Home Ownership
If you are still not completely sure if owning a home is the right decision for you, there are some important things you should consider. Whether you are buying your first home, relocating, investing, or meeting the needs of a growing family, home ownership is, in the long run, less expensive than renting.
Buying VS Renting
Owning A Home Gives You Financial Options
A rent payment of $1000 a month costs you $60,000 in 5 years. A similar house payment, assuming an interest rate of 8% or less on a 30 year mortgage, would enable you to buy a home at a sales price of approximately $125,000 with a down payment of 10%. After 5 years, you would have reduced your loan principal by $5,546 and gained on the entire value of the home through appreciation, not just your down payment. That is known as leveraging.
A Home is a Good Hedge Against Inflation
While it’s true that some homes appreciate faster than others, and some years are better than others, real estate has always been known to keep pace with inflation in the long run. In fact, appreciation rates are usually well ahead of inflation rates, so buying a home is good protection.
Owning a Home Gives You Freedom
When you own your home, you make decisions to please yourself. You can make improvements knowing that the money you spend will improve your home’s resale value, and put money in YOUR pocket, not your landlords. You can choose the neighborhood that complements your personality, and offers the services and atmosphere that you and your family desire.
Tax Advantages of Owning a Home
Mortgage interest and real estate taxes are tax- deductible.Iin a 28% tax bracket, this benefit effectively reduces your effective monthly payment from $1000 to about $754. Consult a CPA for current tax law. |
