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Wondering if you should buy a home or continue to rent? Homeownership can save you money over the long term and build equity that can be leveraged against other goals.
Homeownership can save you money and improve your lot in life both for the short and long term. Here are 9 reasons you should go ahead and buy your own home today.
Home is where most Americans find the bulk of their financial responsibility. Buying a home has its challenges – a sellers’ market is one, and coming up with cash for a down payment is another – but there are plenty of loan programs designed to help you make your dreams of homeownership come true. Buying into the housing market can allow you to see many major financial benefits. Here are nine ways homeownership can save you money.
Not having to pay rent in perpetuity on something you don’t own is a massive benefit when it comes to homeownership. You may feel like buying a home is a giant financial leap, but in most cases you’ll end up paying less to own than to rent and when your loan term is up you’ll own your house free and clear. This is maybe the biggest way homeownership can save you money.
No paying rent in your old age, or wondering how to make ends meet. You’ll be sitting on a piece of real estate with value to take you into your golden years. Plus, if you’re smart, you’ll sock back the difference between what you used to pay in rent and your mortgage payment into savings every month and take a nice nest egg into retirement with you.
Having equity built up in your home can open the door to helping you handle other financial needs and wants. You can pay for college for a child, or plan a wedding or honeymoon. Take time to travel with your spouse, or buy a new car. You can even consolidate debt and get out from high credit card interest rates.
A house is a great asset that can serve you well in the years to come. Since your interest rate on the mortgage or refinance is likely to be much, much lower than interest on a car note or credit card debt or a personal loan, you can consolidate and save thousands interest that you would have otherwise have been on the hook for. It’s the ideal use for that home equity.
Owning a home is one of the safest ways to hedge against inflation. Home values in a strong economy typically increase 3-4% every year, but recently that has spiked much higher. Putting your money into a home is better than putting it into many investment accounts, and way better than spending it all on rent. It’s all about home price appreciation.
You’ll be able to ensure that your money holds value through the years as long as the economy and housing market stay stable long-term – even short term dips shouldn’t trouble you unduly over a 30 year time span. In the long run, home values always go up, if thanks only to the increasing price and finite supply of physical land, so you’ll be glad you bought a home when you did.
You can take advantage of a number of tax breaks for owning a home, and top on the list is the much touted deduction for the interest and property tax portions of your mortgage. This deduction can help you offset the initial financial hit that occurs when you are first purchasing your property, since the first years after you buy are heavy on interest payments and low on paying down principal.
If you used mortgage discount points when you purchased your home, you can write those off as well during the first year, gaining an even bigger advantage. Plus,. When you refinance, there are special tax advantages you can leverage as well. also have the option of taking out a home equity line of credit, which is itself tax deductible. If you have a home valued over $750,000, be aware that the home mortgage interest deduction may be restricted to the interest only on the first $750,000.
As a renter, you’ll often be stuck with whatever your landlord supplies in the way of appliances, which can mean paying way more for power due to inefficient, cheap furnishings like water heaters, washing machines, dishwashers, clothes dryers, refrigerators, and more.
You’ll also not want to pour money into improving a home you don’t own, so forget potential savings from things like solar power systems or thermal water heating. You may not even have permission to run a small business out of your home, or to plant a garden that could help you save on fruits and vegetables. In your own home, you run things, so all of these options could be on the table for you.
How many times have you looked at a deal that requires good credit to get the most favorable price and terms, but been unable to take advantage of it because you don’t qualify? Owning your own home can help you boost your credit and stabilize your finances, making it easier to qualify for better credit opportunities, including credit cards with no interest deals and lower interest terms overall.
You can go into a bank and get an auto loan or a personal loan instead of depending on hole in the wall financiers that charge usurious interest rates and tons of high fees. Just having better credit over time is one great reason to buy a home and make your mortgage payments on time every time.
You can save even more if you buy a multi-unit property and rent out the other units while living in one yourself. This is often called a home hack, because you can basically live rent free while the rent from the other units covers your entire house payment every month. You might even come out ahead if you make more in rent that the payment is for the mortgage loan.
Make sure you’re ready for this kind of move, and have a plan for keeping tenants in place. You don’t want to get stuck with a hefty monthly payment because you’re the only one living in the building. Also consider the costs of being a landlord and having to maintain extra units before you commit.
Finally, when you do decide it’s time to downsize into retirement, you can realize even more savings when you sell. A tax break on capital gains is available of $250,000 for single homeowners and $500,000 for married homeowners filing jointly. It’s one last chunk of change you’ll save as you exit your home, and a final way homeownership can save you money.
At Sammamish, we believe educating homeowners is the best path forward to financial success. That’s why we put so much effort into our blog articles, to help create a resource for homeowners and homebuyers. Whether you’re looking to buy a home or refinance, we can help.
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
Whether you’re buying a home or ready to refinance, our professionals can help.
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