So you're considering buying a home.  Let's talk about it.

The benefits of home ownership can be separated into two categories:  financial and lifestyle

The lifestyle benefits are: 

Home ownership can provide you with the stability of being able to live in your home and make improvements that can increase the value of the asset.  You no longer have to worry about having your landlord selling the house you are living in and giving you 30 days notice to move.    Read more.

The financial benefits are:

1. $8,000 tax credit (if qualified).  This can be received as a refund paid directly to you even if you did not pay any taxes.  More information on the first-time home buyer’s tax credit can be found  here.
2. Interest deduction on all purchase money borrowed.  This means you will pay the interest with “before tax dollars” whereas when you pay rent it is always with “after tax dollars”.  
3. Principal reduction.  Each time you make a payment on an amortized loan a portion of the payment goes to reduce the principal.  This principal reduction increases your equity in the property.  Your equity is the difference between what you owe on the property and what it is worth.
4. When you sell your home that you have lived in as your primary residence for two out of the last five years, you can take up to $250,000 for an individual and $500,000 as a couple, in profits tax free. (Just make sure that you check with your accountant before you apply this advice, since tax laws are subject to change.)
5. When you improve your property you will reap the benefits of the improved value as well.
6. If you want to start a business or make an investment in another property down the road and you have built up some equity in your home, either due to appreciation, sweat equity or both, you can use the collateral in your home to obtain a loan to finance that venture.
7. Paying your mortgage on time each month will help you to build your credit rating and increase your ability to finance a business or other real estate investments in the future.
8. Most renters don’t have renter’s insurance (although you really should since it cost as little as $6-$10 per month,) so if the building burns down, none of your belongings or losses are covered.  When you own a home you must have insurance.  It is required by the lender.  So if you have a fire, your insurance will pay for your temporary housing while also paying to rebuild your home and to replace your personal possessions.  Since here is a lot to know about insurance that is beyond the scope of this article, it is important to discuss with your insurance agent what is covered and what is not.  Also be sure to ask him if his company offers a replacement cost policy or if they depreciate the value of your things and pay you less than it will cost to buy all new stuff?

 
Clearly there is a lot to be gained from owning your home. To learn more about home-buying please feel free to contact us or continue to browse the pages in our website.