It’s argued that buying a home is one of the best investments that one can make. Sure, that school of thought may have been popular when it was believed that homes were one of the only assets guaranteed to go up in value year-after-year, but is that still the case?
While buying a home may not be right for everybody, especially if you have large amounts of personal debt or an unstable income, there are still plenty of reasons to buy a home in this market.
1. PRICES ARE LOW!
Certainly there are a few ares in the country where this isn’t the case, but for a large majority of the United States, home values remain at levels that haven’t been seen in the last decade.
While some non-duressed homes are selling for bargain prices, there are gobs of short sells and foreclosures that you can buy at great prices!
If you’re looking to buy your first house, a foreclosure or short sale may present you with the opportunity to find a bargain and immediately start with 20% equity position!
2. INTEREST RATES REMAIN LOW!
Another one of the reasons to buy a home is the enticing 3-4% interest rates being offered.
As our economy continues it’s recovery process, the Fed has promised to keep rates low and we’ve even seen them drop from once all-time lows over the last 3-4 months. As of right now you can get rates of 3% on a 15-year fixed loan and even 3.7% on a 30-year mortgage when you buy a home!
While young adults may not realize just how great an offer these low interest rates represent, more seasoned adults still hold vivid memories of the 15-20% interest rates that were common back in the early-to-mid 80s.
With the combination of low interest rates and duressed properties, there are really no better reasons to buy a home if you’ve yet to do so.
3. TAX DEDUCTIONS
While this isn’t one of the main reasons to consider when buying a home, it certainly should be a minor factor.
Whether you realize it or not, when you pay rent on a home, condo, apartment, or duplex, a part of that rent payment goes to paying the property taxes and PMI (private mortgage insurance) for your landlord.
If you were to buy a home then you’re allowed to deduct these payments each year when you file taxes, thus saving a few hundred dollars on your tax bill! This of course assumes you can claim more than the standard deduction and itemize your taxes.
4. YOU MAY BUILD SOME EQUITY
Most people that rent can’t get past the idea that they’re throwing away money each month when they mail off that rent check.
While there are reasons that make renting viable for many people, and in some cases a necessity, the truth is that you are throwing some money away. One of the benefits when you buy a home is that every payment you send to the mortgage company includes a payment to principle which helps pay down the balance of your loan.
The lower your mortgage balance gets, the more equity you build in your house (assuming the value of the home stays the same or increases).
With the low housing prices and interest rates, it’s often cheaper to buy a house than it is to rent a place! Despite this being true, a lot of people that rent forget to include all of the additional (sometimes hidden) costs that pop up when you buy a home:
If you’re looking for a reason to buy a home, and are in the market to purchase one, please don’t forget to factor in these additional costs as they may be the deciding factor in a good investment and one that leaves you house poor.
5. COMFORT AND A SENSE OF OWNERSHIP
There was a period of 6 consecutive years that I signed a 1-year lease and moved to another place after the year was up.
Packing up boxes, loading possessions in moving vans, and finding new places to live is something I don’t look back upon with fond memories.
While I’ve listed a few financial reasons to buy a home, this reason to buy is all about the emotional aspect of home ownership and is something that can’t be ignored. I love knowing that this is “my home” (although it’s really the bank’s); I love knowing that I don’t have to move every year and hunt for a new place to live.
Owning a home does bring some peace of mind and comfort. Instead of feeling like a squatter, it gives you a sense of pride and there isn’t a much better feeling when you walk into the door and know you’re “home.”
While there are many reasons one should rent, these 5 reasons to buy a home are hard to ignore when you take into account the benefits they have on your financial future.
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