Advantages of Buying a Home
Purchasing a home with a mortgage most likely creates a fifteen-to-thirty-year term where loan payments remain essentially the same over the life of the term, other than the tax increases associated with the property. Instead of adjusting for fluctuating rental rates, homeowners can take advantage of a consistent mortgage payment and can adhere to a long-term budget for their living expenses. As an added bonus, purchasing a home essentially creates equity in a self-owned asset while renting goes towards paying off the property owner’s debt.
When real-estate is purchased the buyer takes legal ownership of an appreciating asset as property values tend to increase over time. While market variables can highly affect the value of a property, a large majority of home buyers plan to reside in the dwelling for many years. As time passes, homeowners eventually decide to upgrade the efficiency, functionality, or mechanics of the structure while many decide to enhance the overall design & style as well. As long as a property is properly maintained and cared for buyers can typically take advantage of an appreciating asset such as real-estate.
Deciding to purchase a home can be a daunting task, especially considering the amount of paperwork that comes from the lending institutions, brokerages, title & insurance companies, and appraisals. While the red tape is certainly stressful for buyers, there are several tax deductions that homeowners can qualify for. The largest tax deduction that people generally get to write off is derived from the interest they pay on their home mortgage, as it is typically the largest expense they will ever have. As mortgage interest ultimately lowers an individual’s earned income on paper, and the accounting expenses directly related to a property can be substantial, these costs are most certainly tax deductible. Additionally, mechanical upgrades and specific renovation enhancements can also be deducted as they are considered as a capital investment into maintaining the functionality of the property.
As homeowners make payments to their mortgage lender, the outstanding principal balance on the loan decreases and ultimately creates a greater variance between what is owed on the property and the fair market value. This is what’s known as home equity, and it can be considered as an asset because lenders will extend credit to homeowners using their equity as collateral. As property values elevate, or debt paydown continues to unfold, the value created from a growing variance gives homeowners a relatively low interest investment option if they choose to secure a home equity loan. Having significant funds available by paying a mortgage gives homeowners a financial resource which can be utilized for property upgrades or any other type of expense.