Dan Rowe ABR CRS GRI
Dan Rowe Realty
911 Balsam Boise ID 83706
What Future Home Buyers Need To Know
As an Idaho real estate agent, broker and Realtor since 1991, I have helped many first-time home buyers achieve the dream. I find teaching new buyers to be a most rewarding part of my job. Helping you build wealth through real estate is what I do, but that first home is paramount.
Why you should buy a home soon as possible:
Unless home prices are falling or are about to, you should not wait to buy a home. The primary residence is the foundation upon which most Americans build for retirement. Your home is the best investment you can make for many reasons.
Paying rent IS buying a home- for your landlord. Unlike rent, every monthly mortgage payment reduces what you owe, until one day- you have no mortgage payment, only taxes and insurance. Trust me- it feels great. And it may not take 30 years- a few extra payments can knock years off and save you tens of thousands in interest payments.
With rents rising, you may save monthly by purchasing a home. However, the REAL money in owning a home is in long-term tax-free appreciation. I've seen many smiling faces at closing when my sellers walk away with tens to hundreds of thousands that would have taken them years to make on a job. Gains on your primary residence are exempt from capital gains taxes (up to $250k single, $500k married). To qualify, you must live there 2 out of the last 5 years before you sell.
Long term, owning real estate is a sure thing because they don't make any more of it. Homes have appreciated on average 3-4% per year over the last 70 years. It's your best hedge against inflation and especially now.
This will make you smack your forehead if you haven't purchased a home yet... As of July, the median existing home price in Ada County has risen 134% in 5 years! So in 5 years, a median priced home would have added over three hundred thousand dollars to your net worth since then. It's not too late to start building equity.
The #1 reason to buy a home now is low mortgage interest rates. While up a little from all-time lows, rates are still well below the long term average, making this a good time to lock in low payments you can afford.
Do you qualify? Don't guess. KNOW. Call/text me 208-866-3481 and I will refer you to proven local lenders.
How Much Money You Need to Buy a Home
Your next month's rent may be ALL you need to buy a home. I recently helped a first-time home buyer, who needed only a half percent down payment using an Idaho Housing program. The seller paid all of her closing costs because we structured the offer that way. She bought a home for less than $1200 out of pocket, including a home inspection.
Cash required depends on the financing program you qualify for. Typical buyer closing costs with a loan are almost 3% of the purchase price, including prepaids and reserves for taxes and insurance. Sellers can pay buyer closing costs and it is getting much easier to achieve in this softer market.
Now let's cover down payments for various loan programs:
VA Loans are zero down with no monthly mortgage insurance, which saves the buyer hundreds per year, compared to other low-down financing options. I have helped many veterans get closing costs paid and ALL of the earnest money back at closing, costing the buyer nothing out of pocket.
FHA loans are the easiest to qualify for with lower credit scores. FHA requires 3.5% down payment, which can be a gift from family or be borrowed in some cases. FHA loans have recently lost popularity because now the monthly mortgage insurance never drops off, requiring a refi to drop it after you reach 20% equity.
IHFA (Idaho Housing) loans are for first-time (not owned in the last 3 years) buyers who make less than the median income. See their website for income table. Idaho Housing works with many lenders and offers help in the form of second loans or grants to cover the down payment and some closing costs. Earnest money may be all you need to buy a home.
Rural Development Loans are zero-down loans for lower income buyers in less populated areas. Last I checked, only areas in Kuna & Star qualify in Ada County. In Canyon County, the Middleton area, areas West of Caldwell, areas South of Deer Flat Rd near Nampa qualify. Refer to the RD map for areas that qualify.
Conventional (non-government) Loans require as little as $500 down with golden credit, but most home buyers will need at least 3-5% down payment. This depends on the condition of the home, price range and other factors in an ever-changing mortgage market.
Buying a Home- Step #1 Get Qualified For Loan
Are you even in the ballpark? I can pre-qualify you with a short Q&A on the phone and refer you to a reputable local lender. For little more than an hour of your time and the cost of a credit report, a lender can tell you exactly what your options are in financing a home purchase. Before you look at any homes, you need to know:
Get proof you qualify. Having a pre-qualification or pre-approval letter from your lender not only prevents you from wasting time on homes you can't buy, but also puts you in the strongest bargaining position with sellers. Many sellers will not even consider your offer without proof of qualification. Take the first step and get pre-qualified.
Who is on your side in a real estate transaction?
The lender? Maybe. The company exists to make money by originating loans, although your loan officer might be personally sympathetic to your interests.
The Title Company? No- impartial as a neutral 3rd party with equal obligations to buyer and seller.
The listing agent? No- most likely under contract to represent the seller, possibly able to partially represent both sides, but not fully and exclusively for the buyer.
An agent working with the buyer? You might assume so, but not without a contract for representation. In Idaho, only signing an Exclusive Buyer Representation Agreement holds your agent to the highest legal standard in representing your interests as a fiduciary.
See my article Why Use A Buyer's Agent and Why Me.
Learn more about buying a home in SW Idaho and the home-buying process on my website: See my Blog, my Market Monitor and Newsletter for more details on Boise real estate, housing markets, supply & demand levels and much more.