Spring is the perfect season to buy a home and now that the season has begun, a lot of people are beginning the process of buying a home. Real estate has proven to be a good investment still, despite the recession years ago. Investing your money in homes is a good idea because not only are they beneficial but they can also help secure your financial future. Listed below are the reasons why:
The process of buying a home is beneficial- The process of buying a home is beneficial because mortgage companies will only partner with you if you really have a good financial standing—which means that before you are able to buy a home, you would have to do a complete evaluation of your finances. You would have to do a credit score check, pay your debt, make timely payments and fix any errors that you may find. Doing this financial makeover, will ensure that you will get into a mortgage contract with full capabilities of paying your responsibilities. Of course, you already have thought about these things when you first thought of buying a home. However, some people would not take them seriously unless they are faced with the reality of being disapproved.Owning can be cheaper than renting- These days, real estate prices and interest rates are at their record lows which mean that it might be better to buy a home instead of renting one. This would be more beneficial if you are one of those people included in the high tax bracket because of the tax deductions due to your mortgage interest and property taxes.
Owning would still be cheaper than renting- Since you are already paying every month, why not decide to pay for something that you would be able to own in the long run? Yes, you may save more money by deciding to rent but rental fees increase overtime; on the other hand, mortgage payments can be locked for up to 40 years, depending on your contract. The good news is, even if your mortgage is a bit more expensive than rent, it will be paid off eventually and you will have rights to your property.
Mortgage is a form of forced savings- Since you are making mortgage payments every month, you will be able to build equity which is the value of your home over time.
You can have leverage- With the recent downfall of real estate, a lot of people are claiming that it would be better to invest in stocks since their long term returns are definitely much higher. This is true; however, do not forget that some stocks still decline in terms of value which will require you to deposit cash or securities. When this happens, interest rates will be higher and they will not be tax deductible. On the other hand, when you buy a property and it goes up by a certain percentage due to inflation, your investment on that property will consequently increase as well.
Your home equity can be a retirement asset- When you first purchased your home, you considered your children which mean that you have more rooms and more space. Once they go on their own ways, you will be left with a house that might be too big enough for you and your spouse to live in. Therefore, what you can do is to downsize the house and reinvest the difference. Of course, you can take a reverse mortgage, but most people do not prefer this option because of sentimental reasons as well as the high fees involved.
Gains can be tax-free- If you have lived in the home for at least two out of the last five years and has earned $250k of gain or $500k if the home is owned jointly, it would be tax-free. Unlike in stocks or other investments, gains would normally be charged a 15% capital gains tax.
The mere process of buying a home is beneficial because it forces people to straighten out their finances, fix whatever needs to be fixed and improve on their credit scores. Owning a home though, becomes more beneficial because it not only gives homeowners the financial security that they need but they are also given the chance to reinvest their equity if needed in the future. The important things to remember are to make sure that you are financially prepared before engaging in a mortgage contract and that you do not go beyond what you can actually afford. In this way, you can be assured that your home will be an asset and not a liability.
HOW A $17,537 CASH INVESTMENT BECAME A $4 MILLION PROPERTY GENERATING A YEARLY NET INCOME OF $315,000!
(AND THE STEP-BY-STEP DETAILS OF OTHER OUTRAGEOUSLY PROFITABLE REAL-LIFE PROPERTY DEALS)
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