Deciding on Home Ownership: Weighing the Advantages

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Home Ownership – Is it Right for You?

There are a lot of benefits that come with owning a home. But the reality is there is a lot of responsibility as well. The decision to own a home varies by individual, and each individual should take time to consider the advantages and disadvantages to owning their own home. Remember, nobody knows your financial situation better than you.

A Great Investment

Although the housing market is constantly fluctuating, historically, owning a home has proven to be it is a consistent source of growth – providing significant return on investment over time.

Building Equity

Equity is the amount you owe on a home deducted from the home’s total value. That amount left over is home equity, or the portion of the home that belongs to you. If utilized correctly, building home equity can be very beneficial in the long run.

There are two ways to build equity:

Each monthly mortgage payment you make, adds to paying down the principal (the amount owed on the loan), increasing equity over time. What’s more, each month sees a larger portion of your payment being put toward the principal – creating a form of savings, as the home’s equity increases.

As home values increase, equity is built without the owner having to do a thing! Home improvement and repair can also built equity. Increasing the value of the home in this way is referred to as “sweat equity.”

Possible Tax Benefits

Home ownership may also significantly lower the amount of income tax paid by the owner. Mortgage interest and property tax payments may be deductible from federal and many many state taxes. Also, many closing costs and loan discount points also may be tax deductible* as well. Early in a mortgage’s term, interest tends to represent the bulk of a monthly mortgage payment. These tax deductions can add up to a significant amount of money in your pocket.

Building a Solid Credit History

Consistently making monthly loan payments on time, demonstrates to other lenders that the borrower is a low risk, dependable, responsible individual. A solid credit history is invaluable for many facets of your life for years to come – future interest rates and approval for auto loans/credit cards/general financing as well as a possible factor in employment! If you’re credit isn’t great, consider handling any issues before proceeding with the home buying process.

Freedom to Create the Life You Want

Homeowners enjoy significant freedom in shaping the living environment that best suits them, brings comfort, and make it truly “their own”. Life enriching decisions such as: having a pet as a companion, remodeling, decorating are all decisions home owners are free to make without needing approval from a landlord.

*1 Consult your tax adviser about the tax deductibility of mortgage interest.


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