| Why
Buying a Home is a Good Idea
Income
Tax Savings
Because
of income tax deductions, the government
is subsidizing your purchase of a home.
All of the interest and property taxes
you pay in a given year can be deducted
from your gross income to reduce your
taxable income.
For
example, assume your initial loan balance
is $150,000 with an interest rate of
eight percent. During the first year
you would pay $9969.27 in interest.
If your first payment is January 1st,
your taxable income would be almost
$10,000 less - due to the IRS interest
rate deduction.
Property
taxes are deductible, too. Whatever
property taxes you pay in a given year
may also be deducted from your gross
income, lowering your tax obligation.
Stable
Monthly Housing Costs
When
you rent a place to live, you can certainly
expect your rent to increase each year
- or even more often. If you get a fixed
rate mortgage when you buy a home, you
have the same monthly payment amount
for thirty years. Even if you get an
adjustable rate mortgage, your payment
will stay within a certain range for
the entire life of the mortgage - and
interest rates aren't as volatile now
as they were in the late seventies and
early eighties.
Imagine
how much rent might be ten, fifteen,
or even thirty years from now? Which
makes more sense?
Forced
Savings
Some
people are just lousy at saving money,
and a house is an automatic savings
account. You accumulate savings in two
ways. Every month, a portion of your
payment goes toward the principal. Admittedly,
in the early years of the mortgage,
this is not much. Over time, however,
it accelerates.
Second,
your home appreciates. Average appreciation
on a home is approximately five percent,
though it will vary from year to year,
and in some years may even depreciate..
Over time, history has shown that owning
a home is one of the very best financial
investments.
copyright
2006 by Terry Light and RealEstate ABC,
revised 2002
Why
Buying a Home is a Good Idea
Freedom
& Individualism
When
you rent, you are normally limited on
what you can do to improve your home.
You have to get permission to make certain
types of improvements. Nor does it make
sense to spend thousand of dollars painting,
putting in carpet, tile or window coverings
when the main person who benefits is
the landlord and not you.
Since
your landlord wants to keep his expenses
to a minimum, he or she will probably
not be spending much to improve the
place, either.
When
you own a home, however, you can do
pretty much whatever you want. You get
the benefits of any improvements you
make, plus you get to live in an environment
you have created, not some faceless
landlord.
More
Space
Both
indoors and outdoors, you will probably
have more space if you own your own
home. Even moving to a condominium from
an apartment, you are likely to find
you have much more room available -
your own laundry and storage area, and
bigger rooms. Apartment complexes are
more interested in creating the maximum
number of income-producing units than
they are in creating space for each
of the tenants.
If
you are moving to a home for the first
time, you are going to be very pleased
with all the new space you have available.
You may have to even buy more "stuff."
copyright
2006 by Terry Light and RealEstate ABC,
revised 2002
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