Why being a First Time Home Buyer can be Rewarding
There are a number of benefits you receive in life when you start on the path of home ownership. Let’s take a look at some of these benefits and why it’s essential for young or older people to strive to own their first home.
- Owning a home is one of the best ways to build wealth over time
We’ve all heard this from other generations and I can attest to this from first hand experiences working with a number of clients over the years and seeing how they accomplished this very fact. In our Prescott real estate market we see people coming from other states all the time who have acquired wealth from owning their homes and now are able to downsize and retire in our quaint community.
- Build Equity Every Month
You will always hear people say the best time to buy a home was two years ago. Here we are again in a real estate market that has historically low rates and values going up steadily each year. A person’s equity in his or her home is the amount of money they can sell it for a later date minus what he or she still owed on it. Also, the reduction of your mortgage every month increases your equity. This can work two-fold by reducing your principals even if the market drops or becomes stagnate. It’s quite simple, every month you are building additional and valuable equity in your home. The way I view it, you are being forced to save money, unlike renting where you get no return once your lease expires.
- Tax Deductions
This works a couple of ways and is very helpful for anyone trying to save money around tax season. For example, you can deduct your mortgage interest and even the interest you pay on home equity loans or line of credits. This enables a person to alleviate high interest from credit card debts to much lower rates that are deductible. Can you see how this would be beneficial for a family to save and pay back bad debt.
- Capital Gains Exclusion
This is one of my favorites. Let’s say a first-time home buyer buys a home here in Prescott and resides in it as his or her primary residence for more than two years, after that he or she would for the capital gains exclusion. Basically, when they decide to sell their home, he or she will be able to sustain their profits up to $250,000 (single) or $500,000 (married) and not owe capital gains taxes on the profit he or she has made. I know it may sound far-fetched that a person would have this much equity after two year, but if you purchased a home anytime before 2003, there’s a very good chance you made a pretty penny buying at the right time.
- Force Savings / Retirement Plan
Paying your mortgage every month forces you to pay down the interest and principal on your loan. Ideally, your principal is going down, while your home’s value is going up. Either way, you’re being paying into an account that is a justified account slash savings plan. I know a number of retires who rent out their homes, which are paid for and use that money as part of their retirement.
- Buying is Cheaper than Renting (Long-term)
With skyrocketing rental prices that offer little to know ‘long-term’ benefits and historically low interest rates you’d be insane not to strive to achieve home ownership. Sure, it’s nice having the low maintenance and stress of having a landlord fix your problems that may arise in a home or apartment. But even this can be a headache and problematic at times. Wouldn’t it be nice to find a way to lower your monthly living expenses, while taking home some form of equity in your life? I mean, basically you are going to live somewhere, so stop paying off your landlord’s home and start paying off your own!
First-Time Home Buyer Giveback Program
In my personal opinion, owning a home is the foundation for a person’s life to start building wealth and/or a family. Not only for individuals, but for us as a society we see the benefits. This is why I decided to create this first-time home buyer program. We all know about or have experienced the Starbucks pay-it-forward pay the person’s bill behind you in line trend, right? Well this program has some similarities. Here’s how it works. Any first-time buyer who works with me, Donny Karcie of RE/MAX Mountain Properties will get a donation in their name to Habitat for Humanity. The donation will be 33% of my commission (generally this will be one percent of the purchase price of his or her home). My goal is to give money to a great organization that helps other people get into homes. Habitat’s mission is to have a world where everyone has a decent place to live and bring the community together to build homes and hope. My goal is the same and nothing feels better than helping a first-time home buyer get into their house and see them start down the path of home ownership.
- This program is in development and takes effect starting July 1st of 2016 and will run throughout the rest of the year as a beta-test to see how much money can be raised to help Habitat for Humanity. Personally, I’m a small town Realtor who does a light amount of business each year and I would love to see other real estate professionals join me in this cause and pledge to do the same thing.
Thank you for reading!
RE/MAX Mountain Propertes
731 W Gurley Street / Prescott, AZ 86305