Benefits Of Being A Homeowner Versus Renter And Mortgage Process

Benefits Of Being A Homeowner Versus Renter And Mortgage Process

This BLOG On Benefits Of Being A Homeowner Versus Renter And Mortgage Process Was UPDATED On October 8th, 2018

The American dream is still being a homeowner.

  • A home purchase is normally one’s largest and single biggest investment
  • There are many benefits being a homeowner versus renter
  • Many renters do not realize how simple it is to be a homeowner
  • Many renters are under the impression that they need 20% down payment and great credit to qualify for a home mortgage
  • This is not the case
  • Gustan Cho Associates are experts in helping first time home buyers realize the dream of home ownership become a reality
  • Our team of licensed loan officers at The Gustan Cho Team will help renters qualify to become first time home buyers
  • We work closely with realtor partners nationwide
  • Over 75% of our borrowers are home buyers who could not qualify at other lenders because of the other lenders have overlays
  • Lender Overlays are mortgage guidelines that are above and beyond those of FHA, VA, USDA, Fannie Mae, and Freddie Mac Mortgage Guidelines

We are direct lenders with no overlays on government and conventional loans.

Weighing The Cons And Benefits Of Being A Homeowner Versus Renter

We will cover the cons and benefits of being a homeowner versus renter on this BLOG:

  • Many renters feel that home ownership requires the following:
    • Great credit
    • Great income
    • A lot of money to use for a down payment
    • Reserves
  • That is not normally the case
  • Home Buyers can qualify for FHA Loans with outstanding collections and charge off accounts with a 580 credit score with Gustan Cho Associates Mortgage Group
  • There are great first time home buyer loan programs where as long as the buyer can prove that they can afford the monthly housing payment, they should be able to qualify for a home loan
  • FHA loan programs require a minimum of 3.5% down payment
  • However, home buyers who 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
  • They are afraid of committing to such a long term commitment and responsibility
  • There are many benefits of being a homeowner versus renter

Several Benefits Of Being A Homeowner Versus Renter

CONTROL:

  • One of the greatest benefits of being a homeowner is that homeowners have full control of the property since they are the owner of the property
  • Homeowners do not have to abide by the rules of the landlord where they cannot paint the home, have pets, have satellite dish installed, install carpeting, attach fixtures, remodel, or have stereo system too loud

Benefits Of Being A Homeowner Versus Renter With Building Equity

Building equity :

  • Another great benefits of being a homeowner versus a renter is that when they mortgage payments every month, part of the mortgage payments is the interest expense and part is principal
  • Homeowners can deduct mortgage interest from their income tax
  • The principal pay down will reduce the principal of the loan amount
  • Also, real estate is one of the safest investments around
  • Homeowners will also reap the benefits of being a homeowner versus renter because more than likely, the home will appreciate in value
  • The real estate and credit collapse of 2008 has corrected the real estate market
  • So first time home buyer can take advantage of the down real estate prices
  • Renters will not reap the benefits of being a homeowner versus renter but will be able to save money from the mortgage interest deductions and/or potential appreciation of their home
  • As a renter, they cannot deduct any rental expense and renters are helping their landlords pay down their mortgage and build wealth for landlords and not themselves

Financial And Tax Benefits Of Being A Homeowner Versus Renter 

Writing off mortgage interest deductions:

  • Other benefits of being a homeowner versus a renter is that homeowners get to write off the mortgage interest every year whereas as a renter they do not have those benefits
  • Mortgage interest expense is fully tax deductible
  • This is one of the greatest benefits of being a homeowner versus renter
  • Mortgage interest is the biggest portion of monthly mortgage payment during the first half of the term of the loan

Writing off property taxes:

  • The Internal Revenue Service allows property taxes paid on owner occupied homes and second/vacation homes to be fully deductible from income tax
  • Again, renters do not have that privilege 

Exempt from paying capital gain taxes on owner occupied residence:

  • Other benefits of being a homeowner is that as long as homeowners have lived on their property for a few years, a homeowner can exclude paying capital gains
  • Homeowners need to check with their accountant on the amount they 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 from paying capital gains
  • This is different than a 1031 tax exchange where property owners do not have to purchase a like or larger property with the proceeds
  • Primary homeowners are totally tax exempt from paying capital gains taxes from the sale of personal residence

Ability To Do Cash-Out Benefits Of Being A Homeowner Versus Renter

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}
  • Home Equity Line Of Credit
  • Having a HELOC is like having a credit card but it is secured with the equity of the home
  • Rates for HELOC’s is probably lower than first mortgage rates and WWAAAAAAAAAAYYYYYYYYYYYY  LOWER THAN ANY CREDIT CARDS
  • The benefit here is that homeowners can write off the interest from HELOC where they cannot write off the interest from any credit cards
  • Homeowners can use HELOC to pay off all of high interest rate credit cards or other debt

Cash-Out Refinance Mortgage

Homeowners with equity in their homes can do a cash-out refinance mortgage and pay down debts with the proceeds.

  • Lenders cannot dictate on what homeowners need to do with proceeds on cash-out refinance mortgages
  • Homeowners who have equity in their homes and a lot of debt can use the proceeds of a cash out refinance mortgage and pay off their high interest debts
  • Remember that credit card debt, auto loans, and other installment loans are not tax deductible but mortgage interest expense is
  • It may be use to utilize this IRS benefit in getting a cash out refinance mortgage and pay down or pay off all debts

Borrowers who are interested in qualifying for a purchase or refinance mortgage with a direct lender with no lender overlays can contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays. We service countless of first time home buyers and will explain how easy it is and the benefits of being a homeowner versus renter. Many times, the new mortgage payment is the same and/or lower than what the rent payment is.

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