1. Buying may be cheaper than renting- I posted an article back in January that provided detail on the some of the triggers to watch including the Moody’s Analytics, price-rent ratio for third quarter of 2010. As a general rule of thumb, you should often buy when the ratio is below 15 and rent when it’s above 20. If it’s between 15 and 20, lean toward renting. Every situation and market is different and you need to way the pro's and con's and explore all the benefits and potential pitfalls of homeownership.
2. There Are Tax Advantages to Homeownership- Mortgage interest-Your biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest. And all that interest is deductible, unless your loan is more than $1 million. Points-Did you pay points to get a better rate on any of your various home loans? They offer a tax break, too. The only issue is exactly when you get to claim them.Taxes-The other major deduction in connection with your home is property taxes. A big part of most monthly loan payments is taxes, which go into an escrow account for payment once a year. This amount should be included on the annual statement you get from your lender, along with your loan interest information. These taxes will be an annual deduction as long as you own your home. When you sell- When you decide to move up to a bigger home, you'll be able to avoid some taxes on the profit you make. Years ago, to avoid paying tax on the sale of a residence, a homeowner had to use the sale proceeds to buy another house. In 1997, the law was changed so that up to $250,000 in sales gain ($500,000 for married joint filers) is tax-free as long as the homeowner owned the property for two years and lived in it for two of the five years before the sale. Advice- Always check with your accountant or tax advisor for professional tax advice.
3. Homeownership Builds Wealth- Owning a home has been seen as a good investment in the past. Historically home prices rise at a steady pace and if you remain in your home long-term you are able to build equity and thus build your wealth. In recent years home prices rose at rates higher than we typically see. Home ownership should be looked at as a long-term investment and only one part of your investment or retirement strategy.
4. Real Estate is a Good Long Term Investment- Real estate can still be counted among the best long term investments, provided a person invests in it wisely. There are many people who believe that buying real estate property is always a good investment because bricks and mortar always appreciates, indefinitely. This is not always 100 percent true, but holding onto an investment for more than a decade usually overcomes any economic slump that threatened its value.
5. Experts Expect Home Price Appreciation Starting Next Year- The trajectory of real-estate values will vary a great deal from one market to the next. But home prices at the national level should appreciate at "pre-bubble" rates once the market re-establishes its equilibrium, says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley: "I'd say prices are back to (increasing) 1 or 2 percent more than the inflation rate over the next 10 years."
