Tax Savings, The Biggest Cash Bonus to the Homeowner

A substantial part of your monthly mortgage payment: interest and property taxes, are completely tax deductible. Your taxable income is reduced when the annual sum of interest and property taxes you paid throughout the year is completely deducted. Because of these deductions, your home is in a way being subsidized by the government.

How does that work? Assume your initial loan balance is $150,000 with an interest rate of seven percent. During the first year you would pay $10,451.73 in interest. If your first payment were January 1st, your taxable income would be almost $10,500 less - due to the IRS interest rate deduction. Remember, property taxes are also deductible. The amount of property taxes that you paid may be deducted, also lowering your gross income.

 

Home Values Have Sustained Growth Through the Years

There's no better financial investment than homeownership. It's the best hedge against inflation because real estate is the world's only commodity in absolute limited supply. Population growth steadily increases demand, thus increasing the value of real estate. Depending on the time and location, history says that you can expect homes to appreciate approximately 5%* a year. A 5%* increase may not seem that attractive at first, but see how it works.

How does that work? You purchased a home for $150,000 with a twenty percent down of $30,000; although you took out a mortgage for the balance, your $30,000 would be an investment. With an annual 5%* appreciation rate, your $150,000 home would have increased in value an additional $7,500 in the first year. Your $30,000 has now earned you $7,500 or 25%. Forced Savings For many people, saving money can seem next to impossible. But homeownership makes saving money almost effortless. How does that work? Every time you pay your mortgage, part of your payment will go to the principle balance of the loan (like putting money in the bank), this coupled with the appreciation we talked about above can create the homeowner a nice cushion to sit on for the future.

Freedom & Privacy

You choose the style of the structure, landscaping, colors, furniture and décor. Since you are the "landlord" the freedom to arrange or rearrange things to suit your needs is limited only by your creativity and imagination. Owning a home gives you freedom; you can create your ideal living space, and benefit from improvements you have made.

Your home is the place where you can enjoy the many facets of your lifestyle. It can be a center of activity or a quiet refuge. It's much more than a place to eat and sleep; your home is an integral part of your lifestyle.

Security & Stability of a Mortgage

If you pay rent, you are probably familiar with periodic rent increases. However, when you buy a home with a fixed rate mortgage, you can expect to be paying the same amount for the life of the loan. If you obtained an adjustable rate loan, you can be sure your loan will stay within a certain bearable range.

Security and knowledge go hand in hand with home ownership. Your feeling of security will be enhanced by the knowledge that your home, a major investment of a lifetime, is a safeguard against inflation. As time passes, a smaller share of your earnings will go toward this housing expense. Owning a home is the beginning of financial independence.

With this in mind, think of how much your rent could be in the future. Which would you rather have?

Community

You establish roots because your home makes you a part of the community. Your neighbors are homeowners, too, often with backgrounds much like your own.

*5% growth is a historical average; it is in no way a guaranteed return.