Buying a home is the obvious next step in moving on in your personal life cycle and getting settled in a new country. Thanks to the American tax code and perceived & tangible social benefits, home ownership not only makes financial sense but also helps you get settled in the United States and add your flavor to the melting pot. As most reading this blog know, I graduated from college this summer and due to personal professional and personal choices, we continued living in College Station, Texas.
Largely a university town but coupled with Bryan, an older and more diverse town, this twin-city region is quite vibrant and has a booming economy thanks to the university. Few years back, this town may not have seen as our life’s starting point but given the low cost of living (no state tax either), excellent weather, plenty of cuisine options, and proximity to all major Texas cities (not more than 3 hours away) actually makes it a great place to live or at least begin your life. The cost of living makes a huge difference knowing how major capital expenses (home, car, and of course, kids) in your life occur when you start off [yes, I'm aware I lumped kids under capital expenses. It helps in making their lives worthwhile if you do than simply because it was time to have kids]. Of course, our parents are not exactly happy given that most of the non-resident Indians they see in movies live a great and glamorous life in New York City or precincts of Silicon Valley (thanks, K-Jo). How can they tell others that we live in a podunk Texan town (if pop. 130,000 is indeed podunk)? But we’ve given up living the lives that our parents envisioned for us long time back so no worries.
Having no student loans and a wife who has been working full-time for more than two years while I slaved toward my PhD albeit with a generous stipend gave us enough time to not only clear our debts but also save up a bit. Living in a rented apartment or home once you have stable jobs in a dual-income household makes little sense. Not only do you need more space for your growing needs but also siphoning away your rent money when in fact it could be used to build your equity in a home that you own makes financial sense. Did you know at least 90% (mortgage interest and insurance) of your monthly payments in the initial years of homeownership can be written off in your tax returns? In this town (or rather any) where the monthly mortgage payments are almost equal to your monthly rent, not availing yourself of the immense savings is almost criminal. Given the dire situation of the housing market, home prices even in this recession-proof town are at a historic low and to top that, we are eligible for the $8000 First-time Home Buyer Tax Credit. If I believed in them, I would say that the stars are aligning and the universe is conspiring in our favor. Heck, the U.S. Senate even thought it fit to extend the Tax Credit program until June when we decided not to rush into buying a home this year.
Given the aforementioned fact that we are debt-free, years of paying our credit cards on time, and having purchased only a reasonably-inexpensive car with a significant downpayment, our credit history is stellar to say the least. Credit scores in the high 700s and low 800s give us the best possible deal on mortgage loans and in fact, banks are falling all over us to get our business when we merely sauntered in to get a good faith estimate.
So in terms of appropriate time and financial health, we seem to be ideally suited to take the next step into becoming first-time homebuyers. In subsequent posts, I will share our experiences on how we went about making our decision and avoiding pitfalls that landed the collective us in the mess that most of this country finds itself in.