Buying a Home is at the heart of the ""American Dream"", and it's a big step in anyone's life and probably the biggest financial commitment you will make. It can bring happiness and provide a solid foundation for you and your family. It has also proven to be a wise investment in past years. It has many benefits, but today I highlight what many believe to be the three biggest:
Tax Breaks
When compared to other investments, few can generate the healthy and long lasting tax breaks that home ownership does. When you become a homeowner, there may be tax breaks that you can take advantage of that renters and non-homeowners cannot, the mortgage interest deduction being just one of them. Sometimes ""points"" paid to obtain a home loan are deductible.
In addition, the deduction of your real estate tax on your federal income tax return is a common practice. Some homeowners choose to use the built up equity in their home to obtain Home Equity Lines of Credit (HELOC) or home equity loans. Interest on these loans may also be tax deductible. With investment real estate, additional tax advantages include the deduction of depreciation and other expenses. With proper planning you may receive tax advantages that last a lifetime. As always, consult with your own tax advisor as to the specific benefits of home ownership that apply to you.
Equity
A home is an investment that can, and usually does, increase in value over time. In some markets, home values have been rising dramatically in recent years (California, Florida, Nevada, Arizona, etc.). In other markets the rise has been more slow and steady.
In addition, you can use your own hard work to make improvements that will increase the value of your home. Each improvement that you make will add to the overall value of your home and your way of living.
As the value of your home increases, and the amount of your mortgage shrinks, you build equity. That is, the money that would be left over if you sold your home and paid off the mortgage. As mentioned above, you can borrow against this equity should the need arise. It's almost like a savings account that you live in.
Community
Moving into a home gives you a chance to meet new people, get involved in your community, patronize local merchants, and shape your new neighborhood. By improving your community you raise the value of your home and others in your area. It's a way to put down roots and invest in your town. Home ownership provides a sense of permanence and a solid foundation for our lives, and the lives of our children.
Buying a home may be the single, largest investment you will make in your life. But there are so many benefits, some tangible and some emotional. If you are paying rent year after year, you are missing out on the advantages mentioned above. Maybe now is the time for you to take the plunge and buy a home, condominium or townhouse and experience this part of the ""American Dream"". So choose a Realtor and get going today.
About the author: Erick Larson & Vicki Walker are Realtors serving clients in Northern California. For more information about Sonoma County Real Estate , see Erick. If your interest is in Davis Real Estate and Homes for Sale , see Vicki.
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