Home ownership benefits individuals and families, strengthens our community, and is vital to our economy.Â Despite current economic challenges, most Americans still aspire to the dream of home ownership. Last year, the market had already seen a gradual stabilization of sales and prices.Â Default notices have dropped 20 percent from 2009 to 2010, indicating that this foreclosure cycle could peak in 2011 as lenders finally are able to clear the backlog of distressed loans that have occurred in the last five years.
Home ownership didn’t create the foreclosure crisis; Wall Street greed and irresponsible lending practices did, but the fact still remains that owning a home is one of the best ways to build long-term wealth.Â The ability to deduct the interest paid on a mortgage can equate to significant savings at tax timeÂ despite current economic challenges. An example would be a family who bought a home this year with a $200,000, 30 year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year.
Low interest rates mean real money for today’s home buyers. Buyers who purchased a median-priced home five years ago with an FHA loan requiring 3 percent down payment would have a monthly mortgage payment of $1,650. With today’s interest rates, that same buyer would pay $1,150 per monthâ€”that’s a $500 per month savings; $6,500 per year.
Although the market has changed dramatically in the last five years, this is one of the best times to purchase your dreamÂ property. With so many “deals” out there and such low interest rates, the time has never been better and timing is everything, especially in the real estate market.