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Why Should I Buy a Home?

If you are like most first time home buyers, you may be wondering if buying a home is the right thing to do. You have a nice apartment, reasonable rent, a good landlord and a great location. Why would you want to buy a home and lose all of that. Well, there are several advantages there owning a home has over renting (When I refer to a home, I am including condos as well as single families). In the end, it is a lifestyle and financial choice that only you can make.

The American Attitudes About Homeownership survey found that in today’s challenging economy, 95 percent of owners and 72 percent of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home – 93 percent of owners surveyed would buy again.

Home ownership isn't for everyone, because with it comes responsibility. Paying the mortgage on time, paying the property taxes and insurance (luckily, most of the time they are included in your mortgage payment), maintaining and repairing your home and keeping up with the maintenance of your property's landscaping (though you can avoid most of that with a condo) are the major duties you will have as a home owner. There are some people who just don't have the discipline to own a home. Others just don't want the responsibility, or like the freedom to be able to move whenever they want (at the end of their lease) and are willing to give up the advantages that come with ownership. If you cannot commit to staying in one place for at least a few years, then home ownership may not be for you. At least not yet.

Along with those responsibilities comes a host of simple pleasures. Being able to remodel and decorate your home any way you like. Landscaping your yard (wait, wasn't that on the list of responsibilities?) or having a garden. In fact, just having a yard is nice. Someone just told me that all kids should have grass to play on, and I agree. Playing your music and/or video games LOUD (might be an issue with a condo) is something you relish after living in an apartment for years. Having the space to have a home office, game room, (wo)man cave. Just the feeling and satisfaction of owning your own home is awesome.

Buying a home is one of the most important financial decisions you'll ever make. A home can be an excellent investment because most real estate increases in value over time. No, it may not happen in a year, but it will eventually increase in value. Real estate, like many other things that are tied to the economy, have their ups and downs. But in the long run real estate is always a good investment. Even with the downturn in the real estate market in the late 2000's, real estate out-performed the stock market.

Home ownership also brings many tax benefits including deductions for mortgage interest and property taxes. When it's time to sell your home, you can make up to $250,000 profit without paying a dime in capital gains tax!* If you are a couple, that increases to $500,000! What other investment can you make with this type of tax-free profit? When you consider the actual amount of money you actually put down, it is an incredible return on investment!
 
* You must live in the home for at least 2 years. Talk to your tax professional for full details.

Home ownership is less expensive than renting in most cases. One of the major reasons is because of the tax savings through the deductions that you receive, and mortgage interest is one of the largest. During the first several years of home ownership, the great majority of your mortgage payment is deductable. This will reduce the amount of tax you owe, or increase the size of your income tax refund. If you are in the 25% tax bracket, and your mortgage payment is $1500 per month, that means you will save about $3300 in taxes (based on a $296,000 mortgage at 4.5% interest). Compare this with paying rent, which is not deductable on your federal tax return. If you are paying $1200 a month for rent, then a $1500 dollar mortgage payment is about the same after the tax savings.

The financial considerations are not the most compelling reason to buy a home. Pride of ownership is probably the #1 reason why people own a home. Home ownership gives you and your family a sense of security and stability. The landlord can't raise your rent - your payment will stay the same with a fixed rate mortgage, though taxes may (ok, will) go up. There are no pet policies with a single family home, so you can have that 12' boa constrictor you always wanted. Sometimes you just get sick of moving every couple of years, especially as you get older (not old, just older).

In the end, buying a home is a personal decision that only you (and your family) can make. You shouldn't let anyone pressure you into, or out of, buying a home. Make the decision on based on your own personal reasons and finances.

If you have any questions, contact a Realtor at Armstrong Field Real Estate and you will get an honest answer with no pressure. We do not want to sell you a home that you cannot afford. We get the majority of our business from referrals, and our clients won't refer their friends and family to us if they felt they had a bad buying experience. We are fully committed to protecting our clients and their assets. We are proud to say that in the last few years with the struggling economy, none of our clients have had their homes taken by foreclosure.

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