National Homeownership comes around every year in June. This annual celebration shines a spotlight on the significance of owning a home and the countless benefits it brings to individuals, families, and communities.  By becoming a homeowner, people get a step closer to the American dream.  Let's explore the origins of Homeownership Month, delve into the advantages of homeownership, and showcase some compelling statistics that highlight its positive impact.

The Origins of Homeownership Month

National Homeownership Month started as a week-long celebration of homeownership during the Clinton administration in 1995.

It was not until 2002, that it was officially recognized by the U.S. government to promote the value of homeownership and raise awareness about the opportunities it presents. It serves as a reminder of the American Dream and the importance of having a place to call your own.

Throughout June, various organizations, government agencies, and housing advocates come together to provide resources, education, and support to those aspiring to become homeowners.

What Are the Non-Financial Benefits of Homeownership?

Owning a home brings you and your family happiness, satisfaction, and pride.

1. Pride of Ownership: A place to call your own. You’ll be able to customize it according to your likes and personality without anyone telling you how.
2. Civic Participation: Homeownership creates stability, and a sense of community, and increases civic engagement.
3. Provides Stability and creates a positive environment for families.
4. Provides a Safe Place: Owning gives you a sense of security and privacy. Two things that have become very valuable in our lives.

What Are the Financial Benefits of Homeownership?

Buying a home is also an investment in your and your family’s financial future.

1. Forced Savings: Your monthly mortgage payment is a form of ‘forced savings’ which builds your net worth with every payment!
2. Home Equity: Homeownership builds equity every month. You can use that equity to start a business, pay off debt, send your kids to college and so much more.
3. Appreciation: Home prices increase annually which helps to create a safety net.
4. Net worth: A homeowner's net worth is 44x greater than renters! This gives you the financial freedom to invest.
5. Stability: Rent prices may increase each year. However, a fixed mortgage payment allows you to save for future projects and guard against inflation.
6. Tax Benefits: Speak with your CPA to discuss the possible tax benefits homeownership can bring you.

Homeownership Stats

• Homeownership in America is constantly on the move, in-fact, some 65.8% of Americans own a home as of 2022. 
• Millennials represent 43% of homebuyers, the highest share of any generation.
• The average age of first-time homebuyers in the US is 36 years old according to the National Associate of Realtors (NAR).
• U.S. homeowners on average have about $270,000 in equity, nearly $90,000 more than they had at the onset of the pandemic according to a CoreLogic report.

Bottom Line:

As we celebrate Homeownership Month in June, let us recognize the tremendous benefits that owning a home provides. From financial stability and tax advantages to a sense of community and personalization, homeownership plays a vital role in shaping individuals' lives and enhancing communities. Let us continue to support and empower individuals on their homeownership journey, creating a brighter future for all.

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Home Buyer Resources

To encourage and educate aspiring home buyers, Greenway offers free information and resources. You can visit us online to learn more.

• FREE First-Time Home Buyer eBOOK – Includes handy resources & checklists

• First-Time Home Buyer Resources – Learn about our First-Time Home Buyer Programs 

• Home Buying Comparison Chart - Take this chart with you during your home search

• Buying Your First Home – Learn everything you need to know

• Refinance Your Mortgage  - Get a free loan quote

• Renovation Mortgage Programs - Put your home improvement plan into action

• Construction Loans - Can't find your dream home? Build it with a Construction Loan

• FREE Construction Loan Guide Book - Learn everything you need to know about construction loans and the process

• Mortgage Calculators – We have an entire library of easy-to-use calculators!

• Mortgage Terms – Get up to speed on some mortgage terminology

• What to Expect During the Mortgage Process

• When Can You Cancel Your Private Mortgage Insurance? - Find out by using our easy calculator

• Get a FREE Pre-Approval

• Ready to get started? Apply Now using our online application.

 

There’s an important rule of thumb about income when it comes to applying for a mortgage. The numbers you report to Uncle Sam are the numbers lenders will use when making a decision about mortgage qualification.

Many borrowers make the mistake of confusing actual income with reported income. Think of actual income as gross income from full-time, part-time or self-employment, or some combination of the three. This is the total number before you write off any expenses at tax time.

For example, suppose your full-time salary is $70,000 and you make another $20,000 from your side job. Your actual income is $90,000. But that’s not the number we use when evaluating your mortgage application.

Reported Income Is All That Matters

At tax time, your accountant will probably write off work expenses. If you claim $15,000 in unreimbursed expenses for your full-time, salaried position and $5,000 from your side job, the taxes you pay will be based on an income of $70,000. That’s your reported income, which is what lenders care about.

