Buying a home vs. renting is a big decision that takes careful consideration, but the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5 percent every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity. Also, should interest rates drop in the future, you would have the option of refinancing to a lower interest rate and lower your monthly mortgage payment.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible. We can help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant on your behalf.
To find the loan program that is right for you, we will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let us know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
For more information, please call Heidi Rivas of Crown Home Loans at 661-287-9888 or visit www.LoanGal.com . Heidi Rivas is the local lender Santa Clarita’s top real estate professionals recommend most! Please don’t forget to see our ad in this edition.