Buying a home is the biggest purchase most of us will make, but it’s definitely worth it. The biggest reason is the appreciation of the home. The value of the vast majority of homes will appreciate over time. The appreciation builds home equity (the difference between then market value and the remaining loan payments).
For example, the Office of Federal Housing Oversight publishes a quarterly Housing Price Index which determines the average rates of appreciation for specific areas, which showed Miami as having a rate of 317% from 1990-2007. In this example, the initial value was $250,000 in 1990 and $1,042,106 in 2007. On that chart, Miami had the greatest increase of all the cities over the 17 years. Of course, this may not always be the case, it depends greatly on the location of the home, so choosing the right neighborhood is essential.
Buying and owning a home also has some tax benefits. As a homeowner, you may deduct the annual interest paid on a mortgage from income. If the home is your primary residence, you can apply for a Homestead Exemption, which gives up to 25,000 in tax breaks.
There are costs involved in homeownership, taxes, insurance, utilities, furnishings and repairs being among them. At the end of the day though, you own your home and it should appreciate over time. If you were renting, you would be putting money into the landlord’s hands, while they would gain the benefits of owning the house.
As a short term investment, buying a home won’t pay off as much as a longer investment, so buying is great if you’re planning on being there for some time. Overall, homeownership is a great thing. Your home appreciates in value, creating wealth for you and you get tax benefits as well. The Restivo Team would love to work with you, so contact us today.
