With rising housing demand and home prices, many
potential first-time home buyers are hesitant about entering the market. Having
reservations is normal, but the fact remains that while the housing market is
cyclical, over the long-term real estate has consistently appreciated. There
are many benefits of owning a home, including:
1. Building equity. As you repay mortgage principal, you build
equity in your home. Building equity is a ready-made savings plan. Money
paid for rent is money that you will never get back.
2. Hedge
against inflation. Appreciation of your
property over time acts as a hedge against inflation.
3. Low interest rates. Mortgage
rates currently are at historic lows, thereby dramatically reducing the cost of
carrying your mortgage.
4. Pride of Ownership. Homeowners are
able to remodel their homes to their own taste and build additional structures needed for their
families or hobbies.
5. Stability. Home
ownership gives you and your family a sense of stability and security. Staying in one neighborhood for several years gives
you a chance to participate in community activities, lets you and your family
establish lasting friendships.
6. Mortgage interest deductions. Under current tax law, homeownership offers a
tax shelter. Homeowners can deduct the interest they pay on their mortgage, as
well as some of the costs involved in buying their home.
7. Capital Gain Exclusion. Under current
tax law, if you sell your home and
have lived in the home for two of the five years preceding the sale, you do not
have to pay capital gains tax on some or all of the profit on the sale - up to
$250,000 for an individual or $500,000 for a married couple.
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