First Time Home Buying Secrets - Rent Vs. Owning

 

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Transcript:

One of the things that this is all about is about those relationships. One of the things that I wanted to say is this: don’t ever ever think that we are too busy to talk to you guys. I work with everybody individually and just because I may not be able to get back to my phone call within two or three hours, I will get back with you. Because what people say is, “oh, he’s too busy.” Even after this seminar is over, there’s going to be several of you that crowd up here and that’s why we’re going to have our other agents to talk and answer questions and things like that. Just realize that every single one of you is important and it has nothing to do with if we sell you a house or sell you a mortgage. If you want information or you want knowledge or if you want some wisdom, we’re here to help. To make it even easier, I’ll be at the DR Horton model in Creekview subdivision, which is in Cedar Park. There’s a map in the back of your hand out. I’ll be there form 1 to 5 on Saturday. Just come any time. I’m going to hang out and talk with the on-site agent and talk to people about new homes. So that makes it a little easier. Two weeks from today, same area by the riata at Mihn’s café, come and have some appetizers, some sushi or whatever. We’re going to go through another version of this but have it more detailed about your needs and wants. Once again, on Sunday, House Hunters at 4 o’clock.

Now we’re going to go through the meat of this. We’re going to go through it relatively quickly. This is meant for you to use your pen. That’s why I left the blanks. I’ve found that this is very helpful in me helping you through the process. Because if you fill in the blanks, you’ll come back to me and say, “wow, we’re on step 4, aren’t we?” And I go, “yeah, you remembered that because you wrote it down.” You’ll retain 80% more if you write it down. So please, try to write this stuff down because that’s the value of it. Also, there’s a recording, there will be videos of this same seminar so if you missed any of it or forgot anything, come back and by tomorrow or the next day, Daniel will have all of these things up and running. Ok, this is it, home buying.

The first thing is that there’s a lot of fear out there, but in Austin, TX, people should be more fearful of their rent going up. Kenton and I talked a little bit about a situation where people are buying a home and they get their $8000 check from the government and they go out and buy their home. But their big fear is: am I going to have a job? Once again, we have one of the best job markets in the entire United States. We figured out that if you’re renting right now and you lose your job and have no money, as a landlord, I know that I can get you out in 21 days. As a homeowner, however, it would take 4 to 18 months to get you out if you didn’t make your mortgage payment. So it’s actually more secure if you stop making your payments to live in your own house than a rental. I just threw that out there to dispel the fears that you actually can live longer in your rental. So you have no lease and no rental increases. You can personalize your own home and you don’t have to worry about asking the landlord to do all these upgrades. Right now, our rents are going up. Has anybody felt the rents going up? Rents will be going up. Why? Because they’re building less. There’s less people that qualify for a mortgage. And guess what, there’s people moving to town to take all these jobs. That’s going to create a shortage of rentals and that’s going to drive up the price of housing. Rent is more expensive than a home payment. What I mean by that is rent has no tax benefits at all. A home payment actually has incredible tax benefits, but it also pays off over time. With rent, you can be paying forever. So just keep that in mind. The final thing here is something that a lot of our clients have dealt with is that their landlords are coming to them and telling them to move because they’re trying to sell the property. The tenants are like “I’ve been living here for 3 years and paid the rent on time” and the landlords are like “sorry, you don’t own it.” The nice thing is that when you own the property, a landlord won’t be able to make you move. As long as you made the mortgage payment and the property taxes, you get to stay. The nice thing about Texas is that we have the most solid homestead laws in the entire nation. Which means that it is very difficult for some one to take your home away if you get sued. As long as you make your home payment, they can’t take it away from you. The homesteading laws are incredible. Just ask Willie Nelson. He was able to keep his homestead through out all those bankruptcies he went through. Strongest homesteading laws in the entire nation. Secret: Don’t let a lease keep you from buying a home. I just wrote a check for $3,600 to pay off somebody’s lease. Why? Because the builder was paying me enough in my commission to cover that. We want to help you get out of your lease because you might lose the opportunity at home ownership because you’re trapped in the lease. You could miss the perfect opportunity because you said you were stuck in a 6 month lease. One of the things we know as experts, because we are landlords, is that we know how to get you out of the lease if you need to get out of your lease. I often times go to the apartment complexes and say, “What’s it going to take to get this tenant out of the lease?” They reply, “Oh, just give us 60 days notice and one month penalty.” I said, “Really? You mean this person is getting a $10,000 discount on this brand new home and all they need to do is come up with $900?” Don’t let a lease get you stuck. Will is out there with us looking at some USDA properties. I’m going to help him with his lease break out for $700. Or a free TV, whatever it is. Gotta make a living here! Don’t let a lease keep you from buying a home.

Tax benefits! This is the year! Write this down. Interest on home loans is tax deductible, but so are property taxes. So on a $1,250 payment which will support a $150,000 mortgage right now, most of that is tax deductible. What that means is you could be paying $930 rent right now and not want to go to $1,250. If you’re making $30,00 or $40,000 per year, that $1,250 after taxes is the same as the rent you’re paying now. What happens is the government figures it this way: let’s say a $1,200 payment over 12 months is $14,400 in interest and property taxes. They take your income, let’s say you’re making $50,000 per year, they subtract out the $14,400 off of your income and figure the taxes off of the difference, which is what, $35,600? So really, on a regular $150,000 mortgage, you save about $200 per month in taxes. People say “but that doesn’t help me right now, I’m trying to buy this house at $1,250. I’m used to $950.” Just go to your employer and claim more exemptions. Claim more of those things that give the government less money because you’re paying a house payment and your employer will actually pay more of your paycheck to you. So those are the secrets that you may not even know. A lot of people say “I can’t afford to pay a $1,500 payment. It’s completely out of my realm.” Really, if you’re comparing it to rent, it’s only a $1,300 or $1,250 payment. So the tax deductibility is a really big thing. Also, there are tax benefits when you sell it. The profit that Bonnie was talking about from selling a home can be tax free. So there’s some great benefits when you sell it down the line. Married couples? $500,000 tax-free if you live there for more than 2 years. So there’s huge tax benefits that most people don’t cover. Then the $8000 tax credit, that is a check to you. A gift from the government. We’re not IRS experts, but there are some rules you’ll need to follow so we’ll refer you to the IRS website. But we will certainly tell you that you will get a check back. You can even apply it to last year’s taxes. How do you do that? They let you amend last year’s taxes. After they amend the taxes and you close your home, they’ll send you the check for $8000, even if you did USDA zero down. Zero down, zero total move in and they’re going to send you a check for $8000 at 4 and ¾ or 4 and 5/8 interest rate. Come on guys! Let’s get out and look at some houses!