"Should you sign another lease or buy a place you can really call home?"
Believe it or not, millions of Americans ask themselves this question everyday. Your lifestyle and financial situation are just a few factors to consider, so be sure to get the facts. Then, weigh the pros and cons of homeownership and decide for yourself.
We are going to touch on a few important factors which you should take into consideration. Remember, a licensed Realtor can provide you with a lot of additional information or answer any futher questions you may have.
Important Questions
Which offers lower monthly costs?
When you take soaring rent prices into account, along with the fact that mortgage interest and property taxes are tax deductible, monthly mortgage payments may be lower than your monthly rent.
Which offers more value?
When you pay rent, you end up with receipts rather than a return on an investment.
Which offers more stability?
Landlords can raise rents by $50 - $100 every year. But, mortgage payments usually remain the same.
Which allows you to benefit from mortgage interest?
You can deduct mortgage interest if you buy. If you rent, your landlord gets the deductions and uses your rent to pay the mortgage.
Which allows you to deduct real estate tax?
You can deduct real estate tax only when you own. If you rent, the landlord takes the deduction.
Which can lead to good credit?
Homeownership is a major indicator of your financial integrity. Rent payments are not normally reflected on your credit report.
Which helps you establish roots?
When a person rents, they often don't get involved in the community.
Tax Advantages
Mortgage interest is tax deductible.
Real estate taxes are tax deductible.
Local tax benefits may be available in your areas.
You may be able to defer taxes on the profit if you sell your home and purchase or build another home.
As of 1997, wide ranging new tax laws provided for a $500,000 exclusion from capital gains tax for profits on the sale of a principal residence by married taxpayers who file jointly ($250,000 for single).
The option may be used as often as every two years, so long as the homeowners have owned and occupied the property as their residence for at least two of the preceeding five years before the sale.
Investment Benefits
You'll build equity (the difference between the value of your home and the balance of your mortgage). You can sell and collect your equity in cash, gaining liquidity.
Profits are usually greater on home investments than most other investments.
Home equity provides a means of securing emergency funding, since in most states you can borrow against your equity.
Land appreciation adds to the value of your home.
The growth in population constantly increases the housing demand (and the value of your home).
Home owning can be an important part of retirement planning.
Personal Satisfaction
More living space for you to do with as you please.
You can choose your own home, the style, landscaping, colors and decor. You have the freedom to arrange and decorate creatively to suit your wants.
You can come and go as you wish without having to compromise your personality or lifestyle.
Your home makes you a solid part of your community.
You can feel proud that you own a piece of the neighborhood.
You achieve the satisfaction of knowing that "You own your own home".
