Purchasing a home is one of the biggest life experiences that everyone would want to experience. An investment in having your own home can be the most substantial financial decision you’ll ever make in your entire life. Not only will you feel proud of your accomplishment, but you’ll be able to give your family a sense a stability and security that owning your own home will provide. Owning your own home has it’s share of pitfalls, such as property taxes and high maintenance costs, but the positives far outweigh the negatives.
One benefit of owning your own home is because of the tax deductions that owning real estate brings with it. The Home Mortgage Interest Deduction allows homeowners to deduct the amount of interest paid on their mortgage from their taxable income. This can result in significant savings on your overall tax bill.
Another benefit is that the value of your home will increase over time through what is known as appreciation. This alone makes owning a home a great investment. You can expect to see the value of your home increase substantially after 5 years of ownership, even during recessions or periods of sale declines. If buy a home with a 10 percent down payment and it has a 5 percent rate of appreciation annually, you can expect almost 100 percent return on your down payment within just three years on owning the home.
Owning your home will also allow you build up equity over time as the home appreciates. Home equity is the market value of a homeowner’s unencumbered interest in their real property, which is the difference between the home’s fair market value and the outstanding balance of all loans on the property. Having equity build up over time can help you transition easily into owning a second home which you can use as a retirement home, while you allow your kids or family to have your first home if you desire.
This equity can be used in a number of ways, and one of the most common ways is to use it to establish a line of credit or secure a loan. This will lead to you owning more than just a home. You can use your home equity to fund a business, do home improvements or even send your kids to college.
By renting a home or apartment, you are subject to the whims of a landlord at all times. You have to worry about your lease being renewed or whether you’ll be kicked out or not. Owning your own home will give you a sense of stability and security that you and your family never had before. Owning a home can be a big life decision, but it’s one that can make life for you and your family much more comfortable and purposeful.
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