Financial experts have identified several milestones in the financial life of a typical individual — those stages in life that mark a change in your spending and income patterns. Buying a home is one of those milestones. So is it important to buy a home, or can you just skip this milestone altogether?
Secures Your Old Age
When you are retired, you will have a limited income. As a result, you may not be able to afford rent. So having your own home gives you a sense of security since a big chunk of your needs will have been taken care of.
It's an Investment
Unlike renting, when you buy a home, you have something tangible to show for your money. More than that, the value of homes for sale will typically increase in the long run, giving you a good return on your investment.
You Gain Equity
As you continue paying interest, you gain equity on your home; that is the percentage of the home you already own. You can reinvest this equity into you current home or a new one. In short, buying a home helps you to create wealth.
A mortgage with fixed monthly rates will lock your money into your mortgage, helping to stabilize your spending. This in turn ensures you don't waste money on unnecessary expenses. Any fresh money that comes in, maybe through a salary increase, can be channeled to other uses.
When you get a mortgage, you can benefit when filing your tax returns by deducting interest on the mortgage from your taxable income.
Exclusion From Capital Gains
If you live in your home for at least two years, and then decide to sell, you are exempted from capital gains for up to $25,000 if single and $5,000 if you are married.
When you're renting, you keep moving from one place to another, either to follow your job or to move to a better house. But there comes a time in life when you want to settle down — when you want a place to call home.
You can then really invest in your home and remodel it to your taste. You are also able to invest emotionally in your community, knowing you'll be there for a long time to come. You will be in a position to create and nurture lasting relationships with your neighbors.
Buying a home is not just a fad; it actually makes a lot of financial sense: savings, tax benefits, stable spending, and equity. So next time you see a homes for sale sign, take more interest. Contact a real estate agent like those at Bankers Real Estate to start house shopping today.