Owning a home has its benefits and drawbacks. However, the benefits far outweigh the drawbacks. In fact, they make them seem like small inconveniences. Many new buyers are often overwhelmed by the high price tag associated with a home purchase and continue to rent as a result. It is your job to make them see the perks of owning a home. Here are some helpful tips.
Teaching About Home Appreciation
Homes are a safe and steady investment. While it is no secret that real estate has its good and bad seasons, it has constantly appreciated over the years. Most homeowners consider their investment to be a hedge against inflation. Appreciation is the biggest measurable financial benefit of owning a home.
The recent real estate turmoil has shaken buyers’ confidence in homeownership. It is up to you to make your buyers see that homeownership is a clever financial move as long as they buy homes they can afford. If they stick to that rule, they will gradually build wealth.
Build Equity Monthly
This is another big financial perk of owning a home. As your buyers pay for their new home each month, their obligation reduces. The reduction of the mortgage increases their equity. This is very true now that risky mortgages such as interest-only loans and negative amortized have been eliminated. As the years go by, homeowners increase their equity.
Tax Deduction Benefits
- Closing Cost Deductions
The first year your buyers buy a home, they can claim the points on their loan whether they paid for them or not. These points are also referred to as origination fees and are usually 1% or more, a significant amount for many buyers.
- Mortgage Deduction
Home buyers can now strike off the interest on their mortgages from their tax obligations thanks to the tax code. This is a big deduction for many since interest payments make up a great part of the mortgage payment in the first years of homeownership.
- Property Tax Deductions
Property taxes that buyers pay for a first home and a vacation home are entirely deductible for income tax purposes.
Buying Can Be Cheaper than Renting
Some buyers may argue that homes are cheaper to rent than buy. Tell them that this may be true in the first few years, but homeownership becomes cheaper as the years go by. The mortgage interest homeowners pay decreases gradually which means that it becomes lower that the rent they would have paid. Additionally, they won’t be throwing that money away on rent but investing in a valuable asset.
Capital Gains Exclusion
Buyers who buy a home and live in it primarily for more than two years qualify for a capital gains exclusion when they sell. They can enjoy profits of up to $250,000 (for singles) and $500,000 (for married couples). This tax benefit will come in handy for many of them.
Pride of Ownership
Rental homes, no matter how beautiful, don’t give owners a sense of pride. This is not the case with homeownership. Homeowners know they can change their properties any time they want because they own the place. Homeownership gives buyers a sense of security, stability, and peace of mind.
In your career, you may come across buyers who need to be convinced to buy homes. Take time to explain to them about the benefits of buying over renting. Homeownership in the US is at an all-time high at the moment which is an indication that it is an achievable goal. While it may not be right for everyone, its advantages are clearly evident.
Need more real estate tips? Look to the iHouse blog for helpful tips to share with your clients.