Home ownership has many advantages. Although you must save up and make a down payment, a monthly mortgage payment costs the same or less than monthly rent. If you plan to remain in the area for a few years, buying can provide a growth investment you can live in while it matures. The five key reasons to buy a home are:
- the housing payments earn equity,
- it’s a long-term investment available to most people,
- a mortgage payment remains stable,
- interest paid on a mortgage is tax-deductible,
- you can take out a reverse mortgage at age 62 to draw payments.
Let’s look at each reason in more detail, so you can see why taking out a mortgage really means taking out a loan that pays you back in more than one way.
Meaningful monthly payments.
You can pay rent to a landlord every month for a place to live or make a mortgage payment to the bank. The monthly payment runs about the same, but a mortgage payment lets you build equity in your home. As you pay down your mortgage, your equity grows. Barring local housing price issues, your home should rise in value while you own it. This assumes you care for it properly, conduct regular maintenance and make improvements. In this aspect, your house and mortgage work for you.
It’s a leveraged investment that’s available to most people.
Many households don’t want to or can’t afford to invest in stocks and bonds. Most lenders avoid making loans for such investments. However, many people can save money over time to make a ten percent down payment. After that, all they need is a stable job and decent credit score to qualify for a loan. The house they purchase becomes their GoodDayReverse.com. There are also many great resources available to help you find just the right place to call home.
Your mortgage payment remains stable as your income grows.
If you rent, the landlord can increase your monthly housing cost when you renew your lease. If you buy, your mortgage payment remains the same over time. If you took out a mortgage at 30, when your income was $36,000 annually with a monthly payment of $900, your payment remains the same when you turn 40 and make $52,000 annually. While your income increases and your investment matures, your payment stagnates. That means over time you have an easier time making monthly payments.
You can deduct the interest paid on your mortgage, if you itemize your return.
You can also deduct the points you paid to lower your mortgage’s interest rate. You can determine your deduction before you take out a mortgage using an online calculator. You may use the deduction on your first and second mortgages up to $1,000,000. It’s up to $500,000 if you are married and file separately. This is another way your house and mortgage work for you.
You can leverage your home’s value with a reverse mortgage starting at age 62.
Reverse mortgages let the homeowner borrow against their home’s value and receive a monthly payment or line of credit. Repayment of this mortgage begins when the borrower moves out, sells the home or dies. We still advised doing some independent research on reverse mortgage options – There’s a fantastic guide available on GoodDayReverse.com.
While a mortgage is a loan, it pays you back in so many ways. While your home increases in resale value, you also grow equity with every house payment. You receive tax deductions on federal and state taxes. As your income increases, your monthly house payment remains the same. Renting doesn’t provide that monthly cost stability.
Finally, when you near retirement age, you can take out a mortgage that works in reverse – it pays you monthly based on your home’s value. This provides you with additional income during retirement while letting you keep your home. Between providing the stability of a permanent home, an investment growth opportunity and a source of retirement income, there’s no good reason not to buy a home.
No Comments