Navy Fellas Realty Group

Real Estate, Residential sales and purchase

5 Ways Owning a Home Builds Wealth

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Owning a home is a milestone that goes beyond providing a roof over your head. It’s one of the most significant ways individuals can build wealth over time. Unlike renting, homeownership offers financial and personal rewards that grow with time and care. Let’s discuss five ways owning a home can help build long-term wealth.

1. Appreciation Over Time

Real estate historically appreciates in value. While market fluctuations can happen, home prices generally trend upward over the long term. For example, a home purchased for $250,000 today might be worth significantly more 10-20 years later. This appreciation creates equity, which is the difference between the home’s market value and the remaining mortgage balance. Over time, this equity can be a substantial financial asset.

2. Forced Savings Through Mortgage Payments

Unlike rent, which doesn’t build any ownership, each mortgage payment chips away at your loan balance. This process builds equity in your home—a form of forced savings. Over time, you’re essentially transferring money from your pocket into a growing asset. When you eventually sell or refinance, this equity becomes available, providing a solid financial boost.

3. Tax Benefits

Homeownership often comes with significant tax advantages. Mortgage interest and property tax payments are typically deductible on federal tax returns, reducing your taxable income. Some states offer additional tax incentives for homeowners. These deductions can save you thousands of dollars annually, leaving more money in your pocket to invest, save, or use for other financial goals.

4. Rental Income Potential

Owning a home opens the door to passive income opportunities, such as renting out a portion of your property or transforming it into a vacation rental. Whether it’s a spare room or a fully independent unit, rental income can cover your mortgage payments or fund other investments, further enhancing your wealth-building journey.

5. Stability and Wealth Preservation

Homeownership provides financial stability and a hedge against inflation. Rent prices tend to increase over time, while a fixed-rate mortgage payment remains consistent. As your income grows, your housing expense becomes a smaller portion of your budget, leaving more room for savings and investments. Additionally, owning a home gives you control over your property, eliminating the risk of being forced to move due to a landlord’s decisions.

The Long-Term Impact of Homeownership

Owning a home is more than just a personal achievement; it’s a steppingstone to financial security. By building equity, benefiting from tax advantages, and potentially generating rental income, homeowners create wealth that can be passed down through generations. It’s an investment in both your present comfort and your future prosperity.

If you’re considering buying a home, start by understanding your financial goals and exploring mortgage options that fit your needs. The path to homeownership might seem challenging, but the long-term rewards are worth it.

Looking Ahead with Gratitude and Hope

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As the holiday season surrounds us with its warmth and cheer, we reflect on the incredible connections we’ve made this year. To our valued clients, whether we’ve worked together already or you’re considering partnering with us—thank you for trusting us to be part of your journey.

This season is not only a time for celebration but also a moment to appreciate the opportunities ahead. We’re truly grateful for the chance to help you achieve your dreams, whether it’s finding the perfect home or planning for a brighter financial future.

As we step into the new year, we’re filled with hope and excitement for what’s to come. May this holiday season bring you peace, joy, and cherished moments with loved ones. Here’s to a wonderful year ahead filled with growth, opportunity, and success!

Happy Holidays and best wishes for a prosperous New Year!

Can I Buy a Duplex with an FHA Loan?

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If you’re in the market to buy a duplex or similar multi-unit property, you may be wondering whether you can use an FHA loan to finance your purchase. FHA loans are well-known for helping first-time homebuyers, but they can also be used to purchase duplexes. Here’s everything you need to know about FHA loans, how they work, and whether they’re a good fit for your homebuying plans.

What is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, designed to make homeownership more accessible. These loans come with lower down payment requirements, making them ideal for buyers who may not have substantial savings. FHA loans also have more lenient credit and income qualifications compared to conventional mortgages.

How FHA Loans Work
FHA loans are particularly useful for individuals with limited financial resources. The government-backed insurance provided by the FHA reduces the lender’s risk, allowing for more flexibility in loan approval. This means that borrowers with lower credit scores or those who can’t afford a large down payment may still qualify.

Can FHA Loans Be Used for Duplexes?
Yes, FHA loans can be used to purchase duplexes. Buying a duplex with an FHA loan is a smart way to invest in real estate while also securing a place to live. The key condition is that you must live in one of the units as your primary residence, but you can rent out the other unit to generate income that helps offset your mortgage payments.