Suppose you use Schedule C (Form 1040) to report your income from the company you run as a sole proprietor. You make $100,000, which sounds great. But you have to invest $30,000 into marketing, equipment, phone and internet in order to make that $100,000. You write off these expenses on Schedule C.

Your actual income is $100,000, but your reported income on your tax return is $70,000. That’s the number Greenway Mortgage or any other lender will use in your mortgage application.

To be clear, we’re not saying you shouldn’t claim every legitimate deduction to reduce your tax burden. You just need to understand that deductions reduce your reported income, which could affect your ability to qualify for a mortgage and your overall buying power.

If you’re thinking about buying a home and your accountant tends to be very aggressive in looking for deductions, discuss this with your Greenway Mortgage loan officer and your accountant, and be careful about the expenses you claim.

Tax Return Numbers Must Match Mortgage Application Numbers

We’ve also had clients who said, for example, they made $70,000 last year. But when we looked at their tax return, we find out that they reported a loss from their business. You can’t then apply for a mortgage, which is likely to be government-sponsored by Fannie Mae or Freddie Mac, and claim that you made $70,000. The government already knows that you reported a loss.

In other words, you can’t say one thing on your tax return and say something else on your mortgage application.

Another common point of confusion is unreported income. Borrowers will come to us and say that they make a lot of cash off the books, whether it involves bartending, landscaping or any other type of work for which they’re paid in cash.

If you don’t report that income to the government, and you don’t pay taxes on it, you can’t use it when you apply for a mortgage. Period.

Mortgage Lenders Should Ask for Your Tax Returns

They should, but not all do. Instead, they ask for information from a W2 or a recent pay stub. But tax returns are the only documents that paint a full and accurate income picture that can be used when evaluating a mortgage application.

This is why a pre-approval carries so much more weight than a pre-qualification. Pre-qualification is based on a phone conversation and gives you a general idea of how much you would qualify to borrow. Pre-approval is based on a thorough review of documentation, including your tax returns, and shows exactly how much you would qualify to borrow.

If you have questions about actual income vs. reported income, or you’re thinking of buying a home, contact us to start the pre-qualification process. And please, have two years of tax returns handy.

 

Key Points

• May is Home Remodeling Month
• The home improvement industry is flourishing
• Not all home renovations deliver the same ROI
• Top 10 home renovation projects with max ROI (according to Zonda Media’s 2023 Cost vs. Value Report)
• Greenway’s Home Renovation Loans

 

Are you wondering how much you may be able to afford for your home purchase?  It pays to know before you look for a home so you can focus on properties that are truly in your comfort range.

How Does Pre-Qualification Work?

Pre-qualifying for a home loan is the easiest way. Here’s how it works. To determine how much you may be able to borrow, we’ll ask questions regarding the source and consistency of your income and savings. We’ll also inquire about any existing debts you may have for cars, credit cards, education, or other types of loans. This is important because not all income can be used to qualify, and any ongoing monthly debts you have will reduce the amount considered available for your housing expenses.

Once we’ve completed the Q&A, we can calculate how much you may be qualified to borrow and how that translates into a comfortable home price. This will be based on:

• Current Rates
• Loan Type
• Down Payment
• Average Tax
• Insurance Rates  

Some mortgage payments may also include mortgage insurance or fees for a homeowners association, condominium, or co-op. We’ll take this into consideration too. Keep in mind that qualification factors can vary for different loan programs, and final approval can depend on other factors, such as credit scores and funds to close.

Work With An Experienced Mortgage Lender

With our experience we can help you discover the best programs and strategies to reach your dream home goals. That’s why it’s always worth your while to talk to us before you shop for a home. Want to learn how much home is within your grasp today? Reach out when you’re ready, and we’ll be happy to help.

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Helpful Resources 

• Loan Programs
• Pre-Approval Request 
• Homebuyer Guide
• First-Time Homebuyer Resources 
• Meet The Greenway Team

 

Did you know that investment funds may be hiding in your mortgage? It's true! You may have more to invest than you think. 

A mortgage is the single largest liability most people ever assume. Do your realize its proper management is as important as for any investment?

30-Year vs 15-Year Loan

Which is best the best option? A 30-year or a 15-year loan? Many homeowners want to pay their home loan off as soon as possible, but the value of putting their money into long-term savings and investments often trumps a rapid amortization of principal.

Why pay down the balance on a home loan, only to borrow again later to pay for the kids' college?

The differential savings of a 30-year loan vs. a 15-year option can be put in a 529 plan instead. The result is tax-advantaged growth over time and no uncertainty of borrowing at a potentially high rate later.

Have questions or want to learn more. Reach out! The Greenway Team would love to help and answer any questions you may have.