Buying a home is a big achievement as it is a feat that cannot be achieved without overcoming a series of hurdles and challenges. Homeowners have to go through several instances of struggle and hard work before being able to put the down payment for their first home. This often deters individuals who are determined to buy a home, and they may end up renting a space for many years to come if they cannot find themselves up to dealing with the challenges associated with owning a home.
If you are on the fence about whether or not you should put that extra work into the possibility of you and your family owning a home, given below are three ways detailing how being a homeowner can benefit you and your family, and these reasons are likely to give you the push you very much need:
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1. It can help you build equity
Equity represents the value property holds, and as the market value of any property increases, so does its equity. When it comes to owning homes, the more money you tend to pay off for your mortgage, the more its equity poses to grow over time since home equity represents the difference between your home’s market price and the amount you owe on your mortgage. While calculating home equity, you can couple the property’s overall appreciation value to arrive at an appropriate dollar amount.
If you think that your home’s equity is an intangible value that poses little to no benefit for you, you couldn’t be more wrong. If you learn how to take equitis the fact that you can benefit from savings out of your home, you can potentially use it to redraw your loan or borrow additional funds on top of your existing ones to attain mortgage refinancing. You may then use these additional funds to buy, renovate or rent out another property, or invest in other ventures.
In simpler terms, you can use the value of a property that you haven’t fully paid for to take out a loan and invest in other money-making ventures. This is a simple technique that many small investors use to build a portfolio of properties in simply a matter of a few years. The only two skills this requires are understanding how home equity and mortgages work, and learning how to afford down payments.
2. It can give you living security
Renting a place to live for your family doesn’t bring the stability you need in your life. Whenever you live on a rental property with an expiring rental agreement, there is a constant loom of dread concerning what would happen if your landlord asks you to vacate the space or how would you pay rent if they choose to increase it. If you do not agree with your landlord’s wishes, the only thing you can do is call a moving company and choose to shift to another rental property, and the same cycle would continue one rental agreement after another.
Not only is moving homes a hassle both emotionally and physically, but it is also a financially draining experience. In addition to the added costs of moving your home, you would have to incur realtor expenses when finding a new place to live, and the entire experience can very well suck the life out of you. Contrary to this, owning a home gives you the living security you need and deserve knowing that you have a place to stay for the rest of your lives without anyone bothering you.
In addition to living security, owning a home gives you a sense of pride and achievement of the “American Dream”. It is nice to know that you own a little piece of land that can be your little sanctuary in this tumultuous and gruesome world.
3. It can give you tax benefits
Yet another benefit associated with owning a home is the fact that you can benefit from savings, capital gains exclusion, and tax benefits. For instance, when you first buy a home, you can deduct certain parts of the expenses associated with owning a home from the overall taxes you pay to your federal or state governments. The parts that you can deduct include interest on the mortgage, which can amount to thousands of dollars in a year.
This deduction is applicable for both primary and secondary mortgages alike, and hence in technical terms, you could be saving money by paying mortgages in retrospect. Any interest you may pay on home-equity lines of credit can also be deducted, and you may overall deduct USD 10,000 in state and local taxes.
In addition to the above, you can also eventually save up on capital gains whenever you choose to sell your home. Any profits ts you make due to an appreciation in the value of your home can be exempt from taxes, and the IRS allows a tax-free profit of up to USD 250,000 for single homeowners, and this value may ride up to USD 500,000 for married couples who own a home together. This may however only apply to their residential homes and not to secondary or vacation homes.
Conclusion
Just as much as it is an emotional investment, your home is also a substantial investment from a financial perspective. Not only does a home present great emotional value for homeowners, but it also has the potential to benefit them monetarily in more ways than one. The above-mentioned reasons are likely to convince any and everyone with regards to them owning a home and start looking for Cincinnati houses for sale.
