“Why you should buy a house with your taxes”
With tax season around the corner we felt it would be vital to have this conversation beforehand . This year let’s try to use our tax refund to purchase assets not liabilities . When you purchase a car and drive off the lot it not only depreciates (loses value) but it also becomes a monthly expense . However when you purchase the RIGHT home it can be used a vehicle to build cash flow .
Example : when I purchased my first home I only paid 70k for it . I put down 3.5% which was ($2450) and had a mortgage of $541 per month. The average new car payment right now is about $523 and that doesn’t include insurance or maintenance.
Most people only keep their car for about 3-4 years before trading it in for another one and usually when they do they carry negative equity. This means they end up paying interest on the old car’s debt and the new car’s debt as well .
Another reason, why you should buy a home with your taxes. Not to mention, In most cases buying a home will result in your mortgage being cheaper than what you currently pay in rent. This can help you save a tremendous amount of money compared to your peers paying $1000+ every month .
Here’s a few other reasons you should also consider buying a home instead of a car.
- Homes appreciate in value over time ! (My house was 70k now it’s worth 140k)
- Mortgaging is often cheaper than renting.
- When you buy a second home you can use the first one as a rental.
- Platforms like Airbnb now allow you to rent out rooms and make passive income . (I make enough to live for free )
- You build equity in your home that can be used for other investments. (Rental properties, start a business )
- Depending on credit interest rates are often lower on homes. (Prime is about 5.5%)
Mortgage rates are at a historic low and it’s strongly recommended that we take advantage of it . Back when my parents bought their home, Interest rates were around 10% + now today they are 5. That’s a 50% off sale in my eyes !
To get started on your journey to purchasing a home here’s a few things you will need
- Last two years of tax returns.
- 620+ credit score or better ( I can help with this)
- Last three months bank statements.
- Last two pay-stubs from your job.
- 3% down of the purchase price
After you have gathered up these documents you are now officially ready to get pre-approved ! Getting pre- approved means you have submitted all of your documents to a loan officer and they have given you the “ok” to start looking for a home . Once your pre-approved you can then find a realtor which will help you find a home. Once you find a home you like your agent will submit an offer.
It takes about 30-60 days to close and then you can move in ! I know what your thinking but Yes it’s really that simple . On top of that once you move in you have an entire month before you have to make your first mortgage payment. This means you can save up your paychecks for an emergency and start off on the right track.
Also, unlike rent your mortgage payment isn’t due until the 16th of every month giving you more than enough time to pay. So this is why it’s pivotal to set up yourself up for success this tax season by purchasing a home. This will help create a foundation that will allow you to build wealth over your lifetime. Don’t let anyone trick you into believing homeownership is unobtainable because it is!
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