Requirements for FHA Loans
To qualify for an FHA loan, there are specific requirements you need to meet:

  • Credit Score: A credit score of 580 is typically required for a 3.5% down payment, while a score as low as 500 may qualify you for a 10% down payment.
  • Debt-to-Income Ratio: You must demonstrate a manageable level of debt to income.
  • Primary Residence: You must live in the property you are purchasing, although you can rent out the other unit if it’s a duplex.

FHA Loan Benefits for Duplex Buyers
Buying a duplex with an FHA loan offers several advantages. Not only does it allow you to secure a home with a lower down payment and more flexible credit requirements, but it also gives you the opportunity to generate rental income. This rental income can help you cover part or even most of your monthly mortgage payment, making homeownership more affordable.

Mortgage Insurance for FHA Loans
One important aspect of FHA loans is mortgage insurance. FHA loans require both an upfront mortgage insurance premium and an annual premium, which is spread out across your monthly payments. This is something to consider as part of your overall cost when planning to use an FHA loan to buy a duplex.

How to Get an FHA Loan for a Duplex
To start the process, ensure you meet the basic eligibility requirements. Next, you’ll want to compare loan offers to find the best terms for your situation. FHA loans are available through a variety of lenders, so it’s a good idea to shop around. You’ll also need to prepare for the loan application process, which will include providing financial documents, proof of income, and undergoing a credit check.

Is an FHA Loan Right for You?
If you’re a first-time buyer or someone without a large down payment, an FHA loan could be a great fit for purchasing a duplex. The potential to generate rental income while also benefiting from the low down payment requirement makes it an appealing option. However, keep in mind the ongoing mortgage insurance costs and the requirement to live in the property.

In summary, using an FHA loan to buy a duplex is not only possible, but it’s also a smart investment strategy for those looking to enter the world of real estate with more affordable terms. Explore all of the options and find a loan that works for your financial situation.

What’s Ahead For Mortgage Rates This Week – December 23rd, 2024

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The rate cut by the Federal Reserve was hotly anticipated, and as predicted, they proceeded with the reduction, signaling the possibility of further cuts depending on inflation data. Although markets were generally receptive to the positive news, other government-related issues had dampened the high spirits temporarily. Outside of the rate decision, the PCE Index (the Federal Reserve’s preferred inflation indicator) has performed positively by beating the forecast. In addition, the Consumer Sentiment was exactly where it should be as expected.

PCE Index

The PCE index increased a scant 0.1% last month, the government said Friday. That’s the smallest rise in three months and just half as much as economists polled by The Wall Street Journal predicted. The barometer of U.S. inflation favored by the Federal Reserve rose more slowly than expected in November, breaking what appears to be a gradual drift higher in prices that forced the central bank to scale back plans to cut interest rates.

FOMC Rate Decision

The Federal Reserve on Wednesday cut interest rates by a quarter point, the third rate cut since it began to lower borrowing costs in September. The central bank’s latest move leaves its benchmark lending rate at a range of 4.25%-4.5%, a two-year low.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.08% with the current rate at 5.92%
• 30-Yr FRM rates saw an increase of 0.12% with the current rate at 6.72%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.10% for this week. Current rates at 6.42%
• 30-Yr VA rates saw an increase of 0.10% for this week. Current rates at 6.43%

Jobless Claims

Initial Claims were reported to be 242,000 compared to the expected claims of 220,000. The prior week landed at 224,000.

What’s Ahead

With an extremely light release schedule ahead of Christmas, the jobs release data will be the only important release.

First-Time Homebuyer Checklist For Success When Embarking On The Homebuying Journey

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Purchasing your first home is an exciting milestone, but it can also feel overwhelming without a clear plan. With so many moving parts, from financial prep to evaluating potential homes, having a comprehensive checklist can help simplify the process. Here’s everything you need to consider to make your home-buying journey smoother and more successful:

1. Get Your Finances in Order

  • Check Your Credit Score: Lenders rely heavily on your credit score. Aim for a score of 620 or higher to qualify for a conventional loan, though some programs accept lower scores.
  • Save for a Down Payment: Depending on the type of loan, you may need anywhere from 3% to 20% of the home’s price. Be sure to budget for closing costs and emergency funds.
  • Get Pre-Approved: A pre-approval letter strengthens your position when making offers. It shows sellers you’re serious and capable of securing financing.
  • Consider First-Time Buyer Programs: Look into local, state, or national programs designed to assist first-time homebuyers with down payments, tax credits, or low-interest loans.

