Homebuilding Basics

Renting vs. Owning

This is usually a big question for potential homeowners: should I continue to rent? Or, is it time to buy? There are many advantages to owning a home. Here are just a few:

Security

A feeling of security comes with owning a home and the knowledge that your home is a safeguard against inflation.

Investment

You can buy a house these days with as little as 5% down in some locations. Subsequent payments on your mortgage serve to build your overall equity, enabling you to own more and more of your home over time. In contrast to paying rent, every payment you make against your house builds equity, meaning you own more and more of your home. The garden that you plant, the permanent improvements you make – all of these enhance the quality of your life as well as the value of your home. Also, as your home appreciates in value over time, your equity increases too.

Tax Advantage

Depending on your situation, all or portions of your real estate tax and interest on your mortgage may be deductible from your income tax. Check with your accountant to see what tax benefits home ownership may have for you.

Saving Money

Buying a home will usually help you save money in the long run. In the first few years, renting may seem cheaper, but over time the interest portion of your house payment should become lower than the comparable rent. In other words, even though you'll be paying interest payments on your loan initially, your payments will eventually go mostly to principle, getting you closer to owning a home outright with payments complete.

Other Advantages of Home Ownership

Sense of pride

Owning a home is a big part of “the American dream”. Homeownership can lead to a great sense of accomplishment and pride.

Steady payments

As a renter, you run the risk of your lease cost going up unexpectedly at any time. With a fixed rate loan, your payments will generally remain consistent over the life of your loan term (although they can still be subject to changes due to property taxes, cost of housing insurance, etc.).

Better credit opportunity

Homeownership is looked upon as a sign of fiscal responsibility by credit lenders. Also, as you build equity in your home over time, you can borrow against it if you choose to.

Freedom

Set your inner decorator free! As a homeowner, you have the freedom to decorate your home and garden whenever you want, however you want. You don't need the landlord's approval every time you want to paint a wall or hang a picture.

Tax deductions

Many tax incentives are available for homeowners, including the first-time homebuyer tax credit, or tax deductions for homes that incorporate energy-efficient/green elements. For more information, talk to your tax advisor or go to www.irs.gov.

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