5 Financial Benefits to Homeownership
There are many different reasons why people buy homes. Whether they want a good place to raise a family or a place to call your own, there is no bad reason. However, there may be some financial benefits of homeownership that you may not have thought about. Your Lake of the Ozarks REALTOR is here to explain some benefits of homeownership to see if buying a home is for you:
Equity, in terms of your home, is the amount of money you can sell it for minus what you still owe. Every month that you make a mortgage payment, the amount you owe lowers, which in turns raises your equity. What do you get out of building equity? If you sell your home, you get cash for the equity amount. In turn, if you are buying another house, you can use that money to purchase it and borrow less. Also, if you ever need money, you can borrow against the equity in your home with a second mortgage.
Paying your mortgage every month reduces the amount of your principal is essentially a forced savings plan. This is because each month you are building up more equity in your home, which as we just learned is very valuable. Being forced to save is always a good thing.
There are several different tax deduction benefits that homeowners could receive including mortgage deduction, closing cost deductions and property tax deductions. The tax code that allows homeowners to deduct the mortgage interest from their taxes is a huge benefit to some people, as interest payments can be a large component of their mortgage payment in the first few years of homeownership. The first year you buy a home, you can claim the origination fees on your loan, which could help considerably. Real estate property taxes property taxes paid on the primary residence and even vacation homes can be part of your deductions for income tax purposes.
At first, it might be cheaper to rent. However, overtime, long term buying may end up being the cheaper route. Eventually, the interest portion of your mortgage payment decreases, which could make your payment cheaper than the rent you pay. Most importantly you are not just “throwing” your money away on rent. Instead of paying money to a landlord, you could be paying off your own home.
Now is the perfect time to buy a home at the Lake of the Ozarks. With near record low mortgage rates and beautiful homes on the market, you are sure to find the right home for you in your price range. If you are on the search for a Lake of the Ozarks home, contact me at 573-216-8439. I would love to help you find your dream house.
1. Builds Equity
Equity, in terms of your home, is the amount of money you can sell it for minus what you still owe. Every month that you make a mortgage payment, the amount you owe lowers, which in turns raises your equity. What do you get out of building equity? If you sell your home, you get cash for the equity amount. In turn, if you are buying another house, you can use that money to purchase it and borrow less. Also, if you ever need money, you can borrow against the equity in your home with a second mortgage.
2. Forced Saving Plan
Paying your mortgage every month reduces the amount of your principal is essentially a forced savings plan. This is because each month you are building up more equity in your home, which as we just learned is very valuable. Being forced to save is always a good thing.
3. Low Mortgage Rates
Buying a home now could be a great investment, as mortgage rates are currently near historic all-time lows. The interest rate that you secure directly affects your monthly payments and the amount you can afford on a home, if you are working with a budget. Going back to point number 3, buying vs. renting, low interest rates could make buying a home cheaper than renting. Additionally, costs are more predictable and stable when you buy a home versus renting, as mortgages are typically based on a fixed rate. If you rent, unless you are under a contract, the amount you pay could potentially go up in price.
4. Tax Deduction Benefits
There are several different tax deduction benefits that homeowners could receive including mortgage deduction, closing cost deductions and property tax deductions. The tax code that allows homeowners to deduct the mortgage interest from their taxes is a huge benefit to some people, as interest payments can be a large component of their mortgage payment in the first few years of homeownership. The first year you buy a home, you can claim the origination fees on your loan, which could help considerably. Real estate property taxes property taxes paid on the primary residence and even vacation homes can be part of your deductions for income tax purposes.
5. Long Term Buying VS. Renting
At first, it might be cheaper to rent. However, overtime, long term buying may end up being the cheaper route. Eventually, the interest portion of your mortgage payment decreases, which could make your payment cheaper than the rent you pay. Most importantly you are not just “throwing” your money away on rent. Instead of paying money to a landlord, you could be paying off your own home.
Buy Your Next Home with Me!
Now is the perfect time to buy a home at the Lake of the Ozarks. With near record low mortgage rates and beautiful homes on the market, you are sure to find the right home for you in your price range. If you are on the search for a Lake of the Ozarks home, contact me at 573-216-8439. I would love to help you find your dream house.
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