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BUYING
A HOME IS AN EMOTIONAL ISSUE, and not one that should
be taken lightly. Whether it is better to own than rent is
dependent on a number of factors.
You've
been renting for a while. You've enjoyed it. You have the
freedom to move without the worry of selling a home first.
You don't make repairs or pay property taxes. But something's
missing--a sense of security, or perhaps a gut feeling that
your monthly payments are going into a bottomless pit.
You
think it might be time to take a step in another direction.
You're ready to buy a home, but have some questions about
the benefits of home ownership.
Tax
Advantages
The US government allows tax incentives that make it possible
for many homeowners to exceed the standard yearly deduction.
- Deduct
the yearly interest on your primary home. This amount equals
a big chunk of your total payments for the first several
years.
- Deduct
the total amount of your yearly property tax bill.
You
might wish to refinance to consolidate other debts. These
loans typically carry a lower interest rate than the debts
they replace, plus, the interest on the home equity loan is
tax deductible.
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Stable
Costs
Monthly payments can change if property taxes and insurance
go up, but increases usually happen gradually. Rental fees
can sometimes be more unpredictable.
Appreciation
No one can make any guarantees, but over time most real estate
increases in value. If you are careful about your selection
and you treat the home kindly it will likely be worth more
in five years than it was the day you bought it.
Your initial
investment may be as little as 3% (or less) of the home's
sales price, but you are the one who benefits from appreciation
of the property. Not the bank, not the landlord. You.
Equity
Even though interest makes up a good portion of your monthly
payment, the amount paid toward the principal increases each
month. Paying down the principal increases your equity in
the home: the portion of the home's value that is truly yours
should you decide to sell.
Appreciation and equity work together,
helping you use your initial investment to move into a higher
priced home.
Control
The house is yours. Paint it and decorate it in any way you
wish. Put nails in the walls to hang pictures and artwork.
Bring home a pet without asking anyone if it's OK. It belongs
to you.
here is no greater satisfaction than owning your
own home.
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