Owning a home can bring financial rewards as well as a personal satisfaction that comes with knowing that you have a piece of the American dream. The financial benefits of homeownership range from the tax breaks that the owner can enjoy by writing off interest to the possible appreciation in the equity of the home over time. To understand the full extent of possible tax benefits, it is strongly suggested that you contact your local IRS or speak with an accountant about your particular situation. Some of the financial benefits include:
Credit
Owning a home helps you establish financial credibility.
Independence
Owning your own home provides you with independence and more privacy than renting. You are free to paint walls, plant flowers, keep pets and anything else within legal bounds.
Investment
Real estate values generally rise over a period of years, and as you make more payments and own more of your home, you add to its investment value. Most improvements you make will also add to its value.
Owning a home increases your savings
Mortgage payments help build your net worth. Unlike rent payments, a portion of the money you pay goes toward building equity (i.e. the difference between the market value of a house and the amount still owed on the mortgage). As you pay off the mortgage, you owe less on the home and "own" a larger share of it.
Another advantage is that the equity you build over the years can help qualify you for other loans, such as college and car loans.
Being a tangible asset
Real estate is seen by lenders as low risk, durable and marketable. Therefore, lenders are more willing to loan a high percentage of value. This allows owners to benefit by having control over an entire high-value asset with a low initial investment or down payment.
Pride
A home reflects its owner's values and lifestyle. Owning a home can provide you with a source of pride, enjoyment and satisfaction.
Security
A home can provide security against inflation because the value of your home increases as prices go up.
Stability
Being established in a community provides a sense of belonging, stability and security.
Tax Advantages
Homeowners may deduct mortgage interest and property taxes as an expense against income, while residential investors may write off cost recovery or depreciation.
The decision to buy has as much to do with your personal needs as it does to do with the financial reasons that can motivate a buyer. Do the math to understand the monetary ramifications. Take time to understand your own motivations before you rush into this decision. Homeownership has its definite rewards. Pursue them with wisdom!
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