6 top benefits of owning a
Sure, buying and owning
a home has its share of problems.
First there's the down payment and closing
costs to muster. Then there's the property tax hit. And maintaining a residence
isn't cheap. When it's time to move, "pick up and go" is hardly a feasible
the rewards, in most cases, make those drawbacks seem like minor inconveniences.
"The large numbers attached to a real estate
purchase can often overwhelm first-time home buyers, so they continue
to rent as a result," says Dan Auito, a Kodiak, Alaska-based
real estate consultant and the author of "Magic
Bullets in Real Estate." But, he adds, "the advantages
far outweigh the risk or effort required in obtaining and maintaining
one's own personal residence."
Those perks are both financial and feel-good.
to the National Association
of Realtors, record numbers of Americans have purchased a home in recent years.
U.S. Census data for 2003 show a total of 68.3 percent of Americans are homeowners.
Here are six significant reasons to grab that hefty piece
of the ownership data pie:
- Tax deductions:
Although they're the stuff that bill-paying grumbles are made
of, mortgage interest and property tax obligations are a homeowner's
best friend come April 15. For both federal and state income taxes,
these payments are usually fully deductible. And in the first
years after a home purchase, most of the money paid toward those
mortgage payments represents interest. Think of it as a government
subsidy on the purchase. In addition, many closing costs, such
as points paid and fees for your loan application and appraisal,
may be deductible, either immediately or down the line when you
plant that "For Sale" sign in your lawn.
We're talking about the financial kind. Homes are considered a
safe, steady investment, with values that rise while debt amount
drops. The national median home price has risen every year --even
during recessions and periods of sales declines -- since 1968,
when the NAR began tracking it. Typically, the values appreciate
at the rate of inflation, plus 1 or 2 percentage points. Sometimes
it's a greater increase. In 2004, for instance, the median price
went up by 9.4 percent. A long-term investment? Yes. Harvard University's
for Housing Studies found a dramatic increase in the rate
of return on housing the longer it's held. For example, a buyer
who makes a 10 percent cash down payment with an annual home appreciation
rate of 5 percent could expect a 94 percent return on the cash
after three years of homeownership . After five years, the return
increases to 225 percent, and after 10 years, a whopping 623 percent.