition, amenities, lot size, topography, view, landscaping and neighborhood. Get Comparable Market Analysis from your Real Estate Agent Visit local open houses and compare the location, condition, size and amenities of these houses to your own as objectively as possible. If your house is located in a neighborhood that is highly in demand, you will be able to get a higher price than you can for the same house in a less desirable area. A house that has been well-maintained will show better and, therefore, is likely to sell more promptly and for a higher price than one that needs work. When a house offers amenities that are currently popular in the marketplace, it will invite a higher price. Educate Yourself As your real estate team, we will give you a full Comparable Market Analysis after examining what comparable homes have sold for in your neighborhood in the recent past. Drawing upon our knowledge of other homes within the area, we will determine what we believe to be an approximate value of your home that we may use together to determine the final listing price. Calculate the Price per Square Foot Using homes from the Comparable Market Analysis, divide the list price by the total square footage. This will establish a baseline value per square foot of homes in your area. Multiply this number by the total square footage of your house and adjust based on amenities. Consider Market Conditions How is the economy? Interest rates? Local job market? What season is it? Homes tend to sell more quickly in the Spring and Summer months than in the Winter because people prefer to move during the longer warmer days and between school years. Are prices of homes in your neighborhood on the rise? Are they selling quickly? Check your Comparative Market Analysis to determine the days on the market for each comparable house sold. When real estate is booming, houses may sell in a few days. Ask your local real estate agent if it is a buyer’s or seller’s market. The Unsold Inventory Index, which indicates the pace of the market, is calculated by measuring how long it would take for all the homes currently on the market to be sold at the current rate of sales. A smaller index signifies a seller’s market, whereas a higher index suggests a buyer’s market. The Price Discount is the percentage difference between the seller's initial asking price and what the house actually sold for. A small percentage means the market favors sellers, while a large average discount signals a buyer's market.
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