Buy A Home
Advantages of Home Ownership
Independence & Self Determination – You never know when the landlord might raise the rent, or decide to sell the property, or move his Aunt Edna in, while telling you to move on. You may not be allowed to have pets, not be allowed to paint or decorate the way you want, or have other restrictions as to the way you live in your home. Buying a home can help eliminate those issues and put you in the driver’s seat.
Income Tax Deductions – Generally, any interest you pay on a mortgage used to purchase or improve the property, as well as property taxes and possibly private mortgage insurance may be deductible as expenses on your income tax returns.*
Leverage – With a down payment as low as 3 1/2% if using an FHA loan, you can control 100% of a property, and have the option to have pets, paint, remodel and decorate without the consent of a landlord.
Hedge Against Inflation – Long before people saw homes as great investments, or a piggy bank to use for vacations and plasma TV’s, this was one of the main reasons people bought homes. When you secure a home with a 30 year fixed mortgage, you know your monthly payment will always be the same. Inflation will cause rents to rise over time, but it’s safe to say that if you keep your home for 15 years, the monthly payment you may find challenging today, will likely be a bargain compared to renting down the road.
Equity – As we’ve seen over the past 10 years, housing prices can rise and fall, but over a long period of time, prices can generally be expected to rise and provide homeowners with equity over that period.
Disadvantages of Home Ownership
Moving – Many people are in professions that require them to move frequently. If you think you could be in a situation of having to look for a job in another area or don’t plan to be in the area for at least 3 years, buying a home may not be a worthwhile investment.
Stretching Finances – Despite the recent reduction in property values, buying a home requires a modest down payment and what will likely be somewhat higher monthly costs initially than what you can rent for. If you’re comfortable stretching your finances for the benefits of home ownership, that’s great, but sometimes, as many have encountered in this past recession, the benefits may not outweigh the risks if you’re cutting it too close.
Responsibility – When you rent, it’s someone else’s problem if the roof starts leaking, or a pipe breaks. When you buy a home, all that responsibility falls on you.
Price Declines – As we’ve found out in the last decade, real estate can go up or down in value. Nobody can predict with any degree of accuracy when the market will rise or fall.
People Involved in The Home Purchase Process
Listing Agent – Hired by the seller to market the home, and will represent the seller in any subsequent purchase negotiations and resulting transaction.
Buyer’s Agent – Works with a potential buyer to help identify a property to purchase, and will represent the buyer in any subsequent purchase negotiations and resulting transaction.
Mortgage Broker – Takes the loan application, runs credit reports, helps with any issues or concerns that arise, and then packages the application for review by the lender’s underwriters. Mortgage brokers can be independent or work directly for a large institutional lender. See more information on our Loan Information page.
Appraiser – The appraiser is hired by the lender. Their job is to verify that the purchase price that the buyer offered is consistent with recent comparable sales in the areas. Despite the fact that the appraisal is paid for by the buyer, the appraiser is hired by the lender to protect their interests. Appraisers are not neutral 3rd parties, and are not there to provide protection to the buyer or to provide a completely objective appraisal of the property. They have a copy of the purchase contract and know the price agreed to and contract terms when they review the property.
Escrow Officer – A neutral 3rd party that handles the transfer of all money and property between the buyer and seller. The escrow officer operates with written instructions from both buyer and seller, and can only proceed to closing when all parties are in agreement. See more information about escrow on our What is Escrow?
Inspectors – Inspectors can be hired by either the seller or buyer to provide information on different aspects of the property. Generally, the buyer is responsible for the cost of any desired inspections they want to complete. See more about this on our Inspections page.
Getting pre-approved for a loan is highly recommended prior to beginning your home search. Pre-approval means that your application, credit report, and all other documentation has been sent to and approved by an underwriter at a direct lender. They will make a firm commitment to loan you the necessary funds with specific terms, conditional upon the property you choose. Occasionally, some mortgage brokers will look at your information and, based upon their judgment, issue you a letter of approval. This is actually considered a pre-qualification, and is not a guarantee that you will be able to obtain the desired loan
Our experience with Ken was the best experience we could have ever hoped for! Ken is such a knowledgeable, experienced, patient, and trustworthy agent. We were first-time homebuyers who decided to buy in CA’s toughest market when it was molten hot due to the pandemic, sending people out of the city and into the burbs. We could not have been more clueless, but Ken coached us and gave us the space to learn what it really was we wanted; never rushing or pressuring us into decisions. Every time we were met with disappointment and every time wanted to give up, Ken reassured us it was going to work out. It did, and we are glad we listened to him. Thank you, Ken!John K.—Walnut Creek
I don't usually write reviews but the experience I had with Ken Jacobs was such an amazing one, I really felt the need to. As we looked for a new home, Ken paid close attention to what we did and did not like to really formulate the vision of our perfect home. Multiple times when we thought we wanted to put in an offer, Ken would review the disclosures and issues with each home, even warning us when he thought it wasn't the right house for us. We never once felt rushed and now that we are in our new home, I can't even begin to explain how happy we are that we waited for the right one. Before we submitted an offer, Ken thoroughly explained everything, from the types of contingencies to the fine print in each document. Once our offer was accepted, I thought Ken's role in the process was nearly complete but I was wrong and in the best way possible. Ken continued to help us from coordinating post-offer inspections to facilitating different contractors coming to the house for minor repairs, and everything in between. Even after we moved in, Ken came to the house to answer miscellaneous questions. I dreaded that deciding on the biggest purchase of my life would be stressful and complicated, yet Ken made buying a house such a better experience than I could have imagined. Now I have a trusted agent for any home I buy or sell in the future. Thank you for such an amazing experience!Daniel & Livia P. - Pleasant Hill