Benefits for Buyers

Homeownership: more than just the American dream

By: Coral Dworaczyk

In my profession, I see people struggle almost daily with making the ultimate leap to buy a home, especially in the case of first-time homebuyers. Other than fulfilling what so many consider the ultimate American dream, homeownership has many other advantages and may actually save a buyer quite a bit of money in the long run.

What do you get for the money?
Many advocates of ownership argue that owning is actually less expensive than leasing – and in many cases, this is true! Some sources tell us that it’s “30 percent cheaper on a monthly basis to buy versus rent.” It’s hard to see this percentage as an honorable statistic, but when you compare actual dollar figures, the financial impact becomes more apparent.

I see so many people in our community paying $1,000 to 1,500 per month (not including bills) for a small one- or two-bedroom apartment. This same payment could afford a qualified buyer a home in the $100,000 to 160,000 price range, and we have a decent selection of those in our active market. Instead of paying off your landlord’s property, pay off your own!

What is equity?
When individuals buy their home, they are making a long-term investment in their financial future. Equity is casually defined as the amount of money you could sell your home (or property) for, minus what is owed on the mortgage. Instead of paying a landlord hard-earned money that is basically a loss for the tenant, homeowners are able to gain equity in their properties and potentially recoup their expense and make a profit upon the sale of the home in the future.

To earn equity more quickly, buyers may utilize a large down payment, improve their property with updates and upgrades and take advantage of the inflation that occurs over the years of ownership. However, if buyers make a poor decision when initially purchasing the property, decide to sell the property shortly after buying or do not maintain the property, they can also lose equity in their investment.

Can owning a home save me money on my taxes?
There are several tax advantages to owning a home. These advantages come in the form of tax deductions reserved for homeowners. The annual property taxes for an owner’s actual residence is fully deductible, potentially saving the taxpayer a considerable amount of taxes paid each year! And buyers can deduct their mortgage interest from their annual tax obligations, too. This is also a huge advantage, considering that the monthly mortgage payment is primarily interest for the first several years of a buyer’s repayment term. Additionally, any prepaid interest or “points” paid at closing is deductible. Please make sure to always consult your own tax specialist for the most up-to-date information and rules regarding tax deductions for homeowners.

However, there are exceptions, and there are some instances where it may be best to wait before buying a home. If you are in a situation where you may need to move often (more than every two to three years) or with short-notice, it may be best to wait before buying. Other factors like job instability, credit challenges or the need for greater flexibility and less responsibility may all be strong considerations to wait before purchasing. Always consult your trusted advisors and real estate professionals to help you determine if you are ready to buy a home.

For more information, please contact Coral Dworaczyk, M.S., realtor, at cdworaczyk@gmail.com or 979-229-2836 (cell). Please also feel free to visit her online at www.realestatebycoral.com for local real estate market information.

dolgachov/bigstock.com

Posted in Uncategorized