Why Should I Buy a Home?
If you are
like most first time home buyers, you may be wondering if buying a home
is the right thing to do. You have a
nice apartment, reasonable rent, a good landlord and a great location.
Why would you want to buy a home and lose all of that.
Well, there are several advantages there owning a home has over renting
(When I refer to a home, I am including condos as well as single
families). In the end, it is a lifestyle and financial choice that only
you can make.
The
American Attitudes About Homeownership survey found that in today’s
challenging economy, 95 percent of owners and 72 percent of renters
believe that over a period of several years, it makes more sense to own
a home. In addition, an overwhelming majority of home owners are happy
with their decision to own a home – 93 percent of owners surveyed would
buy again.
Home
ownership isn't for everyone, because with it comes responsibility.
Paying the mortgage on time, paying the property taxes and insurance
(luckily, most of the time they are included in your mortgage payment),
maintaining and repairing your home and keeping up with the maintenance
of your property's landscaping (though you can avoid most of that with a
condo) are the major duties you will have as a home owner. There are
some people who just don't have the discipline to own a home. Others
just don't want the responsibility, or like the freedom to be able to
move whenever they want (at the end of their lease) and are willing to
give up the advantages that come with ownership. If you cannot commit to
staying in one place for at least a few years, then home ownership may
not be for you. At least not yet.
Along with
those responsibilities comes a host of simple pleasures. Being able to
remodel and decorate your home any way you like. Landscaping your
yard (wait, wasn't that on the list of responsibilities?) or having a
garden. In fact, just having a yard is nice. Someone just told me that
all kids should have grass to play on, and I agree. Playing your music and/or
video games LOUD (might be an issue with a condo) is something you
relish after living in an apartment for years. Having the space to
have a home office, game room, (wo)man cave. Just the feeling and
satisfaction of owning your own home is awesome.
Buying a
home is one of the most important financial decisions you'll ever make.
A home can be an excellent investment because most real estate increases
in value over time. No, it may not happen in a year, but it will
eventually increase in value. Real estate, like many other things that
are tied to the economy, have their ups and downs. But in the long run
real estate is always a good investment. Even with the downturn in the
real estate market in the late 2000's, real estate out-performed the
stock market.
Home ownership also brings
many tax benefits including deductions for mortgage interest and
property taxes. When it's time to sell your home, you can make up to
$250,000 profit without paying a dime in capital gains tax!* If you are
a couple, that increases to $500,000! What other investment can you make
with this type of tax-free profit? When you consider the actual amount
of money you actually put down, it is an incredible return on
investment!
* You must live in the home for at least 2 years.
Talk to your tax professional for full details.
Home
ownership is less expensive than renting in most cases. One of the major
reasons is because of the tax savings through the deductions that you
receive, and mortgage interest is one of the largest. During the first
several years of home ownership, the great majority of your mortgage
payment is deductable. This will reduce the amount of tax you owe, or
increase the size of your income tax refund. If you are in the 25% tax
bracket, and your mortgage payment is $1500 per month, that means you
will save about $3300 in taxes (based on a $296,000 mortgage at 4.5%
interest). Compare this with paying rent, which is not deductable on
your federal tax return. If you are paying $1200 a month for rent, then
a $1500 dollar mortgage payment is about the same after the tax savings.
The
financial considerations are not the most compelling reason to buy a
home. Pride of ownership is probably the #1 reason why people own a
home. Home ownership gives you and your family a sense of security and
stability. The landlord can't raise your rent - your payment will stay
the same with a fixed rate mortgage, though taxes may (ok, will)
go up. There are no pet policies with a single family home, so you can
have that 12' boa constrictor you always wanted. Sometimes you just get
sick of moving every couple of years, especially as you get older (not
old, just older).
In the end,
buying a home is a personal decision that only you (and your family) can
make. You shouldn't let anyone pressure you into, or out of, buying a home. Make
the decision on based on your own personal reasons and finances.
If you have
any questions, contact a Realtor at Armstrong Field Real Estate and you
will get an honest answer with no pressure. We do not want to sell you a
home that you cannot afford. We get the majority of our business from referrals, and our
clients won't refer their friends and family to us if they felt they had
a bad buying experience. We are fully committed to protecting our
clients and their assets. We are proud to say that in the last few years
with the struggling economy, none of our clients have had their homes
taken by foreclosure.
TAKE THE NEXT STEP:
FINANCING
YOUR
HOME
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