Whether you’re a current homeowner or you’re thinking about buying your first home, owning a home is important for building wealth. But before you make that purchase, here are some things to consider.
Why Own?
One of the oldest and most trusted assets in your financial arsenal is your home. It’s also the place where you likely spent the majority of your adult life. So, owning a home is a big deal for good reason. Buying a new or existing home can be a stressful and expensive experience, but with the right planning and a bit of foresight, you can reap the rewards.
Home Equity
Homeowners have the opportunity to build wealth over time through home equity. The equity in your home is the difference between how much you owe on your mortgage and your home’s appraised market value. Using your home’s equity can help you meet many of your financial goals. You can use it to pay off debt, renovate your home or make other wise investments. When you decide to tap into your equity, it’s important to do it right. You can do this by comparing home equity rates, terms and fees from a variety of lenders to find the best match for your needs.
Home Value
The value of your home may be the most important factor in your financial future, because it influences things like insurance and taxes. If you own a home that’s worth less than 20% of the total cost, your lender might require you to pay for private mortgage insurance (PMI). Appraisal values are based on your home’s age, location, square footage, number of bedrooms and bathrooms, upgrades, and recent sales in your area. Market values are what buyers are willing to pay for a home, and they can vary greatly. You can estimate your home’s value with free online valuation tools or work with a real estate professional to get a more accurate calculation. Using these estimates can help you decide how much to ask when refinancing or selling your home.
Taxes
Buying your own home is a great way to build wealth, but you must consider the tax implications before making any major financial decisions. This is because there are a number of tax deductions that can help reduce your taxes and save you money over time. The mortgage interest deduction and property tax deduction are two of the most common homeowner tax deductions, but they can be regressive. Especially in high-cost housing markets, the benefits of these deductions go to high earners and people who own a large home. In addition, tax policies can have an impact on economic decision-making, including work, savings, inter-state migration, investment, and business organization. They affect how entrepreneurs organize their companies and optimize their investment and borrowing activities, as well as how the United States is competitive in attracting and retaining multinational firms.
Phillip Fehler Realtor NorthGroup
One of the most fundamental ways to build wealth in America is through home ownership. Even in a tough economy, homeownership still represents a foundational way to build wealth over time and can act as a significant investment. In fact, a homeowner’s mortgage payment acts as a forced savings account. And when they sell, any equity built up in the property comes back to them. In this tough economy, many people are focusing on paying their bills and making sure they have emergency funds to cover unexpected expenses. Rather than putting wealth-building in the back burner, take advantage of the opportunity to talk with our real estate agency here at Phillip Fehler Realtor NorthGroup about your financial needs. We are ready to provide you with the best advice on a wide range of issues related to business, finance and personal development! Don’t wait; contact us!