Top 7 Benefits of Home Ownership - Part 1
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The last several years have been really difficult for the Wichita Falls real estate market, and home buyers have had trouble obtaining financing, and home prices softened after the peak in 2008. However, the market is turning around and financing is becoming easier to obtain. Many people are still wondering if now is really a good time to buy a home or not. Many other people want to buy a home, yet are stuck in the rent trap because of the tightening lending standards we've experienced the last few years. People we work with are finding pleasant surprises, simply assuming they could not qualify when they were actually closer than they assumed. This series of articles will discuss the Top 7 benefits of owning a home versus renting.
1. Steady Payments: One of the first differences to realize when considering owning versus renting is what happens to your monthly payments over time. Most bank mortgage have 4 parts included in the monthly payments. These are Principal, Interest, Taxes & Insurance. This is referred to as PITI. The largest portion of the payment is the Principal and Interest "PI". If you buy a home with a 30-year fixed rate mortgage, then the PI portion of your payment will stay the same for 30 years. The only change over time will be the Insurance and Property Taxes portion of the payment, and the majority of the payment stays constant. If you compare this to renting, most landlords raise your rent every year with inflation. Furthermore, over the last several years we've seen rental rates significantly higher than a comparable mortgage payment for an equivalent home. This is due largely to supply and demand. As more people got pushed out of the market to buy a home since 2008, those people became renters, and just as less buyers in the market caused sales prices to dip, more renters in the market have caused rents to rise. With interest rates still near historic lows, those people who can qualify for purchasing a home are finding they are saving significantly on the payment for an equivalent home. In some cases, we've seen people save a couple hundred of dollars a month for the same size and age home.
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2. Tax Savings: Even though there has been discussions lately in congress about how they want to get rid of this benefit so the government can take more of our money to spend on their entitlement programs, currently home owners still have the ability to take advantage of this huge benefit, being able to deduct the interest portion of their mortgage payments from their taxes. Most renters I speak with are really unaware of this significant benefit. See, when you rent, you are paying a mortgage payment...your landlord's! This mortgage payment includes an interest portion when pays down the balance of the loan every month, and it also includes an interest portion which pays the bank for the right to use the money. Congress knows that there are many benefits not only to individual families, but also to the national economy to increasing home ownership. So, many years ago, the U.S. government decided that as an incentive to get more people to buy a home, they would give all home owners the ability to deduct the interest portion of the mortgage payment from their taxes. This can be the difference between being able to itemize your taxes and taking the standard deduction. This opens the doors to many more legal tax deductions which you could be missing out on right now, and could potentially put thousands of dollars back in your pocket each and every year.
Because of the way mortgage payments are calculated, the majority of interest is paid up front, so the first 5-10 years you live in a home, most of the payment can be deducted from your regular earned income from your job. This is like giving yourself a raise of a couple to several thousand dollars per year, simply by switching from paying your landlord's mortgage to paying your own mortgage. If you buy a home, you can go to your employer the day after you buy and ask to change your deductions so they will take less out of your paycheck for taxes and immediately put more money in your pocket every month... starting right away.
- What would it mean to you to immediately start paying $100 or $200 per month less every month for a similar house?
- What would it mean to you to keep an extra couple to several thousand dollars from your regular paycheck every month?
- How important is it to you and your family to stop the annual rent increases and trade that for the peace of mind and stability of knowing you have a fixed and stable payment year in and year out?
For more information Call Tim Lockhart - Keller Williams Realty. Call or Text 940-704-7058.
For Your Free KW Real Estate App to search for homes and find price information and pictures on homes for sale simply text KW6PW9U to 87778
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