For most, it is the American Dream to own a home. It has always been an important milestone of adulthood. But as a first-time home buyer, how do you know it is the right thing to do? Besides the obvious benefits of owning a home, here are additional advantages of owning rather than renting.
The bulk of your house payment each month goes toward interest. Mortgage interest is tax deductible unless your mortgage loan is greater than $1 million. You can also deduct the property tax your lender pays on your behalf.
Over time, houses generally go up in value. A $200,000 house after 30 years becomes a $545,313 house. According to the Price-Shiller Index, existing homes increased 3.4% annually on average from 1987 to 2009. Over a 30-year period, this increase is a big deal.
Equity is the difference between the home’s value and how much is owed to the mortgage lender. The reduction of your mortgage every month increases your equity and builds interest in your home.
Having a mortgage is having a forced savings plan. When you pay your mortgage every month, you are ultimately being forced to save because you are building more valuable equity in your home. Making an extra payment on your mortgage each quarter could potentially save you money on interest resulting in your loan retiring earlier.
As a borrower, you are able to accurately predict your future payments with a fixed-rate mortgage. Your interest rate doesn’t fluctuate during the loan period, keeping your payments relatively the same. Rent payments are unpredictable and may rise every year.
Owning a home gives you the freedom to do what you want with it, especially aesthetically. Decorate it how you please, paint whatever color you’d like and upgrade amenities that suit your sense of style.
You are officially planting your roots in an area you choose that benefits you and your family the most. From here, you will build long-lasting relationships with your neighbors and will offer the benefit of life-long friendships and education continuity to your children.
Want to learn more about the home buying process? Contact a First Home Loan Officer today!