Home calls to mind family, community, friends, relationships, and a shared history. Where we live affects our self-esteem, the control we have over our environment, and our perceptions over financial security. Being a homeowner is seen by most as a sign of accomplishment and success. Buying a home takes a lot of thought, hard work, and sacrifice.
Whether you are a single person or have a family, you need to decide whether or not owning a home is right for you. There are many things to consider, including where you want to live, how much you can reasonably afford, and what you are willing to do to make sure your new home maintains its value. Aside from the important psychological benefits of homeownership, there are many financial benefits to consider:
(1) Mortgage payments are a sort of forced savings with a portion of your monthly payment going to reduce the principal balance,
(2) The U.S. tax code allows homeowners to reduce mortgage interest from tax obligations (limits apply),
(3) Real estate property taxes paid are also fully deductible from tax obligations,
(4) If you live in the home for more than two years and then decide to sell it, up to $250,000 of the profit gained from the sale is excluded from capital gains taxes for single persons and up to $500,000 for married persons, and
(5) Price appreciation helps build home equity, which is the difference between the market price of the house and the remaining mortgage payments.
Careful consideration of all applicable benefits to your particular situation can be reviewed with a certified public accountant.
Sylvia M. Gutiérrez is author of Mortgage Matters: Demystifying the Loan Approval Maze. RealWorks Press: 2015. Available at Amazon, Barnes & Noble, iTunes, and independent booksellers everywhere. Distributed by Ingram.
Licensed and registered mortgage loan officer with NMLS id: 372427
Diversity & Inclusion Co-chair, NAMB – Association of Mortgage Professionals
Government Affairs Chair, South Florida Mortgage Bankers Association
Associate Member, National Association of Real Estate Editors