While becoming a homeowner comes with a lot of responsibility, there is also a lot of rewards. Here are some of the main reasons people choose homeownership over renting.
You Enjoy Significant Tax Deductions – Owning a home can reduce the amount you pay in income taxes each year. Out of your monthly payments a significant portion may be a tax write-off for you. A tax write-off helps to reduce the amount of taxable income. Rent has never been tax deductible. Interest and property taxes are the main items that may reduce your taxable income. Ask us how much of your new home payment may be a write off!
Hedge Against Inflation – This is a fancy way of saying that your payments won’t go up! In fact, parts of your payment may go down—like if your new loan has mortgage insurance. Mortgage insurance eventually falls off. The best way to quantify this is to remember what you were paying for rent 10 years ago. Rent usually doubles every 10-12 years. Your wages and rent will tend to increase while your new house payment won’t!
Equity Accumulation – Every month, a portion of your loan payments is used to reduce how much you owe. This helps to grow your wealth over time. Also, home values tend to increase. Even a small increase of 2.0% per year for 5 years is approximately $42K increase in value on a home that started at $400,000. This is a big benefit over renting, where you’re paying comparable monthly fees without any comparable stakes.
Build Up a Stronger Financial Future – Owning a home is one of the fundamental means of accumulating wealth as we age and buying one may never be as affordable as it is today. Decent home prices combined with record low rates and great loan programs make the “Housing Affordability Index” the lowest that it has been in decades.
You’re Free to Create the Home You Want – Homeownership offers tremendous freedom to create the living environment that you have always wanted. You can own pets, paint rooms whatever color you like, make changes to floors and carpeting and do all the things that make a house your home – all without having to get approval from a landlord.
If you have any questions about these benefits, contact us for more information.