Some people don’t need a reason to buy a home; they just want it. That can be enough justification by itself. Other people need some solid logic before they’re ready to make the commitment. The following eight reasons might help you to make the decision to buy a home.
Pride of Ownership
It just feels GOOD to be a homeowner!
Among the most popular reasons given by home buyers is that they want a place they can call their own, a place to decorate and improve it in the way they want. It is a place to feel safe and secure and a place for their family. They can share it with their friends and enjoy living in it.
Good Investment
In general, homeowners have a net worth 80 times greater than that of renters. By investing in a home that appreciates over time, it contributes to an increasing equity. The high loan-to-value mortgages currently are available, combined with low mortgage rates, also contribute to the investment through leverage, which has been described as “using other people’s money” to control an investment.
Interest and Property Tax Deductibility
Homeowners can deduct their qualified mortgage interest and up to a maximum of $10,000 of their property taxes as itemized deductions on their federal income tax return. In some instances, the standard deduction might benefit them more, but they can elect to choose either method each year, whichever helps them the most.
Capital Gain Exclusion
A single homeowner can exclude up to $250,000 of capital gain and, if married filing jointly, can exclude up to $500,000 of gain on their principal residence. Of course, they need to have owned and occupied it as their home for two of the last five years.
Cash-out Refinance
Generally speaking, a lender will allow an owner with good credit and income to borrow the difference in their current unpaid balance and 80% of the fair market value. This money can be used for any purpose and is not a taxable event.
No Landlords
Paint the walls whatever color you want. YOU are your own landlord now!
Most people don’t want to deal with landlords who might impose restrictions on things like painting, improvements, and pets. Owners are not concerned about rent increases and will have a fixed principal and interest payment for as long as they have a mortgage.
Equity Buildup
The difference in the value of the home and the unpaid mortgage balance is called equity, and it increases with each payment made. It is like automatic savings.
Low Mortgage Rates
A bonus reason to buy a home now are the low mortgage rates available. The lowest rate recorded by Freddie Mac for a 30-year fixed rate mortgage was 2.68% in December 2020. Prior to the pandemic, Today’s rates average 3.58% on a 30-year fixed rate mortgage and 2.65% on a 15-year fixed rate mortgage.
The highest rate on a 30-year fixed rate mortgage ever recorded by Freddie Mac was 18.63% in October 1981. When you put today’s rates in perspective, they are an incredible bargain. Many industry experts expect that they will not remain as low as they are now. Locking in a low rate now can keep your housing costs low.
