Vol 5 No. 46 - August 3, 2005

Home ownership still has many benefits
By Louise Bolger

The real estate market in Manatee County is exploding. Investors are buying up pre-construction properties as well as existing properties hoping to turn a quick profit. But not every potential homeowner is an investor and not every potential homeowner is only interested in what his house will be worth next year. Some people actually buy a home to live in and there are excellent reasons to do so.

Tax deductions: The most popular government giveaway by far is the deduction of mortgage interest and property taxes on your annual income tax return. This fact alone makes home ownership a goal that everyone should strive for. Even retirees and people on fixed incomes should consider carrying a mortgage on their homes (after talking with their tax consultant, of course). It could save you money every year.

Appreciation: Our staggering appreciation rates may not be around forever, but even if things slow down, owning a home is still considered a safe, steady investment with values that rise while debt amount drops. Harvard University’s Joint Center for Housing Studies found a dramatic increase in the rate of return on housing the longer it’s held. A buyer who makes a 10 percent cash down payment with an annual home appreciation rate of 5 percent could expect a 94 percent return on the cash after three years of homeownership. After five years, the return increases to 225 percent and after 10 years, a whopping 623 percent.

Equity: The portion of property that’s actually owned increases as you pay off the principal in the mortgage. This, accompanied by the appreciation factor, frequently can lead buyers to better second homes. Remember, even if your home never appreciated, you would still be building equity as your mortgage principal is reduced.

Borrowing power: Owning a home gives you the ability to obtain lines of credit or loans for home improvements, emergencies and school tuition.

Stability: A fixed rate 15-, 30- or 40-year mortgage gives homeowners the comfortable feeling of knowing exactly what their mortgage payments will always be.

Your property taxes may go up, but your mortgage won’t.

Freedom: Why is home ownership the great American dream? It is because in your home you can paint the walls any color you want, plant as many vegetables and flowers as you want and make the improvements you want. Naturally, if your home is a condominium, you are subject to more rules than single family homes. You do give up certain freedoms when choosing to live in a condo, but the pay back is freedom from mowing lawns, exterior painting and cleaning the pool.

According to the National Association of Realtors, record numbers of Americans have purchased a home in recent years. U. S. Census data for 2003 show a total of 68.3 percent of Americans are homeowners. The hot, investor market may cool down soon, but people will still buy homes in which to live and raise their families will occasionally give in to the temptation to count their mental equity.

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