Advantages of Buying a Home

With the $8000 first time home buyer tax credit it seems many agents have forgotten the other incentives for buying a home.

The $8000 first time home buyer tax credit is only the beginning.  What about the tax advantages saved every year?  Paying a $100,000 mortgage may cost you $600 a month but remember, the interest and taxes are deductible.  That may amount to $10,000 in deductions.  If you are in the 15% tax bracket, this can put $1500 a year back in your pocket.

Hopefully we are pretty much hitting the bottom of the price declines in this recession.  If we are at the bottom of pricing that could mean we may see an increase in home prices over the coming years.  Lets imagine a 10 year scenario. Even if your investment looses money over the next two years you may be further ahead.

Year 1 loose 2% new market value $98,000.

Year 2 loose 2% new market value $96,000.

Year 3 no change market values $96,000

Year 4 increase 2% new market value $98,000

Year 5 increase 1% new market value $99,000

Year 6 increase 2% new market value $101,000

Year 7 increase 2.5% new market value $103,500

Year 8 increase 2.5% new market value $106,000

Year 9 increase 2.5% new market value $108,500

Year 10 increase 2.5% new market value $111,500

Even with modest gains you may show an increase in market value of over $10,000.  Remember first time home buyers are also gaining an $8000 tax credit and receiving $1500 a year in tax refunds.  This is a total of $33,000 in 10 years.  If you looked at that in terms of an investment, you may show a total gain of 33%.

Of course this is theoretical, actual gains may be more or less.

Other incentives include:

Pride of ownership.
Access to home equity.
Freedom of expression.
Stability

Try and find a land lord that can offer you any of these.