Have you ever thought about the benefits of buying a home as opposed to renting one? Some may say that renting is much easier, low maintenance and less stressful, but if you are financially able to buy a home and instead opt to rent you may be missing out on one of the nation’s easiest ways to build wealth and a strong financial basis.
When renting a property, you are giving your rent to the owner, who then pays his/her mortgage, taxes and insurance, and maintenance costs with your money. This is great for your landlord, as it covers the costs of owning the home. Landlords are typically responsible for repairs and major expenses to maintain the home.
In contrast, when you commit to buying a house, you can put that same money into paying off your own mortgage, taxes, insurance, and maintenance. This allows for you to use the “rent money” you would be paying to increase the equity you have invested in your home. You want to make your hard-earned money work for you, and a great way to do that is by paying off your own mortgage loan. You save on moving costs, because you are in control of when and if you choose to move, and, over time, your home should increase in value to further put you in the black.
There are also tax incentives to owning your own home. The lions share of each mortgage payment is interest, particularly at the beginning of your loan. This mortgage is fully tax-deductible which helps your personal bottom line over time. Depending on your tax bracket, you could be saving thousands in taxes every year. Additionally, if you own your own business or are self employed you may qualify for a home office deduction, which allows you to deduct a portion of expenses relating to ownership including utilities. Speak with a tax advisor to find out more about opportunities to reduce your tax liability through homeownership.
Now is a great time to buy because interest rates are still low, but are slated to rise in the coming months. It is important to understand the impact of interest rates on your purchasing power, because one minor interest rate hike can increase payments significantly enough that you must change your real estate price range entirely. Find out more from your real estate agent and mortgage broker today on why homeownership is the way to wealth!!