Advantages of Home Ownership

rent vs buy coloradoWhether you are buying your first home, relocating, downsizing, or meeting the needs of a growing family, deciding to buy a home is a big decision.  

 There are many advantages to home ownership, as discussed below.

 Owning A Home Gives You Financial Options (Rent vs Buy Decision)

A rent payment of $1,000 a month costs you $60,000 in 5 years. A similar house payment, assuming an interest rate of 5% or less on a 30 year mortgage, would enable you to buy a home at a sales price of approximately $135,000 with a down payment of 3.5% (for an FHA loan).  Your monthly payment would include the mortgage payment, taxes, mortgage insurance, and homeowners insurance.  After five years, you would have reduced your loan principal by about $11,000 and gained on appreciation on the entire value of your home, not just on your down payment. In addition, you are able to deduct your mortgage interest, which, in a 28% tax bracket would reduce your effective monthly payment to about $850.  This doesn’t even take into account your tax deduction for real estate taxes.

Owning a Home Gives You Freedom to:

  • Make your own decisions.  When you own your own home, you make decisions to please yourself.  You can re-tile your bathroom, or paint the walls… without approval from your landlord!  Some communities may have a homeowner’s association and you may need to gain approval from them for exterior changes (painting color, major landscaping, new deck, etc).
  • Do home improvements.  You can make improvements knowing the money you spend will improve your home’s resale value, and put money in YOUR pocket, not your landlord’s.  
  • Choose your neighborhood.  You choose the neighborhood that complements your personality, and offers the services and atmosphere that you and your family desire. 
  • Be relieved of rent increases.  Once you lock into your fixed mortgage rate, you will always know how much money you’ll need to cover your monthly mortgage payments.  If you rent, your landlord can impose rent increases on you.
  • Build equity.  With most loans, each time you make a mortgage payment, you are building equity in your home. Also, as time goes by, your home will likely appreciate in value. 
  • Obtain tax perks.  The interest portion of your monthly mortgage payment is tax deductible, as are real estate taxes! 
  • Hedge against inflation.   While it’s true that some homes appreciate faster than others, and some years are better than others, real estate has always been known to keep pace with inflation in the long run.  In fact, appreciation rates are usually well ahead of inflation rates, so buying a home is good protection.
  • Leverage.  You can receive a great return on your investment with very little down.

On top of all of the reasons listed above, this real estate market is GREAT for home buyers.  We have unbelievably low interest rates and lower home prices!  It is the perfect time to make the decision to own your own home or to invest in rental properties! 

Want to make the market work for you even more?  Buy a fixer upper and look into the FHA 203K loan!  Turn the fixer upper into the home of your dreams and pay for the renovation over time!

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