Parade of Homes

Financial Benefits Spark New Opportunities for Homebuyers

For more than 60 years, the Parade of Homes has been a Kansas City tradition for consumers shopping for a new home. This year’s event comes at an exceptional time for consumers taking a look at homeownership with a rare combination of low mortgage rates, competitive home prices and new tax credits for first-time homebuyers.

While housing values have increased steadily in recent years and made homeownership a valuable investment for many individuals and families, the slowdown in the nation’s housing market has helped make housing prices more competitive and eased inflation fueled by rising material prices and higher labor and land costs.

As the housing market heats back up – with many local indicators pointing in that direction – prices will rise too, making now a great time to buy for consumers who want to avoid paying more for a home down the road.

But if you think price is the biggest impact on your ability to afford a new home, you may be surprised. The interest rate you will pay on your mortgage is one of the most critical factors in determining how much home you can afford.

Consider this: an increase of just one point in mortgage rates will add about $130 to the cost of your monthly mortgage payment for a $200,000 mortgage. Over the lifetime of a loan, that one point difference will save you more than $46,000.

That’s why taking advantage of low mortgage rates before they rise can make such a tremendous economic impact when choosing to buy a new home. Mortgages rates are hovering around 6 percent for a 30-year fixed-rate mortgage. Yet with inflation on the rise, signs point toward the Federal Reserve raising interest rates over the next year which will lead to higher mortgage rates as well. Taking advantage of today’s prices and rates could save you hundreds of dollars in monthly mortgage costs and tens of thousands of dollars over the lifetime of the mortgage versus waiting to buy later.

The newest perk for first-time homebuyers can found within the housing stimulus package passed by Congress and signed into law earlier this summer. The law includes a tax credit of $7,500 for homebuyers who haven’t owned a home during the past three years. The tax credit is fully refundable, which means that if you normally pay $500 in federal taxes at the filing deadline, you would actually get back $7,000. If you’re expecting a refund of $1,000, the government would send you a check for $8,500.

The tax credit is an historic step taking by Congress to promote homeownership. Other tax credits are also available, including credits for purchasing homes utilizing energy-efficient and green technologies, which can further reduce your tax burden or add to your refund.

Consumers ready to take advantage of the financial benefits of new-home ownership can find more information online at www.kcparadeofhomes.com, the official Web site for the Parade of Homes. The site includes links to a host of resources for new-home buyers, including articles on the home-buying process and links to local home-building resources. Produced by the Home Builders Association of Greater Kansas City, the parade is a great tool to find model homes and community information to help you begin the search for your new home.