Home Buying Tip - Benefits of Minnesota Home Ownership

Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.

Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the National Association of REALTORS found that a typical homeowner has approximately $50,000 of unrealized gain in a home.

Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.

Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Talk with one of We-Team Twin Cities Real Estate Agent: 612-978-4464

Buying vs Renting

If you are considering buying a house, one of the first decisions you need to make is whether buying a house instead of renting one is the right direction for you. Since owning a home is the "American Dream", many people simply assume that it's always to their advantage to buy a home, and for most, it is. Take a moment to review the following lists to see how your situation fits in.

Renting

·         More fixed costs for the term of the lease

·         Not gaining equity, but not losing it either

·         When the lease is up, you can just move

·         There is generally less work in maintaining a home or apartment

·         Smaller amount of "up-front" cash

·         No matter what happens with the value of the home, you will never gain equity

·         Limited - or no - ability to personalize your living quarters

·         No tax advantage to renting. Your landlord gets any and all tax breaks that are available

Buying

·         Variable costs

·         Equity may go up, down, or stay stagnant

·         If you want to move, home generally must be sold

·         Work needs to be done by you - or paid for by you

·         Generally a larger initial investment - the downpayment

·         Over time, the mortgage balance decreases and equity builds, even if the value of the home does not increase

·         The ability to remodel and redecorate the home to match your needs and desires

·         There can be tax advantages attached to home ownership. Consult competent legal and/or accounting advice for details for your situation

To calculate whether renting or buying is the best financial option for you, use this calculator courtesy of Ginnie Mae: www.ginniemae.gov.

 

         

Scott Wollmering

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