People are renters for various reasons. They may not be interested in owning a home because of the cost and effort in maintaining a home. Perhaps a person doesn’t have the down payment necessary for a home purchase. Maybe personal plans call for a very short stay and a home purchase really isn’t practical. There are a great number of renters, however, who could own a home today and are not aware of the financial advantages of home ownership.
Here are some facts to consider:
THE PRESENT REAL ESTATE MARKET
Conditions have not been this good since I started selling Naperville real estate in 1982. Home prices are still on the rebound from the 2008 market crash, the Covid-19 crisis has stalled the housing appreciation and mortgage rates are at an all-time low since I have been in the business. As a matter of fact, a rookie in the business, I cut my teeth on interest rates that were through the roof at nearly 20 percent. Not so today, both price and interest rates are terrific. If Grandpa Leavenworth were still alive, he would have said that timing is everything and this is certainly the time to stop throwing money out the window in rent and buy!
TAX ADVANTAGES
The only sizable tax deductions remaining are the mortgage interest and property taxes paid as a result of owning and financing a home. The monthly rent check that goes to the landlord could actually be partially returned by a tax deduction if the same amount went to make a mortgage payment instead of rent. If a rent payment is $1,200 per month, as an example, someone in the 25 percent tax bracket would receive $300 back in a federal tax return if the payment were not for rent, but mortgage interest and property taxes.
A FORCED SAVINGS ACCOUNT
It is very difficult for people to save money. A homeowner, however, saves money every time a mortgage payment is made. The principal amount of the mortgage loan is reduced with each payment thus reducing the amount owed and increasing the amount that will go to owner upon the sale of the property. If the home is located in an area of increasing values, the passage of time continues to inflate the amount of profit the owner will realize when it is time to sell.
ADVICE: If you are now renting, contact a Realtor to investigate your situation. Timing may be right for you to get on a firm financial footing through the purchase of a home.
