The Three Major Financial Benefits of Buying a Home
Buying a home is a big decision, but home ownership comes with many benefits that make it one of the most rewarding purchases you’ll make. If you’re still renting, you might be wondering if it’s time to consider owning a home instead. Aside from the pride of ownership, being able to choose from endless options that fit your lifestyle, and not having to answer to a landlord, there are financial benefits of buying a home you should know about. Today, we’ll delve into major financial reasons why buying a home is the way to go, shedding light on why transitioning from renting to owning can significantly improve your financial well-being.
What are the Top Three Reasons to Buy a Home?
1. A Fixed Monthly Payment
Being able to anticipate your future monthly housing payments is a huge win for home ownership over renting. When you rent, your landlord can increase the rate at the end of your lease or amidst your lease for many reasons making it difficult to budget effectively. Homeowners have the advantage of opting for a fixed-rate mortgage. A fixed-rate mortgage means that the monthly principal and interest payment stays the same over the life of the loan (typically 30 years). Also, if rates drop over time, they have the ability to refinance to lower their payments even more. Owning a home lets you plan for your future confidently, knowing that your housing costs won't suddenly increase.
2. Annual Tax Advantages
There are several tax benefits of home ownership that can put more money in your pocket come tax season. Mortgage Interest Deduction. When you pay your mortgage, you’re paying interest on the loan. This interest is tax-deductible and will reduce your taxable income which is a great help when it’s time to file. Mortgage Insurance Costs. You may be able to deduct your mortgage insurance payments. This only applies to those who used the FHA (Federal Housing Administration) loan type and made a down payment of 20% or less. It will also depend on your income, so be sure to work with a tax professional to see if you qualify for this deduction. Property Tax Deduction. Another way to help reduce your taxable income is by deducting property taxes. The money you pay towards state and local (SALT) taxes, including property taxes, can be deducted up to $10,000. Capital Gains Exclusion. This benefit happens when you sell your home and applies only if the home is your primary residence. The IRS allows you to be exempt from capital gains tax up to $250,000. Capital gains are the profit you’d gain from selling your home.3. Long Lasting Equity
One of the most commonly known financial reasons to buy a home is the ability to build equity. Equity is the difference between the market value of your home and the amount you owe on your mortgage. Though it takes some time to build equity, your home is likely to gain market value over time so you can rely on your equity to grow with it. Unlike renting where your monthly payments just go to your landlord, your monthly mortgage payments help you build equity which can act as a forced savings. The long-term accumulated wealth can then later be used to purchase another home, make home improvements, educational expenses, and more.
Buying a New Home vs. a Pre-owned Home
Part of your decision to transition from renting to owning a home will also include whether or not to invest in a new versus pre-owned home. While each has its pros and cons, buying a new home offers many upsides that a pre-owned home just can’t beat.
Designed for how you live today. From the open-concept floor plans and functional layouts to flexible rooms that can be used for whatever you need, a new home is built with the modern family in mind. You can expect tons of natural light and upgraded appliances that are not as common in pre-owned homes. Never lived in before. A new home is like a clean slate that’s ready for you to start an exciting new chapter in your life. No need to worry about the home’s many prior owners and how things were updated and maintained. Energy efficiency = lower bills. From the way they’re built to the included features, new homes come with peace of mind that you’re living in a healthy home that’s energy-efficient. They’re safer for you, and the environment, and help you save money. No upfront maintenance costs. With a pre-owned home, there are likely to be maintenance and repair costs that come soon after purchasing. Everything in your home is brand new, untouched, and never used. Therefore, you can save money and just enjoy your home. Guaranteed safe. New homes are built up to the most current codes, which can’t always be said about a pre-owned home. They’re inspected at every stage of construction and are built with modern home-building techniques. This benefit can also result in lower insurance costs. The list of benefits of buying a new home is countless.
Connect with Dream Finders for the Best Homes for Sale!
Dream Finders Homes makes it easy to find the perfect home in a great location. We have several options to suit the life you want to live in some of the best areas across the US. They’re close to incredible city attractions and everyday conveniences while offering amazing amenities. Our single family homes and townhomes include spacious designs that are sure to add to the many benefits of homeownership. If you’re ready to make the leap from renting to owning a home, browse our communities, floor plans, and quick move-in homes. Once you’re ready, we’re happy to answer any questions you have and show you more advantages to owning a Dream Finders home.Categories: Buying New