The Life of a Realtor!: You Could've Had a BIGGER Tax Refund if You Owned a House!

Buying a house is part of the "American Dream," however some people don't see the advantages of owning a home in America. Some of the reasons I've heard for not becoming a homeowner are I'm scared the market will drop again, I don't want to be responsible for repairs, I don't have the down payment money or I want to wait until I get married.

Although someone may feel these are valid reasons not to purchase a home, there are many advantages to being a homeowner. The major reason is the tax benefit you get each year. Before we discuss some of the benefits, let's delve into the reasons some people choose not to buy.

#1 I am scared the market with drop out again

The real estate market is cyclical. If you review the history of the U.S. home values index you will see it goes up and down throughout time. During WWI/II and the Great Depression, the market experienced a decline and in the 70's and 80's there was a boom. The peak we had leading up until 2006 was unprecedented, however safeguards have been put in place to stop predatory lending and protect the consumers. Currently, interest rates are still at record lows and the market seems to be in a healthy state.

#2 I Don't Want to Be Responsible For Repairs

When you purchase a home, you are able to also purchase a home warranty that will cover you in the event disaster strikes. Home warranty's are very affordable and can be purchased for as little as $300-500 per year. Also, if you stay on track with maintaining your home and it's systems you can avoid some repairs caused by negligence.

#3 I Don't Have the Down Payment Money

If you are a first-time homebuyer, there are many programs available that will assist you with grant funding to purchase your new home. Based on the type of loan you get, you are able to receive up to 6% of the sales price as gift funds towards your purchase. As soon as you've made the decision to become a homeowner, begin to save money to build your house fund.

#4 I Want to Wait Until I Get Married

It may be ideal to get married and then buy a house, but it is not the only option. If owning a home now will be beneficial to you, once you get married you can sell your home and use the money from the sale of your house towards the down payment of your next house. Or you can rent out your house and earn passive income.

BENEFITS

Tax Deductions

Most people can find reasons for why they don't want to do something, so let's find a few reasons why buying a house is a GOOD investment. When you buy a house, some of the money used for your closing cost are tax deductible. Also, each month you pay your mortgage, you are paying principle and interest. The interest portion of your payment is tax deductible.

Build Equity And Wealth Over Time

By making your regular monthly payments, it decreases the amount you owe on your home, therefore increasing the equity in your home. Equity is the difference between the amount you own on the home and the market value. If you pay off your house, your home becomes an asset. In recent time, many people found themselves in an upside down situation where they owed more than the house was worth.

Fixed Monthly Payments

Another advantage is your payment amount (Principle & Interest) never changes. Most people get a 30 year fixed mortgage to have equal payments. You never have to worry about your landlord raising your rental rate every year.

Pride of Ownership

You've carved out your piece of the American dream. When you own your home, you can make renovations to your home without having to consult with a landlord. You can paint your walls any color you want, knock down or build a wall and decorate however you want.

In the end, people have many reasons why they should or shouldn't buy a house but there are many benefits to owning a home. It is best to review your financial situation with your lender to determine how much buying power you have and if this is the right time for you.