Let s say you re thinking about buying your first house or condominium. The process of buying real estate can be an extremely rewarding experience, both from a personal and financial standpoint.
There are many reasons you may wish to buy a home, whether you need or want:
- A place to live
- Feeling of permanence
- Stable housing costs
- Good use of your money
- Tax benefits.
On the other hand, you may not be ready to buy a home. Buying a home:
- Is a complex, time-consuming and costly process
- May bring unwelcome responsibilities such as maintenance and repairs
- Makes it harder for you to move
- Can create financial hardship.
The purchase of a home is, in part, a financial transaction. Much like a trip to the grocery store to buy coffee, you have many choices and a significant price range. But unlike a bag of Costa Rican coffee, a house has certain bonuses: Equity, Tax Savings and Ownership.
What s all that mean
A house is an investment in land and the existing structure. History tells us that there is a good chance that a house will increase in value over time. Also, by making timely mortgage payments, you are paying down the debt you owe and building equity.
Equity is the difference between the value of your home and how much you still owe. You may not own your home outright, but your investment has a cash value.
In addition to increasing in value over time, owning a home can have a significant impact on your monthly paycheck in a very positive way! When you borrow money to purchase a home, the interest that you pay on that money is usually tax deductible.
For example, if you have an annual income of $45,000 and owe $200,000 on a 30-year mortgage at a fixed 7% interest rate, you ll likely save about $200 per month in taxes the first year you own the home!