|
 |
|
|
|
 |
| The Benefits
of Home Ownership |
Very few people, even home
owners themselves, are aware of all of the benefits of home ownership.
Read the list below for a better understanding of the benefits
of owning a home.
Tax write off - Stop paying income tax! All interest
paid on the mortgage can be written off on your taxes. That is,
you save money by owning a home by paying thousands less in taxes
every year! Essentially, a great deal of your mortgage payment
goes towards paying your taxes, and the rest becomes equity in
your home. Therefore your entire mortgage payment is paying yourself
every month!
Investment vs. a purchase – Equity builds
and you end up PROFITING vs. spending (wasting) money. Equity
is available to “cash out” refinance or as a line
of credit. You can sell the property or rent it for a profit.
Houses appreciate in value, while rent is a 100% loss. Notice
that very, very few rich people are renters. Instead, many are
landlords! The median net worth of most modest-income owners is
almost $60,000 compared to less than $10,000 for renters in the
same income group-The Federal Reserve Board – Survey of
Consumer Finance. Furthermore, ask around to see how many times
people actually get their deposits back when they leave a rental
property- many times landlords claim damages on top of the deposit!
Where does that money go? To fix the landlord’s house of
course. More of your money wasted. How much time/money have you
wasted? See the chart below:
|
If
your current
rent is: |
1
YR |
5
YRS |
10
YRS |
15
YRS |
| $500 |
$6,000 |
$30,000 |
$60,000 |
$90,000 |
| $600 |
$7,200 |
$36,000 |
$72,000 |
$108,000 |
| $700 |
$8,400 |
$42,000 |
$84,000 |
$126,000 |
| $800 |
$9,600 |
$48,000 |
$96,000 |
$144,000 |
| $900 |
$10,800 |
$54,000 |
$108,000 |
$162,000 |
| $1,000 |
$12,000 |
$60,000 |
$120,000 |
$180,000 |
| $1,100 |
$13,200 |
$66,000 |
$132,000 |
$198,000 |
| $1,200 |
$14,400 |
$72,000 |
$144,000 |
$216,000 |
| $1,300 |
$15,600 |
$78,000 |
$156,000 |
$234,000 |
| $1,400 |
$16,000 |
$84,000 |
$168,000 |
$252,000 |
| $1,500 |
$18,000 |
$90,000 |
$180,000 |
$270,000 |
|
Freedom - You make the rules at a house you own.
You can redo the home as you like it. When you fix up the place
you are investing in yourself, not throwing money away. You don’t
have to worry about a landlord “kicking you out” when
your lease is up.
Security - I recently met a landlord who owns ten
houses in Greater Denver and he told me flatly that if the rent
is more than 3 days late he has the tenants removed from the property
(evicted). I have also personally seen an eviction of a neighbor
where all their possessions were put out on the lawn by law enforcement,
and passers-by took what they wanted. All this is perfectly legal.
If you own then you have a mortgage. There is no penalty if you
are up to 15 days late on most mortgages. And there is only a
small fine if you are under 30 days late. In order for a foreclosure
to happen it typically takes several months before they will evict
someone and there are many options for people to avoid foreclosure.
These are options that renters simply don’t have. Owning
a home also builds a sense of security and pride, you have a place
to truly call home.
Build Credit - Having a mortgage is an excellent
way to build great credit. Every month positive information is
added to your file. Over time, building your credit helps you
to have a much better credit score and therefore you become able
to get a better interest rate. Paying rent has no credit benefits
whatsoever. Also, rent usually goes up with time vs. a mortgage
payment which stays the same or goes down when you refinance it
at a better interest rate.
Cash Flow - Equity is the difference between what
your home is worth (value) and what you owe on it. By increasing
the value of your home or decreasing what you owe, you build equity.
This happens in the following ways: |
| 1) |
Homes appreciate (go up in value) with
time. Like all things, homes become more and more expensive.
Unlike cars and most other purchases people make, houses
increase in value. |
| 2) |
You upgrade your home. Making your
home nicer improves the value. Upgrades such as new windows,
adding a bathroom, etc. can often make your house’s
value go up by more than the improvement cost you to make! |
| 3) |
As you make mortgage payments, you
pay down the principal, giving you equity in your home.
This equity in your home can be accessed through a home
equity line of credit (HELOC). This works like a credit
card and gives you access to your equity when you need
it. It also helps build your credit. |
|
And your HELOC money can be used to upgrade your house, therefore
building you yet more equity!
Future Investment - Once you own a home it becomes
much easier o purchase investment property. Investment properties
are excellent for fixing up and reselling (“fix and flips”)
or for renting out (becoming a landlord). On your additional property
you get all the tax benefits and you can also get the benefits
of cash flow as described above.
The question isn’t whether you should buy a home; the question
is ‘can you afford not to buy a home’! |
|
|
|
|
|
