Tuesday, July 14, 2009

Why should I buy a house?

9 Reason to Buy a House

1. Pride of Ownership

Pride of ownership is the number one reason people buy a home. You can paint your walls any color you want, turn up the volume on your CD player, attach permanent fixtures and decorate however you'd like. But more than that, home ownership gives you and your family a sense of stability and security, and provides years of enjoyment.

2. Affordability

Most people are surprised to discover they can own a home for about the same as they pay in rent. Effective mortgage payments (which is to say your mortgage payment less the tax benefits of owning a home) are surprisingly competitive with rents.

3. Savings

Every time you make a rent payment, you're effectively throwing money away. Mortgage payments, on the other hand, build personal equity. It’s never too early to start building your nest egg, since on average 60% of a person’s equity is held in the property they own. Average net worth of a renter is $4,000, compared to $184,000 for a homeowner.

4. Appreciation

Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated.

5. Mortgage Interest Deductions

Home ownership is a superb tax shelter and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment. Consult with your tax accountant on the full tax benefits you can gain.

6. Property Tax Deductions

IRS Publication 530 contains tax information for first-time home buyers. Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes.

7. Preferential Tax

Treatment If you receive more profit than the allowable exclusion upon sale of your home, that profit will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment.

8. Mortgage Reduction

Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the principal portion of your principal and interest payment increases slightly every month. It is lowest on your first payment and highest on your last payment.

9. Equity Loans

Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%. Equity loan interest is often much less and it is deductible. For many home owners, it makes sense to pay off this kind of debt with a home equity loan. Consumers can borrow against a home’s equity for a variety of reasons such as home improvement, college, medical or starting a new business.

We hope this information helps you get closer to your first home!!

For more information or an one-on-one consultation,

Please contact me, Eunice Cosme, at 815-540-7114.