Buying a house is a huge financial commitment and one that will definitely benefit you in the long run. Whether it is your first home or your fifth, building equity in an appreciating asset like a home is a great investment. Here are five reasons why buying a house is a smart move for you.
1. Your House Appreciates In Value
Real estate, historically, has always increased in value, meaning the value of your house will be more when you sell it than when you bought it. Even with the market crash in the past decade the value of homes are still up and on the rise. The number of US households are also supposed to raise 10 to 15 percent over the next decade. Buying a house is a smart financial decision almost without exception.
2. You Build Equity
When you rent, the money you spend is gone forever but when you are purchasing a house you are building equity. Building equity in your home has been compared to a forced savings plan since the money you put into your house will eventually be yours again when you sell. You can also qualify for capital gains exclusion if you live in your home for more than two years, so when you sell your house later on you can exclude profits of up to $250k if you are single or $500k if you are married.
3. You Can Personalize Your Home
Along with the pride of owning your own home, you have the freedom to do what you want with the place. You no longer need to worry about what your landlord thinks or having them show up randomly to your door. Replace those old cabinets or update the bathrooms, the renovation projects that you complete will only increase the value of your new home.
4. Your Living Cost Will Be More Stable
When you buy a house you are able to secure a more stable and predictable monthly cost of living. The cost of rent is only increasing as the housing market continues to grow and buying is also cheaper than renting long term. Over time the interest portion of your mortgage payment decreases and eventually the interest you pay will be lower than the rent you would have been paying.
5. The Tax Benefits
There are three different types of tax benefits when buying a house. The first is property tax. Property tax on your current home and a vacation home can be fully deducted for income tax purposes. Second, there are certain closing cost deductions. The first year you buy your house you are able to claim origination fees whether they are covered by you or the seller and with these fees commonly surpassing 1% of your total cost these can be substantial. Lastly, there is a mortgage deduction. The tax code allows home owners to deduct the mortgage interest from their tax requirements. This can be big especially in the early years of home ownership.
If you find yourself with questions about buying your future home, contact us and we’d be happy to help. You can also browse our Pinterest boards and follow us on Facebook to find more information about Perry Homes Southern Utah.