GREAT REASONS
TO BUY A HOME TODAY!
ELIZABETH WEINTRAUB [ABOUT.COM]
If you're like most first-time home buyers,
you've probably listened to
friends', family's and coworkers' advice,
However, you may still wonder
if buying a home is the right thing to do.
Relax. Having reservations is normal.
The more you know about why you should buy a home,
the less scary the entire process will appear to you.
Here are eight good reasons why
you should buy a home.
Pride of Ownership
Pride of ownership is the number one reason
why people yearn to own their home.
It means you can paint the walls
any color you desire, turn up the volume
on your CD player, attach permanent fixtures
and decorate your home according to
your own taste.
Home ownership gives you and your family
a sense of stability and security.
It's making an investment in your future.
Appreciation
Although real estate moves in cycles,
sometimes up, sometimes down, over the years,
real estate has consistently appreciated.
The Office of Federal Housing Enterprise
Oversight tracks the movements of
single family home values across the country.
by region and metropolitan area.
Many people view their home investment
as a hedge against inflation.
Mortgage Interest Deductions
Home ownership is a superb tax shelter
and our tax rates favor homeowners.
As long as your mortgage balance is smaller
than the price of your home,
Interest is the largest component
of your mortgage payment.
Property Tax Deductions
IRS Publication 530 contains
Real estate property taxes paid for
a first home and a vacation home are fully deductible
for income tax purposes. In California,
established the amount of assessed value after property
changes hands and limited property tax increases
to 2% per year or the rate of inflation, whichever is less.
Capital Gain Exclusion
As long as you have lived in your home
for two of the past five years,
you can exclude up to $250,000
for an individual or $500,000 for a married couple
of profit from capital gains.
You do not have to buy
a replacement home or move up.
There is no age restriction,
and the "over-55" rule does not apply.
You can exclude the above thresholds
from taxes every 24 months,
which means you could sell every two years
and pocket your profit--subject
to limitation--free from taxation.
Preferential Tax Treatment
If you receive more profit than
that profit will be considered a capital asset
as long as you owned your home for more than one year.
Capital assets receive preferential tax treatment.
Morgage Reduction Builds Equity
Each month, part of your monthly payment
is applied to the principal balance of your loan,
which reduces your obligation.
The way amortization works,
the principal portion of your principal
and interest payment increases slightly every month.
It is lowest on your first payment
and highest on your last payment.
On average, each $100,000 of a mortgage will
reduce in balance the first year by about $500 in principal,
bringing that balance at the end of
your first 12 months to $99,500.
Equity Loans
Consumers who carry credit card balances
cannot deduct the interest paid,
which can cost as much as 18% to 22%.
Equity loan interest is often
much less and it is deductible.
For many home owners, it makes sense to
Consumers can borrow against a home's equity
for a variety of reasons such as home improvement,
college, medical or starting a new business.
Some state laws restrict home equity loans.
