If you're like most first-time home buyers, you've probably listened to friends', family's and coworkers' advice, many of whom are encouraging you tobuy a home. However, you may still wonder ifbuying a homeis the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are eight good reasons why you should buy a home.
Pride of Ownership
Pride of ownership is the number one reason why people yearn to own their home. It means you can paint the walls any color you desire, turn up the volume on your CD player, attach permanent fixtures and decorate your home according to your own taste. Home ownership gives you and your family a sense of stability and security. It'smaking an investmentin your future.
Beyond pride of ownership, it's important to realize another benefit. First, real estate moves in cycles, sometimes up, sometimes down, yet over the years, real estate has consistently appreciated. The Office of Federal Housing Enterprise Oversight tracks the movements of single family home values across the country. ItsHouse Price Indexbreaks down the changes by region and metropolitan area. Many people view their home investment as a hedge against inflation.
Home ownership is a superb tax shelter and our tax rates favor homeowners.
Sometimes the mortgage interest deduction can overshadow the desire for pride of ownership as well. As long as yourmortgagebalance is smaller than the price of your home,mortgage interestis fully deductible on yourtax return. Interest is the largest component of yourmortgage payment.
As long as you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. You do not have to buy a replacement home or move up. There is no age restriction, and the "over-55" rule does not apply. You can exclude the above thresholds from taxes every 24 months, which means you could sell every two years and pocket your profit--subject to limitation--free from taxation.
Preferential Tax Treatment
If you receive more profit than the allowable exclusion uponsale of your home, that profit will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment. This means even if your profit exceeds the exclusion, the taxable portion will be much less than you might imagine.
Mortgage Reduction Builds Equity
Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. Theway amortizationworks, the principal portion of your principal and interest payment increases slightly every month. It is lowest on your first payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balance the first year by about $500 in principal, bringing that balance at the end of your first 12 months to $99,500.
Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%.Equity loan interestis often much less and it is deductible.For many home owners, it makes sense to pay off this kind of debt with ahome equity loan. Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical or starting a new business.
About Kriste Simmons & The Simmons Team of Reliant Realty ERA Powered -931-245-8800
Thank you for choosing The Simmons Team for your real estate needs! We make it our mission to provide you with top of the line services in any type of situation. We specialize in the Clarksville, Montgomery County, Fort Campbell and Hopkinsville areas, but will gladly help you with surrounding areas as well. Our local expertise and wide variety of Real Estate knowledge will benefit you whether you are buying or selling for the first or the tenth time.
First Time Home Buyers, For Buyers, Generation X, Millennial, Move-Up
"As we began our journey to find a new home in the Clarksville area, we met Mrs. Kriste Simmons. Upon the first meeting with her, she exceeded our expectations. She is always willing to help and go out of her way to get any and all answers you may have, no matter who she needs to call. We closed on our house this morning, and from start to finish the entire process has been beyond anything we could of hoped for. We will recommend everyone we know to Ms. Simmons."