Buying a House

The purchase of a house may be the single largest financial transaction in your life. It can be a smart financial investment as well an emotional investment.

The right choice can turn into a great financial investment. With appreciation of value, you can earn equity by just paying your note, insurance, and taxes.

Owning a home has tax advantages over renting. Interest paid on a mortgage and property taxes are tax deductible. This means that your gross income is reduced by the amount of the total interest you paid for a year on your mortgage and any home equity loans and the amount of property tax you paid. Your primary home in Louisiana can be exempt from taxes on the first $75,000 of value.

Your housing costs become stable with fixed interest mortgage. If you purchase a home with a fixed-interest mortgage, your monthly note will not change over the course of the loan. Rentals are locked in only for the short term of a lease. If you make escrow payments, that portion of your payments may vary, however, as insurance premiums and taxes change.

Owning a home provides you freedom of enjoyment. If you don’t like the color of the walls, paint them. No landlord will tell you how to use the property. However, be sure to check for covenants or restrictions within your neighborhood.

Know what factors are most important to you…location, number of bedrooms, school district, enclosed garage, gas vs. electric, etc.

Know what contingencies will be involved such as you have to sell current home first

Know how much you want to spend

Don’t make any major purchases when you are preparing to make an application for a mortgage. This would include automobiles, furniture, etc.

Don’t move a lot of money around. When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts. If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them. The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Get a blank Uniform Residential Loan Application and fill it out. This will get your organized and you’ll be ready the first time you meet with a banker or mortgage broker. We will be happy to help you with this.


Contact me for your real estate needs.