Despite rising mortgage interest rates, home ownership rate is projected to increase in the years ahead. That’s mainly because mortgages are becoming more widely available, thanks to a shift toward more lenient lending standards and expanded mortgage product lines from lenders. But an aspiring homebuyer should consider many different things before applying for a mortgage and starting the house hunting process. One aspect relates to the advantages of home ownership. Is it really advantageous to own a home these days? Please join us as we try to find out the answer to this question by analyzing a few key benefits of home ownership.
Purchasing a home can be a very savvy financial move. However, the 2007-2008 financial crisis has demonstrated that owning a piece of property makes sense only when people buy homes they can afford.
Though some may argue there’s no point in purchasing a home in the hope that it will increase in value, homes can and do appreciate. A recent report from the OFHEO has indicated that homes with an initial value of $250,000 appreciated by at least 50 percent, while some exceeded a 300-percent increase between 1990 and 2007.
Though past appreciation cannot accurately indicate future rates of home value appreciation, historical data confirms that most properties gain in value over time. As a result, a homeowner can sell his or her property at a profit later on, purchase a less expensive home and use the profits to supplement his or her income. This is just the beginning of the benefits of home ownership.
Another benefit of homeownership includes building equity. Taking out a mortgage to buy a home involves a substantial long-term financial commitment. Unsurprisingly, people don’t feel comfortable knowing there will be a monthly payment they need to take care of.
However, every mortgage payment made not only reduces the amount of money owed to the lender but also allows borrowers to build equity in their homes. This means that homeowners can borrow against their home equity, either via a home-equity loan or line of credit (HELOC).
Reaping Significant Tax Benefits
According to the IRS Publication 530, homeowners can deduct a series of expenses in 2017, as follows:
- Real estate taxes paid to the tax authority;
- Mortgage interest, including discount points; deductions may be limited when mortgages are used for reasons other than to buy, build or improve homes, or if the mortgage balance is more than $1,000,000 (respectively, $500,000 for singles or when spouses are filing separately);
- Mortgage prepayment penalties and late payment charges, with some limitations;
- Mortgage insurance premiums, (only for qualified mortgage insurance provided by the VA, FHA, Rural Housing Administration, and private mortgage insurance);
- Mortgage interest credit; homeowners can claim mortgage interest a credit if they have qualifying low income.
Getting Capital Gains Exclusion
When homeowners sell their principal residences at a profit, they may be able to exempt all or some of the gain from the federal income tax. If the seller has used the home as a principal residence for a total of at least two out of five years, he or she can exclude from the federal tax up to $250,000 (or $500,000 if filing a joint return) of any capital gains resulting from the sale of the property.
As you can see, there are many benefits of home ownership. The mortgage brokers from North Florida Mortgage are here to help people fulfill their home ownership dreams. Recognized for our extensive experience and expertise in the mortgage industry, we can help all of our customers build a solid future with quality residential and commercial mortgage products. For more information about our programs and services, please get in touch with our professionals by calling (904)-389-4635.