Why
Buying a Home is a Good Idea
ONE: You Can Improve Your
HomeWhen you rent a home, you are normally limited on what you can do to improve it. If your landlord will not pay for improvements such as paint, carpet, tiling, or new windows, it does not make sense for you to spend thousands of dollars in improvements.
Your landlord wants to keep his expenses to a minimum, so he or she will probably not want to spend too much to improve the space until you move out. Then, he or she still may not spend much to improve the place for the next tenant.
When you own a home, you can do whatever you want. You get the benefits of the improvements– plus you get to live in the environment you have created.
TWO: You Will Probably Acquire More Space
Both indoors and out, you will probably
have more space if you own your home. You will find that you will have your
own laundry and storage areas 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 will have available.
THREE: You Will Have 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 8%. 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.
Your property taxes are deductible too. Whatever property taxes you pay in a given year may also be deducted from your gross income, thus lowering your tax obligations.
FOUR: You Will Have Stable Monthly Housing Costs
When you rent a place to live, you can certainly expect your rent to
eventually increase. 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.
Imagine what rent might be ten, fifteen even thirty years from now? For example in 1991, an average apartment went for about $475 per month. That same apartment today will cost you between $650-$750 per month.
FIVE: You Will Essentially Be Forced to Save Money (Equity) Some people just can't save money. A house is an automatic savings account. You accumulate savings in two ways: First, every month, a portion of your payment goes toward the principle - which pays the balance you owe. Admittedly, in the early years of the mortgage, the principal payments are not very much. Over time, however it accelerates. This is called the Rule of 78.
Second, your home appreciates. Average appreciation on a home is approximately 4-5%, through it will vary from year to year. It is also possible it may even depreciate. Over time, history has shown that owning a home is one of the best financial investments.