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Why Buy Real Estate?
Home Ownership is still the best deal! Owning a home isn’t for everyone. But if you want to have long term stability, to give your kids a place to grow and prosper, become part of a community and build financial wealth, owning your home instead of renting it from someone else should be one of your top priorities in 2008!
Experts say homeownership still offers the greatest benefit to the most people. If you have a down payment in hand-BUY! Even if you do not have a down payment , home-ownership still could be within your reach. In the last year mortgage programs have changed drastically and most no down options have disappeared for now, however there are still low down payment options as well as adjustable rates, interest only, etc. As long as you have a steady salary, good credit, and few long-term debts, purchasing a home is probably within your reach especially with the new FHA loan programs and the new Higher loan amounts. And by taking things one step at a time, you'll find that buying a home can be a very manageable process.
Homeownership brings countless benefits. When you make a mortgage payment, you're building equity, which is an investment in your family's future. Owning a home can qualify you for tax breaks that actually lower your monthly out-of-pocket costs. The mortgage interest tax deduction and the equity-building boost. Buyers can deduct the interest component of their monthly mortgage payment, subject to an annual limit. Tax deductions may be as much as 80 % of the payments during the first few years, when most money goes toward interest. Equity is worth something. Building equity, in turn lets people accrue money for a larger house down the road, as well as gain access to funds through home equity loans and lines of credit. Even with a modest annual increase in the property's value. Homeownership provides the kind of freedom, stability, and security that is attainable in few other ways. Wealth accumulation through homeownership is the key to financial independence and self-sufficiency.
A home is worth more than money- there's also the heart.
Most people would still rather own thier own home!
Tax Benefits
Mortgage interest
One of the biggest incentives to owning a home is that the interest you pay on your mortgage is tax-deductible, up to a limit of $1 million. This deduction, like most other tax breaks for homeowners, applies to any kind of home. That includes a second home, as long as you spend a certain amount of time there: either 14 days each year, or 10 percent as much time as it's rented.
In addition, you can deduct the interest on up to $100,000 of other debt that uses your home as security -- for example, a home equity loan. However, the amount you can deduct may be limited if the money you borrow raises your debt above the home's actual market value. This can sometimes happen when a lender extends you a loan based on more than the value of the house.
You can also deduct any amount you pay for points to reduce the interest rate of your mortgage or other loan linked to your home. In most cases, the points on a mortgage to buy or build your principal home can be deducted fully in the first year. However, if you refinance, take a home equity loan, or a loan secured by a second home, the points must be deducted over the life of the new loan. The exception is if you use part of a refinanced mortgage to improve your house; that portion of the points can be deducted in the same year.
Tax-free profits
Another major advantage of home ownership is that, in most cases, you don't have to pay taxes on any profit you make when you sell your home. The law allows you to exclude from taxes up to $250,000 in profit from the sale of your principal home -- $500,000 for a couple who file jointly. This exclusion also covers the sale of a parcel of land adjacent to your house, unless it's used for business.
There are some stipulations, however. The home must be your principal residence, and you (and your spouse, where applicable) must have lived there for at least two of the previous five years. You can only claim the exemption once every two years. If you don't meet those requirements, you may still claim a partial exemption if the sale was due to a change in your place of employment, necessary for health reasons, or due to other unforeseen circumstances.
Property taxes
You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any others you may own. Any money held in escrow to pay future taxes, however, is not deductible.
Moving expenses
The government allows you to write off many of your moving costs when you buy a new home if it's at least 50 miles closer to your job than your old home. To qualify, you must continue to work full-time in the general area of your job for 39 weeks during the following year. If you're self-employed and work in your home, any move of 50 miles or more will make your moving expenses deductible. However, you must also work full-time near the new location for 78 weeks during the next 24 months.
Of course, because tax rules vary based on income and other factors, be sure to consult an accountant or financial advisor about your particular situation.
In the market for a new home or a second home.
Buyers Market-Buy now or wait? Is now a good time to buy a home? Prices are falling and mortgage rates are still low! However, inventory is also decreasing. Many sellers are waiting out this market if they can affort do. Bank owned and short sales are still plentiful in some markets but only around 25% of short sales are actually making it to escrow before foreclosure. Also, banks are increasing thier efforts to avoid foreclosures and this is creating an environment for loan modification agrements with homeowners who want to keep thier homes.
One answer to this question could be : It's a bad time to buy real estate. Prices and mortgage rates might be lower in a few months. With so many short sales and foreclosures on the market sellers are bound to get desperate so why not wait them out?
Another answer is: If you find the right house and the right price-BUY IT!
If you are serious about purchasing a home this is the first and final goal. You can't be distracted by market forces outside your control. You will need to decide if you will absolutely shop and negotiate a fair deal or if you will browse listings hoping to stumble on a deal. If purchasing a home is your goal you are more likely to succeed with this approach instead of waiting (possibly in vain) for prices to fall further. You can't predict when houses will hit bottom. You will also run the risk of someone else buying your favorite home while you are waiting.. The experts advise these tips
- If you find the right home at the right price-buy it!
- Put technology and a buyers agent to good use
- Negotiate effectively
- Avoid gimmicks-such as free tv's, trips, etc.
Remember a house is a home first and this is where you will build your memories. Over the years real estate does experience price fluctuations- increases along with decreases. It is just part of home ownership. Real Estate is still a very sound long term financial investment. The only time people know where the bottom of the market is?-Is when they see it pass them by. As long as we are in a decreasing market it is a good time to negotiate your new home. Historically, when the market corrects it does so very quickly.
Purchase a home that can grow with you and start enjoying the American dream
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