Rent fades, equity is forever. Though the figure of monthly rent may seem far lower than the costs associated with paying off a house, home ownership provides you with a significant asset whereas rent is basically thrown away each month, never to be seen again. A home instead begins generating value for you within your first year. The national average of home value appreciation is over 6% per year. Assuming your mortgage costs are comparable to what you would be paying in monthly rent for a similar space, you are actually making quite a good bit of money over the course of paying off your mortgage. How much exactly? If you initially buy a home for $200,000, and its appreciation stays on track with the national average, you will own a home worth over $1,000,000 after 30 years. If you had instead insisted on renting a house for, say, $1500 per month, you could have easily kissed over $540,000 goodbye in the same time and without anything to show for it! Renting is an unrewarding drain on your finances, while ho
meownership is a steady investment in your future.
The tax-man loves homeowners. In another blow to renters, there are no available tax breaks whatsoever if you pay rent monthly. Homeowners, on the other hand, can be eligible for a mortgage-interest tax deduction. In some cases, this can total up to 30% of your monthly mortgage payment.
A sound investment. To those worried about whether or not housing represents a sure enough investment, consider the basic fact of live that most people who are living prefer to do so in a structure of some kind; most often a house. So long as there are new people coming into this world, there will be people looking for houses. In fact, the Federal Reserve has estimated that the average homeowner has 34 times the net worth of the average renter!
Fast trades for big bucks. Feeling confident? A buyer that can come up with the required cash down payment for a house, and, with the help of a bank loan to make up the difference in the mortgage, secure the property. If your house rises in value over the next few years, you can sell the house, pay back the bank from the overall takings, and still have made tens of thousands of dollars, if not more, in a relatively short period.
Another big bonus for home owners. The capital gains tax is one which the government applies to extra income generated by your investments. Examples of income eligible for this type of taxation include money you might have earned by buying a particularly successful stock for a lower price and making a killing by selling it for a much higher one. Fortunately for homeowners, the capital gains tax is not applied to income generated by selling your primary residence, not to the first $250,000 at least. If you happened to be married, you can up your tax free earnings to $500,000!
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