Home is where the heart is.

Because of low interest rates: (yes, they are still very low), the buzz lately has been all about home purchase. For many folks the real question is where to begin?
Owning a home versus renting does have merits even if it begins with a simple exercise in math to bring the true picture to life. The exercise makes even more sense if the prospective homebuyer has no children. Having assets of significance can make all the difference when times become tough, or dare we think it, retirement age looms and we need a nest egg to pay for managed care and assisted living.

The only tools required for this exercise are a calculator, pen and paper. The calculation starts with the number of months rent has been paid during this period, (over years), multiplied by the monthly rent paid out.

How long have you been renting?
The daunting surprise maybe revealed by the total. Be warned, this number could be shocking, so make sure you're sitting down!

Exercise example: Rent = $1000
One year = 12 months.
Rent Period is 5 years or 60 months.
The total dollars, $60,000
Where did this money go and who benefited?

If this money had been applied to a home purchase, here are a few of the direct benefits over those five years:
1. Reduction of mortgage (based on the loan type).
2. Home appreciation.
3. Return on taxes paid, including taxable income.
4. If investment property is purchased, this may offer income after expenses, another term for this is CASH FLOW.

The following are a few ideas to help begin a home ownership plan.
1. Establish a separate home saving account at your bank or credit union. If possible the account should be interest baring. This money is strictly for home purchase and no other expenses.
2. Find out your credit score, sometimes called the FICO. This is a must. For resources go to the link options. If you have an unsatisfactory score (under 500), work on improving it.
3. Study your intended purchase market. Should you buy here, or should you consider finding a more affordable area? How much must be saved to afford the down payment for this area?
4. Start today!
If you have questions, contact a mortgage specialist, or even our BP Mortgage Sponsor.

• Money Mortgage Loan Center
• Money Mortgage Calculator
• FICO Score