We were always taught growing up that owning a home is a financially savvy move. Our parents knew it, and their parents knew it. But this past decade of real estate turbulence has shaken everyone’s confidence in homeownership. That is why it’s so important that we discuss this again now that we’re in a ‘new market.’ Homeownership can be a very savvy financial move – but only if people buy homes they can actually afford. In 2014, this idea of sticking to a home you can afford to gradually build wealth is a “rule” that just happens to be new and old at the same time.
2. You Build Equity Every Month
Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity. That is especially true now with the elimination of risky mortgages like negative amortized and interest-only loans – thanks to the new “Qualified Mortgage” rules. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!
3. You Reap Mortgage Tax Deduction Benefits
Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home
Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.
4. Tax Deductions on Home Equity Lines
In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the horrendously exorbitant credit card interest rates, and get a deduction on the interest as well.
5. You Get a Capital Gains Exclusion
If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.
6. A Mortgage Is Like a Forced Savings Plan
Paying that mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save—and that’s a good thing.
7. Long Term, Buying Is Cheaper than Renting
In the first few years, it may be cheaper to rent. But over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. But more importantly, you are not throwing away all that money on rent. You gotta live someplace, so instead of paying off your landlord’s home or building, pay off your own!
Author:Phillip Gonzales Phone: 480-540-3911 Dated: April 6th 2016 Views: 1,207 About Phillip: ...
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Mojica & Associates Real Estate has over 55 years of combined real estate experience here in the Valley. Concentrating on evolving trends in a rapidly growing market, we specialize in finding the perfect opportunity for first time buyers, families looking to upgrade their home, 2nd home buyers and investors. Whether you are looking for the perfect place to hang your hat or finding qualified buyers to purchase your current property at top market prices, we can get it done for you.
Mojica & Associates Real Estate professes that the only way to best serve our clients’ needs is to continually educate ourselves and our agents on the most current and future market trends. Whether it is cutting edge technology to showcase or find the perfect home, making sure our staff is the most knowledgeable in the Valley on contracts, curre nt laws governing real estate sales, short sales, or simply updating our listings throughout the day, we deliver.
Available to you, our most important client, is a vast network of business professionals dedicated to every facet of the buying or selling experience. We specialize in “targeted” marketing that provides optimal exposure through every forum available in today’s competitive market.
Are You Renting? You Should Read This.Hey Renters, I am going to give
"I would give Michelle 100 stars if I could. She goes above and beyond for her clients. I have gone through two purchases and one sell with her and she made the processes for each as smooth as possible. Working all hours of the day/night to ensure a successful outcome. Six years ago I was buying my first home and she took my hand carefully walking me through the home buying process. I couldn't be more grateful for her patience. She always has my best interests in mind. She is honest, hard working and passionate about real estate. I highly recommend Michelle Mojica & Associates Real Estate!"