There are many reasons you may wish to buy a home, whether you need or want:
• A place to live • Feeling of permanence • Stable housing costs • Good use of your money • Tax benefitsOn the other hand, you may not be ready to buy a home. Buying a home:
• Is a complex, time-consuming and costly process • May bring unwelcome responsibilities such as maintenance and repairs • Makes it harder for you to move • Can create financial hardshipThe purchase of a home is, in part, a financial transaction. Much like a trip to the grocery store to buy coffee, you have many choices and a significant price range. But unlike a bag of Costa Rican coffee, a house has certain bonuses: Equity, Tax Savings and Ownership. What’s all that mean? Read on.
A house is an investment in land and the existing structure. History tells us that there is a good chance that a house will increase in value over time. Also, by making timelymortgage payments, you are paying down the debt you owe and building equity. Equity is the difference between the value of your home and how much you still owe. You may not own your home outright, but your investment has a cash value.
In addition to increasing in value over time, owning a home can have a significantimpact on your monthly paycheck – in a very positive way! When you borrow money to purchase a home, the interest that you pay on that money is usually tax deductible.
For example, if you have an annual income of $45,000 and owe $200,000 on a 30-year mortgage at a fixed 7% interest rate, you’ll likely save about $200 per month intaxes the first year you own the home!
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