There are
a number of personal and emotional reasons to buy a home. But there are also
some strong financial reasons to make the investment. In addition to
exceptional home affordability and near historic interest rates, here are some
important financial benefits of owning a home:
Increased
Net Worth: Few
things have a greater impact on net worth than owning a home. In a comparison
of renters versus homeowners, the Federal Reserve Board of Consumer Finance
found that the average net worth of renters was just $4,000 compared to
homeowners at $184,400.
A Big Tax
Deduction: One of
the largest tax deductions available is the amount of interest paid on a
mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to
approximately $8,000 in first year's interest. This amounts to a significant
savings - effectively reducing the amount of a homeowner's monthly loan
payment.
Long-Term
Appreciation: Over
the last few years, home prices have corrected and become more affordable.
While that's good news for potential buyers, it has overshadowed the long-term
appreciation of a home's value. The reality is, despite market ups and downs,
real estate historically appreciates around 6% per year. Even if you calculate
a modest appreciation of 3%, a home purchased today for $150,000 should grow in
value to $364,000 over 30 years.
$8,000
Tax Credit: Don't
forget, the government is offering an $8,000 tax credit for first-time
homebuyers - or for folks that haven't owned a home during the past three
years. However, the program is scheduled to end soon. In fact, the Internal
Revenue Service recently reminded potential buyers that they must complete
their first-time home purchases before December 1, 2009 to qualify for the
special credit, which means the last day to close on a home and qualify for the
credit is November 30, 2009.
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