There’s a great saying about home ownership, “Everyone pays a mortgage every month and everyone buys a house, it´s a matter if it´s yours or your landlord’s.” Over a lifetime of paying rent, you still paid for the landlord’s investment. So we put together a list of seven things every renter should know about home ownership which could very well turn them into first time home buyers!
1. RENTS ARE GOING UP.
Rents have risen steadily over the last few years and experts are calling it one of the biggest imbalanced rental markets ever. That means what you spend on rent every month has probably gone up and probably will go up again. In fact, many first-time homebuyers are purchasing their home and spending a lot less than they did for rent!
2. YOU’RE MISSING OUT ON TAX DEDUCTIONS.
The federal government long ago decided they didn´t want to be in the business of housing the American people, so they instituted generous tax breaks for private real estate owners. Owning a home is still one of the best tax breaks you´ll ever get. In fact, the interest you pay on your mortgage is tax deductible, as are a lot of repairs and upgrades, meaning you keep much more of your hard earned paycheck in your pocket. And when it´s time to sell your home, there are generous tax laws that allow you not to pay proceeds on the profit up to a certain point if you´ve owned it two years.
3. INTEREST RATES ARE STILL LOW.
Too often, potential homebuyers are confused or scared by the news about interest rates and the economy, and that causes them to not act. They even have a term for this, “paralysis by analysis”. But it´s important to realize that interest rates are near historical lows, and even if they move up a point or so in the next years, they are still great.
4. THERE ARE PROGRAMS TO HELP FIRST TIME HOMEBUYERS.
Buying your first home (and getting your first mortgage) can be a confusing and overwhelming process. But it’s important to know that there are so many resources and places to get help for first-timers. Many banks and lenders have special programs for first time buyers, and governmental agencies like FHA, the Federal Housing Authority, specifically try to aid new buyers. In some locations and markets there are even grants or down payment assistance programs, so one way or another, you probably will have to invest far less than 20% for a down payment, and all of your questions and concerns will be addressed.
5. YOU’RE ONLY MAKING YOUR LANDLORD MONEY.
If you add up the financial advantages of owning a home versus renting, the numbers make a clear case. Your landlord understands the power of real estate as an investment, and loves it that you rent instead of buying your own property for these reasons.
6. OWNING A HOME IS THE BEST FINANCIAL DECISION YOU’LL EVER MAKE.
Among millionaires and financially successful people, 95% attribute owning real estate as a contributing factor. In fact, owning your own home is one of the most, well-traveled paths to 28 financial independence. Between the tax breaks, paying off a mortgage over time, and appreciating values, it’s hard to fathom why more people don’t buy their home.
7. OVER TIME, HOUSES ALWAYS APPRECIATE.
There are very few “sure things” in life, but real estate always goes up in value once you hold onto it long enough. Of course there are market swings and fluctuations, real estate booms and then corrections, but the beautiful thing about owning a home is that you don’t realize that loss unless you sell during that time – you can just wait for it to go back up in value. And over the history of real estate in the United States, there has never been a decade where houses haven’t appreciated in value.