There Are Many Benefits In Being A Homeowner Versus A Renter
The American dream is still being a homeowner. Many renters feel that homeownership requires great credit, great income, and a lot of money to use for a down payment. That is not normally the case. There are great first time home buyer mortgage loan programs where as long as you can prove that you can afford the monthly housing payment, you should be able to qualify for a mortgage loan. FHA loan programs require a minimum of 3.5% down payment, however, if you do not have the down payment, the down payment can be gifted by a family member. Many first time home buyers are nervous in becoming first time homeowners and are afraid of committing to such a long term commitment and responsibility. There are many benefits of being a homeowner.
Several Benefits Of Being A Homeowner
1. CONTROL: One of the greatests benefits of being a homeowner is that you have full control of the property since you are the owner of the property. You do not have to abide by the rules of the landlord where you cannot paint your own home, have pets, have satellite dish installed, install carpeting, attach fixtures, remodel, or have your stereo system too loud.
2. Building equity : Another great benefits of being a homeowner versus a renter is that when you pay your mortgage payments every month, part of the mortgage payments is the principal amount and you will be reducing your mortgage balance every month. Also, real estate is one of the safest investments around and you will also reap the benefits of being a homeowner because more than likely, your home will appreciate in value. The real estate and credit collapse of 2008 has corrected the real estate market so if you are a first time home buyer, you can take advantage of the down real estate prices from the real estate and financial meltdown of 2008. If you are renting, you will not reap the benefits of being a homeowner and your monthly rental payments is nothing but an expense.
3. Writing off mortgage interest deductions: Other benefits of being a homeowner versus a renter is that you get to write off the mortgage interest you pay every year whereas as a renter you cannot do that. Mortgage interest expense is fully tax deductible and this is one of the greatest benefits of being a homeowner versus a renter. Mortgage interest is the biggest portion of you monthly mortgage payment.
4. Writing off property taxes: The Internal Revenue Service allowes property taxes paid on owner occupied homes and second/vacation homes to be fully deductible from your income tax.
5. Exempt from paying capital gain taxes on your owner occupied residence: Other benefits of being a homeowner is that as long as you have lived on your property for a few years, a homeowner can exclude paying capital gains. You need to check with your accountant on the amount you can exclude but from my understanding, a homeowner can exclude up to $250,000 for an individual or up to $500,000 for a couple who are married. This is different than a 1031 tax exchange where you do not have to purchase a like or larger property with the proceeds. You are totally tax exempt from paying capital gains taxes from the sale of your personal residence.
6. Benefits of being a homeowner is the ability to use equity loans versus credit cards: Other benefits of being a homeowner versus a renter is that a homeowner can get a home equity loan or a HELOC. Home Equity Line Of Credit. Having a HELOC is like having a credit card but it is secured with the equity of your home. Rates for HELOC’s is probably lower than your first mortgage rates and WWAAAAAAAAAAYYYYYYYYYYYY LOWER THAN ANY CREDIT CARDS. The benefit here is that you can write off the interest from your HELOC where you cannot write off the interest from any credit cards. You can use your HELOC to pay off all of your high interest rate credit cards.