Why Take The Big Step

The events we experience in our lives have a lot of bearing on where we choose to live. From graduation through retirement, your housing needs will change for various reasons. Here are some of the milestones in life that can influence your decision to purchase a new home.

• Graduation- As you leave school and search for a job you may also be looking for your first home.
• Fed-up with apartment living- Lack of privacy and tight quarters can start you dreaming of owning your own home.
• Marriage- Your old place is more cramped now that there are two of you. The thought of more room and beginning a life together starts the home shopping process.
• Changing jobs- New jobs and promotions may mean more money and the realization that you can finally afford your own home.
• New baby- Is there enough room for the baby? Is there a safe place for your kids to play? When you decide to start a family these questions can influence the decision to buy a house.
• Relocating- Moving to accommodate a job transfer means you'll be looking for a new place to live.
• Divorce- As one of life's biggest adjustments, divorce may impact where you live.
• Children leaving the nest- When your children grow up and leave the house you may want to get a place that's smaller and easier to care for. Maybe you just want to take the opportunity to move to a different neighborhood or build on some land you've had your eye on.
• Retirement- Moving to a warmer climate? Thinking about buying a maintenance free condo or villa? Retirement can motivate you to begin shopping for a home once more.

Advantages and Things To Consider

Should you own your own home? Like anything else, there are advantages and other things you should think about before becoming a home owner. 1st Source has listed both to give you the opportunity to apply them to your own situation and make the decision that's right for you.

Advantages

• Pride of ownership- Owning your own home brings with it a sense of pride and accomplishment you just can't get from an apartment.
• More space- The square footage a house has to offer, even smaller ones, is generally greater than you'll find in an apartment. If you anticipate the "pitter-patter" of little feet, this becomes more of a necessity than an advantage.
• Investment- A home can be an investment. In most cases, housing prices increase year after year so your home's value grows the longer you own it. Rent payments only help your landlord pay his or her mortgage.
• Savings- When you write checks for your mortgage payments you can consider them a kind of scheduled savings plan. As you pay off your mortgage you build equity in your home which will convert to cash when sold.
• Equity- Not only does equity convert to cash at the time of sale, it can also be used to borrow against in the form of a home equity loan.
• Stable payments- If your landlord doubles your rent you have two choices, move or pay up. Mortgage payments almost always stay the same year after year.
• Taxes- As a homeowner you are eligible for certain tax advantages. In most cases you can deduct the interest from your mortgage payments and save money on your federal income taxes.
• Options- Owning a home offers options not available to renters. You have more choices when it comes to type, size, location, style, décor, and other features.
• Freedom- If you try to do too much interior decorating to an apartment you run the risk of losing your deposit. When you're a home owner, you can paint the living room lime green if you want.
• Financial Integrity-A home of your own is a symbol of financial integrity and may help improve your credit rating.

Things to Consider

There are two sides to every story and the same holds true when buying a house. Becoming a homeowner isn't for everyone, or maybe it just isn't right for you right now. These are some of the points that reflect the down side of owning a house.

• Down Payment- With most mortgage programs a down payment is required.
• Other Costs- Owning a home is a long term financial commitment. In addition to your mortgage payments you'll have to shell out for property taxes, utility bills, homeowner's insurance, and trash pick up.
• Repairs- If the furnace, air conditioner, or plumbing stops working, there isn't any landlord to bear the cost.
• Mobility- It's not as easy to move when you own a home. If life throws you one of its famous curve balls such as a job relocation or divorce, changing your residence becomes a lot more complicated.
• Possibility of Foreclosure - Getting into trouble with your mortgage payments can have dire results. Not only could you lose your home and investment but your credit rating can suffer serious damage.
• Value- Your investment may be at risk if the housing market takes a serious downturn, especially if you bought when prices were at a high point.
• Buyer's Remorse- If you purchase a home and decide later that you've made a mistake, you've just made a big one.

Avoid Home Buying Mistakes

Purchasing a home is no simple task and it's easy to make mistakes. 1st Source Bank is here to help you avoid some of the most common errors.

• Skimping on preparation- Know what you want before you take the plunge. If, for whatever reason, you determine that you shouldn't have made the purchase, your chances of being released from a contract are almost non-existent.
• Poor representation- Are you sure the real estate agent you're using is really representing you? The listing agent represents the seller and if that's the person you're working with, they'll be looking after the seller's interests, not yours.
• Utilize your team- The agent, lender, and title representative should all work together for your benefit.
• Too much house- Being "house poor" is an unpleasant situation that can last for a long, long time. It's important to know what you can afford, not necessarily what you are able to borrow. Purchasing a home is worth making sacrifices for, but only to a point.
• No pre-approval- Knowing for sure how much money you are able to borrow gives you an exact price range when you shop. It also lends strength to any offer you make.
• The perfect home- Finding the "perfect" home is an unrealistic goal and may cause you to pass up others that meet 90% of your requirements. While you're waiting, interest and housing costs may be going up. By the same token, don't grab the first house you find. Make sure you've seen at least 7-10 homes before you make your choice.
• Not comparing mortgages- Different mortgages have different features including number of points, terms, and options. And, some lenders feature low interest rates but have other fees you discover when it comes time to close your loan. When you shop for rates, it's important to make sure you are comparing apples to apples.

Glossary of Terms

Assessed value? Balloon payment? Escrow? These are just a few of the terms you will run across when moving through the home buying process. The world of real estate has a language of its own that can be difficult for anyone to understand, especially the first time buyer. 1st Source Bank eliminates the confusion and helps you understand these terms.

1st Source Bank provides the tools and resources you need to meet these challenges. To access our entire glossary click the "Search" button in the box to the right. Or if there's a specific term you would like to research, enter it in the box before clicking "Search."