The American Dream
Not that your Turkey is going to necessarily taste any better if you own your home, but there is something to be said for entertaining your guests in your own home.
There actually are several reasons why we as Americans like to live the American Dream of homeownership. Some are logical and some are emotional.
When to buy Financial guru Suze Orman calls owning a home the absolute best investment out there, bar none.
In many cities across the country, the last five years have seen dramatic growth in the value of real estate, with annual increases in the double digits. Most experts agree that the market is taking a much-needed correction, and expect appreciation rates to settle down to their historical average of about 4 to 5 percent a year. Even at that rate, homeownership is a great way to build wealth over time with a relatively small cash investment.
Let's say you buy a home for $300,000 and put 10 percent down. That's an investment of $30,000. If your house appreciates 4 percent, you realize a gain of $12,000. The first year, you make $12,000 on a cash outlay of $30,000 a 40 percent return on your investment. That's tough to beat.
There are plenty of other reasons why buying a home makes sense. Here are a few more to think about.
It's all yours. You can paint the walls whatever color you want, add a room, remodel the kitchen, and plant a big shade tree. There are freedom and pride in owning a home that renters just don't experience.
You're building equity. When you write a rent check, you're paying for the right to live in someone elses property; when you write a mortgage check, you're building up ownership in your own home. You can also borrow against that equity to make major purchases, pay for your Child's education or make other investments. Plus, all the interest expenses associated with a home equity loan are tax-deductible. Lets say your'e renting, and have credit card debt of $10,000 at 15 percent. None of the interest you pay is deductible. But if you take out a home equity loan for $10,000 to pay off your credit card, all the interest is deductible, and the rate on your home equity loan will be much lower than 15 percent.
Great tax benefits. The IRS lets you deduct your mortgage interest as well as your property taxes. Plus, when you go to sell, you get to take the first $250,000 in profit if you're single, or the first $500,000 if married, without paying capital gains tax. The cost of home improvements is also deductible when you sell your home. There are other tax advantages available. For example, if you work out of your home, you may be able to take deductions for your home office.
You're in the game. For most buyers, their first home isn't their ultimate dream home, but it is the first step towards that dream home. Your home appreciates over the years, and perhaps you do some improvements that increase the value even more. Over time, the equity in your home builds into a great down payment on that dream home in the future.
Security for retirement. Rent goes on forever, but the mortgage on your home will eventually be paid off. Having a rent-free place to live provides a lot of security in your retirement years and allows you to spend that extra money enjoying yourself.
The timing is great for buyers. In most markets, there is plenty of inventory, which means lots more choices for you and more room to negotiate.
The bottom line? Buying a home is one of the most important decisions in life. The time to buy a home is when it makes sense for you: You're ready to own a home, you can afford it, and you plan to live there for a while. Over time, you'll be able to ride out any downturns in the market and benefit from the upturns ... and you'll spend that time in a place that you can really call home.
Hey, and rates are still great. Check out the previous blogs on some great loan progams that are available right now!
