Moving On Up: Five Financial Reasons You Should Own Your Own Home
BY NANCY BIERENGA, REALTOR®, E-PRO, ABR, éLAN REALTY, PAST PRESIDENT, WEST MICHIGAN LAKESHORE ASSOCIATION OF REALTORS
The American Dream of homeownership is alive and well. Recent reports show that the U.S. homeownership rate has rebounded from previous lows and is headed in the right direction.
The personal reasons to own are different for each buyer, but there are many things that are the same for all buyers. This month we want to talk about the top five financial reasons you should own your own home and how to get there.
1. Homeownership is a Form of Forced Savings. Paying your mortgage each month allows you to build equity in your home that you can tap into later in life for renovations, to pay off high-interest credit card debt, have a nest egg for retirement, or even send a child to college. As a renter, you guarantee that your landlord is the person with that equity.
2. Homeownership Provides Tax Savings. One way to save on taxes is to own your own home. You may be able to deduct your mortgage interest, property taxes, and profits from selling your home, but make sure to always check with your accountant first to find out which tax advantages apply to you in your area. This statement is less true today when your costs may no longer be deductible, but it is still true that if you have lived in your home for at least two of the five years before you sell it, you do not pay Capital Gains taxes on the appreciated value – unlike investing in the market or even on your savings account interest.
3. Homeownership Allows You to Lock in Your Monthly Housing Cost. When you purchase your home with a fixed-rate mortgage, you lock in your monthly housing cost for the next five, 15, or 30 years. Interest rates remained around 4% all last year, marking some of the lowest rates in history. The value of your home will continue to rise with inflation, but your monthly costs will not. (You must anticipate some increase in taxes and homeowner’s insurance, though, so your monthly payment will edge up.
4. Buying a Home Is Cheaper Than Renting. The results of the 2018 Rental Affordability Report from ATTOM show that buying a median priced home is more affordable than renting a three-bedroom property in 54% of U.S. counties analyzed for the report.
5. No Other Investment Lets You Live Inside of It. You can choose to invest your money in gold or the stock market, but you will still need somewhere to live. In a home that you own, you can wake up every morning knowing that your investment is gaining value while providing you a safe place to live.
Bottom line: Before you sign another lease, let’s get together to help you better understand all your options.
Now – to get started:
Contact a lender or two. Check out mortgage interest rates at your bank, but then also consider a credit union, and even a mortgage company. Chances are many of them will sell your loan to another larger company, but having an originator you like and can work with will make the process of buying much easier.
This three bedroom, three full and one half bath house is waiting for you to make it a home. This spacious home features wood floors, fireplace, solid surface counter tops, central air, under ground sprinkling and a large deck for all of your entertaining. Home has great curb appeal on a quiet cul-de-sac, yet close to everything.
Interview one or two REALTORS. In the interview, find out how many buyers they’re working with at present. You probably want someone who is responsive to your calls/emails/texts in the form that is easiest for you. That may mean it isn’t the busiest person you find. You also want someone who knows the community. For sure you want someone who you can relate to and who listens to your wants and needs.
Make a separate list of your needs, your wants, and your nice-to-have items. These would include how many miles (or how much time) to work or to family, how many bedrooms, per month payment (this may include more than the cost of the house, like HOA fees, taxes, and insurance costs), swimming pool, fireplace – wood-burning or gas – number of bathrooms, main floor laundry, main floor master. There are many variables and your list of needs will help the REALTOR you choose find you to best home in your price range.
Nancy Bierenga, of élan Realty, is past president of the West Michigan Lakeshore Association of REALTORS®, a member of the National, Michigan, and West Michigan Lakeshore Associations of REALTORS®, and the Greater Muskegon Woman's Club. She is an Accredited Buyer's Representative, a Certified e-Pro REALTOR®, and a Certified Fair Housing REALTOR®. She and husband Robert have lived in Muskegon since 1996. Phone Nancy at (231) 730-0887, email Nancy@HousesByNancy.com, stop by élan Realty's office at 4075 Airline Rd., Muskegon or visit the élan Realty on Facebook here.