By David Pitt, AP Personal Finance Writer
DES MOINES, Iowa (AP) — It's a big year for Ashley Weller and Anthony Laubenthal. Like millions of other Americans, the 24-year-olds just bought their first home.
The high school sweethearts were engaged last July and hadn't given much thought to buying.
Then Weller's dad mentioned the $8,000 tax credit available to first-time homebuyers.
"We thought we could have more space, invest some sweat equity; not just pay somebody else and not get anything out of it," she said.
The couple, who works at Scheels, a regional sporting goods store in Des Moines, understood little about the home-buying process. Over the next couple of months, they learned about mortgages and not to jump too fast to buy the first house they liked. It paid off. In March they moved into a four-bedroom home with a backyard and a deck in Norwalk, a small suburb south of Des Moines.
A combination of government incentives and near record-low mortgage rates has prompted legions of first-time homebuyers to take the plunge. Buying a home can be exciting, yet daunting because it's a complicated process with potential pitfalls at every step. But, it doesn't have to cause anxiety if you plan and find the right professional help.As part of a week-long look at homeownership, The Associated Press examines the major steps along the path to buying a home. It's a first-time experience for many and knowing what to expect can prove invaluable.
SET A BUDGET
Weller and Laubenthal were paying $800 a month in rent. They concluded that for a little more, they could buy a home, build equity and gain tax advantages.
When weighing affordability, it's critical to factor in the tax advantages that homeownership provides. Namely real estate taxes, mortgage interest expenses and at least some mortgage insurance costs are deductible.
The IRS outlines home tax deductions at: http://tinyurl.com/y5x8gp8.
Although tax deductions are a plus, ultimately you have to make sure you can still make your monthly payment and have money left over to live on. It's helpful to use calculators like those available at the Federal Housing Authority website: http://tinyurl.com/2e9yz6.