Reasons for Buying a Home
You may wonder if buying a home is the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are eight good reasons why you should buy a home.
Pride of Ownership - Pride of ownership is the number one reason why people yearn to own their home. It means you can fix, paint or remodel according to your own tastes. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.
Appreciation - Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. Most people view their home investment as a hedge against inflation. We know that rent will go up over time, why not lock in your mortgage payment and watch your home value go up instead?
Mortgage Interest Deductions - Home ownership is a superb tax shelter and our tax rates favor homeowners.
Property Tax Deductions - Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. While real estate taxes will increase over time, so will your landlord's and you will feel that in the form of higher rents.
Capital Gain Exclusion - As long as you have occupied your home for two of the past five years, you can exclude up to $250,000 for an individual profit or $500,000 profit for a married couple from your home's capital gains. You can exclude the above thresholds from taxes every 24 months, which means you could sell your home every two years and pocket your profit--subject to limitation--free from taxation.
Preferential Tax Treatment - If you receive more profit than the allowable exclusion upon sale of your home, that profit will be considered a long-term capital gain as long as you owned your home for more than one year; which are taxed at lower rates.
Build Equity through Mortgage Reduction - Each month, part of your monthly payment is applied to the principal balance of your loan, reducing your mortgage balance. 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.
Equity Loans - Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical or starting a new business. The interest paid on these low interest equity loans is deductible unlike interest on credit cards or other personal loans.
Real estate is one of the unique investments where you as a buyer can do due diligence and kick the tires making sure that what you see is what you get. You can conduct inspections, and if it's not what you expected, your deposits are returned to you. Ask your Buyers Agent how to structure your offer to protect your deposits (Benefits of Using a Buyer's Agent).