If you’re currently renting a home or an apartment you might be missing out on the chance of a lifetime to own your own home. With rents rising and interests on mortgages at a low we’ve not seen in years, what you pay each month to own your own home could be significantly less that what you’re currently paying in rent.
While there are still those hesitant to make the leap to homeownership due to a fear of a repeat of the 2004 recession and its impact on home values, the current interest on fixed rate mortgages are about as low as they’re likely to be. Today more than ever there are plenty of good reasons to own rather than rent. Here are five that you would be well advised to consider.
How Much You’ll Pay Each Month
The singular beauty of obtaining a fixed-rate mortgage is that what you’ll pay each month to own your own home will never change. Depending on where you live and the size of the home or apartment, it’s not uncommon to pay over $1,000 a month in rent. At today’s fixed 30-year mortgage rates you could easily pay half or less of that figure a month to own your own home. This monthly payment would not change for the duration of the 30-year mortgage period.
Ask yourself when was the last time rents failed to increase, if not yearly, then at the end of the duration of the lease period? Owning your own home frees you forever from this cycle of periodic inflationary increases.
The Best Investment You’ll Ever Make
Even if you’ll never be a big player in investments such as commodities or stocks, that doesn’t mean you can’t make a wise and fruitful decision by investing in your own home. We sometimes forget that, aside from the contentment found in owning your own home, it’s also an investment, and a significant one at that.
Over time homes appreciate. Say you purchase a home today for $100,000 with a low, fixed-rate mortgage. What might that home be worth 30 years from now? Allowing for fluctuations in the market it is not beyond the realm of possibility that, at some point during the 30 years, you might be able to sell your home at double, even triple the original purchase price.
Another potential benefit of homeownership, often overlooked, is that you are, in effect, creating a secondary stream of potential income. Could you not rent out a portion of your home, say one of the bedrooms, to a boarder each month? What about renting out parking space should you own more than you need?
Help with the Taxman
Current IRS regulations allow homeowners to deduct what they pay in interest on their mortgage and the property taxes they pay each year on their annual tax returns. In addition, there are regulations that allow for certain improvements related to energy efficiency to be tax deductible. There are also provisions that allow you to reinvest the money you receive from selling your home without paying federal taxes on the proceeds. These tax deductions are not insignificant and often result in helping to make it possible for a homeowner to be eligible for a tax refund.
Helping You Save Money on a Regular Basis
When you make a monthly mortgage payment a portion of it goes to paying down the principal amount you borrowed. Each year, as this principle amount continues to go down, the amount you’re paying each month that goes towards principal increases. This can be viewed as a form of forced savings for homeowners. As the principal owed is reduced, the owner’s equity in the home increases. Equity is the amount you might pocket after the principal and interest is paid in full were you to sell your home.
Smart homeowners will often configure their monthly budget to allow for an additional amount paid towards principal only so that their equity might increase at a faster rate. Often, homeowners are able to transform a 30-year fixed mortgage into a 15-year fixed mortgage through additional monthly principal only payments.
It’s Your Home — Do Whatever You Like
Almost everyone, at one time or another, has had to deal with a landlord who was difficult at best. Now imagine never having to deal with a landlord again. Despite all of the wonderful financial benefits that accrue for homeowners, sometimes just the thought of being able to do whatever you want in your own home is reward enough.
Just think, as long as you maintain your mortgage payments there’s no one that can ever evict you or tell you that you can’t remodel or reconfigure your home to your liking. Would you like to knock down a wall and make an existing room even bigger? Go for it. Do you prefer a certain paint scheme over others considered more traditional? It’s your choice.
Whether it be the interior design of your home or your landscaping preferences, with the exception of complying with certain homeowner association regulations, should you belong to one, there’s no one to tell you what to do.
The Next Step
Okay. You’ve read this article and you’ve decided to take the plunge. What next? It would be prudent to seek out a reputable, professional mortgage company. One that has a proven history in the town or county where you intend to purchase a home. Once you contact them, they’ll guide you through the process of purchasing a home and will even pre-qualify you in terms of just how much of a home you can afford. Here in the Fairlawn area, the Tim Bullock Team at Union Home Mortgage is just such a mortgage company. If you’re ready to take the money you pay in rent each month and invest it in your own home, contact them today.