Reasons for Home Ownership
Owning a home is an American dream that millions achieve each and every year. When owning your own home, you can increase your degree of ownership with every mortgage payment because some of your payment goes towards principal, paying down the money you borrowed. This process is referred to as "building up equity" and if the equity in your home grows greater than 20%, you may be able to borrow against your equity, should the need arise.
You can borrow money to pay for a major purchase in the future, pay down credit cards, or for any other reason. Of course, it's always wise to be prudent with money and the same holds true with the equity in your home. Millions of people elect not to tap the equity in their home and some see investing in their home as another way of saving for retirement.
Another benefit of owning a home is tax relief. If you are paying down a mortgage on your home, you can deduct your mortgage interest and property taxes. Taking these deductions lowers your overall tax bill and may even result in a refund. A recent tax law change capped the amount of "SALT" (state and local taxes) you can deduct to $10,000.
Note: Always consult your accountant for any tax advice.
Current mortgage rates are near historical lows and are another reason to purchase a home now. The amount of money you finance with your mortgage costs you less because mortgage rates are low. These low mortgage rates also allow you to borrow more money, which can mean buying a larger home or a home in an area you thought might be out of your range.
Owning a home also gives you greater flexibility to improve your home and make changes that will improve the value of your home. As a renter, any improvements you make, if you're even allowed to make improvements, will only benefit the landlord and their property. When you own your own home, you don’t have to worry about your lease ending, the landlord increasing your rent, or them deciding to sell and forcing you to move.
If you purchase a home with a fixed mortgage rate, your combined principal and interest payments will remain the same for the life of the loan. Please note, if you have your property taxes and insurance payments escrowed, bundled into your mortgage payment, your overall payment can increase as property taxes and/or insurance costs increase.
The first step towards homeownership is finding out how much you are comfortable spending. You can figure this out on your own but an easier way is to work with a mortgage broker. You can also "pre-qualify" for a home loan, which shows realtors and sellers that you're a serious buyer. You can start this process by finding a lender with a great mortgage rate at MonitorBankRates.com.
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