Why
buy a home instead of rent one? Until recently, homeownership
was within the reach of just a few. You may want to have
a place you can call your own, or have a secure place to invest
your hard-earned money. Owning your own home has many benefits
both tangible, like tax deductions, and intangible, such as having
a yard for the dog you've always wanted.
Savings
Goals
When your buy a home, your monthly payment
serves as a type of scheduled savings plan. Over time, you gradually
accumulate what lenders call "equity" - an ownership
interest that you can borrow against or convert into cash by selling
the house. When you rent, your payment does not allow you the
opportunity to build financial equity. To determine whether it
is worthwhile for you to buy a home or continue renting, try this
calculator.
Housing Costs
Another advantage of home ownership is that
while rent typically increases from year to year, the principal
and interest portion of most mortgage payments remained unchanged
throughout the term of the loan (fixed rate loans). Even payments
to variable rate loans change with more predictability than many
rental payments. In fact, because of the effect of inflation,
this means that over the years, you pay the same amount but with
ever "cheaper" dollars.
Investment
Homes typically increase in value, or "appreciate,"
over the years. It's not unusual to find a house that sold
for $50,000 fifteen years ago to be valued at much more than that
today. This increase, or price appreciation, adds to the equity
you build with your monthly mortgage payment, which becomes profit
if you ever sell your home. The housing market fluctuates,
however, so appreciation should not be your primary motivation
in purchasing your home.
Tax Benefits
Homeowners also get significant tax breaks
that are not available to renters. Property taxes and interest
paid on a home mortgage are usually tax deductible. This alone
can save you a substantial amount each year in federal income
taxes.
To find out more about how homeownership can benefit you, call
or write Lynn today!
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