2. Determine Your Budget

  • Know Your Monthly Budget: Factor in mortgage payments, taxes, insurance, and potential maintenance costs. Leave room for unexpected expenses!
  • Factor in the Long-Term: Think about future life changes—do you plan to expand your family? Relocate for a job? Buy with a forward-looking approach.

3. Start the Home Search

  • List Your Must-Haves vs. Nice-to-Haves: Prioritize things like location, the number of bedrooms, and school district over less critical features like a pool or finished basement.
  • Work With a Real Estate Agent: Partner with an agent who understands your needs and local market trends, providing valuable insights and helping you find the best options within your budget.

4. Visit Properties & Make a Decision

  • Attend Open Houses and Viewings: Bring a checklist of what to look for—condition of the roof, HVAC system, foundation, and neighborhood noise levels. Take photos and notes for future reference.
  • Ask Questions: What’s included in the sale? How old are the appliances? What’s the community like? Knowing the details can help you avoid future surprises.
  • Look Beyond the Surface: Fresh paint may hide issues. Inspect areas like the basement, attic, and behind large appliances for potential red flags.

5. Seal the Deal

  • Make an Offer: Your agent will help you craft a strong offer based on comparable properties and market conditions. Be prepared to negotiate!
  • Schedule an Inspection: A home inspection ensures the property is in good condition. If issues arise, you can request repairs or adjust the offer accordingly.
  • Close the Deal: Once everything checks out, you’ll finalize your mortgage, sign the paperwork, and receive the keys to your new home!  Buying your first home can feel daunting, but by following this checklist, you’ll have the confidence to make informed decisions at every step. 

 

How Younger Homebuyers Can Make A Dream Into Reality

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For many younger individuals, especially those in Gen Z, the dream of owning a home can feel distant amid rising home prices, mortgage rates, and inflation. With these challenges, it’s easy to wonder if homeownership is truly within reach. While the current housing market may seem daunting, it’s important to know that it’s still possible to become a homeowner with the right strategies and support. With professional guidance, you can navigate the obstacles and achieve your goal of owning a home.

Here are some helpful tips for younger homebuyers to make their dream a reality.

1. Explore Your Options for a Down Payment

For many first-time buyers, the down payment is often the biggest hurdle. The good news is, there are several options available to help with this critical step. In fact, over 2,000 down payment assistance programs exist to make homeownership more achievable. Many younger buyers may not realize that putting 20% down isn’t always necessary. Depending on the type of loan and lender, a lower down payment could be sufficient. Additionally, a significant number of Gen Z homebuyers have received financial support from family members to help with their down payment. Working with a trusted mortgage professional can help you understand how much you’ll really need for a down payment and how you can take advantage of any available assistance programs or gifts.

2. Live with Loved Ones to Boost Your Savings

An increasing number of younger buyers are choosing to move back in with family or friends to boost their savings. By cutting down on housing costs, you can save a larger portion of your income toward your future home. According to Bankrate, 30% of Gen Z homebuyers move directly from living with family to purchasing a home of their own. This strategy helps increase your financial security, allowing you to reach your savings goal faster while benefiting from lower living expenses.

3. Cast a Broad Net for Your Search

Once you’ve saved enough for a down payment, it’s time to start your home search. Given the current challenges in the market, it’s important to broaden your search and remain flexible. Working with a professional real estate agent can help you explore neighborhoods and home types that you might not have initially considered.

4. Take a Close Look at Your Wants and Needs

When it comes to finding your first home, it’s essential to distinguish between what you truly need and what would be nice to have. Your first home doesn’t have to be your forever home. It’s more important to focus on securing a property that allows you to start building equity. Being open-minded and willing to make some compromises on your wish list can make a big difference. Working with a real estate agent will help you prioritize your must-haves and focus on homes that align with your budget and long-term goals. They’ll also explain how buying a home now can eventually lead to moving into your dream home as your equity grows.

While the path to homeownership may not be simple, it is achievable, especially with the right strategies and expert advice. By exploring down payment assistance options, living with loved ones to save more, and being flexible in your home search, you can bring your dream of homeownership closer to reality. Working with experienced professionals will guide you through the process and ensure that your first step into the housing market is a successful one.