Advantages of Homeownership

Freedom and Privacy

If you have lived in an apartment, you know what it is like to have to deal with rude neighbors, unexpected visits from the landlord while keeping your own family from being a disturbance. If you lived with your parents or family, the regular dissatisfaction of having to live under somebody else’s rules cries for personal freedom. This is one of the best and most popular reasons people want to buy their own home.

You can decorate, rearrange, and furnish your home however you choose. You can establish your own rules for acceptable living, and are largely insulated from the noise and disturbances of neighbors. It is a work-in-progress, with you alone determining how it will look and who may live there.

Increased Equity

The down payment on a house is the first step in creating equity for yourself. Each monthly payment increases your personal ownership of the house, increasing your equity. The value of the home may increase over time, creating even more equity.

Future value of the home is one benefit to building equity, but another advantage is that the equity you have in your home can be used to borrow money in the future. The interest rates on home equity loans are lower compared to other financial items such as credit cards, and the terms of repayment are generally longer compared to these shorter-term debts. This provides the opportunity for many homeowners to borrow money from the equity in the home to immediately increase short-term cash reserves. It is also a viable way for owners to make needed home improvements or additions.

An Appreciating Investment

More than a place to live, your home will be an investment instead of an expense. As with any investment, there will be upturns in the market and downturns, but those who retain and maintain their investment for the long term find a profit at the end of the line. Obtaining a fixed rate mortgage will help to minimize the impact of any potential inflation, as the monthly payment remains the same throughout the term of the mortgage. As a renter, inflation and other economic uncertainties can cost you more every year.

Tax Benefits

Should the time come when you decide to sell you home, there are several tax advantages that will benefit you and put more cash in your pocket. The first is that if you use your home as your primary residence, the proceeds will likely be free of taxes. If you lived in the house two of the past five years and are married, $500,000 of your income is not taxed while a single person has a reduced benefit of $250,000 which goes untaxed.

Expenses the homeowner will face when purchasing a home is the interest and principal of a mortgage as well as  closing costs related to buying a home. When you have to file your annual federal and state income taxes, these costs will work in your favor as you may be able to deduct loan discount points and the total amount of interest you paid on the mortgage for the entire year. Because of the way interest payments are calculated, home buyers generally pay more in interest during the first years of the mortgage then later on, allowing a greater tax deduction.

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