Top 5 Reasons to Buy a Home in 2012


 on January 6, 2012 in Home Buying

iStock Couple houseXSmall Top 5 Reasons to Buy a Home in 2012The American dream of homeownership is a very  feasible aspiration for 2012.

There are many benefits of owning a home.  Yet some first-time buyers  are skeptical of purchasing with the uncertainty surrounding the housing  market.

The uncertainty many reference when speaking about the housing market  involves a specific date when home values will increase. Since no one can  pinpoint this date, the word uncertainty (when paired with the housing market)  often reveals a negative connotation.

There are some factors we can be certain about in this housing market such as  home values rebounding.  This is true; the housing market often moves in  cycles.

It’s safe to assume that many Americans harbored the same uncertainty during  the George H. W. Bush administration in the early 1990s when the national  homeownership rate fell from its previous historic high of 64.4 percent in 1980  to a low of 64.1 percent in 1991.

In the 1960s Lyndon Johnson illustrated a correlation between homeownership  and accountability by stating “owning a home can increase responsibility and  stake out a man’s place in his community…The man who owns a home has something  to be proud of and reason to protect and preserve it.”

This statement is still true more than 50 years later.  There are many  reasons to take pride in homeownership such as:

  • Appreciation – Buying a home now (at the current  rates) can almost ensure your home’s appreciation in the future.  Mortgage rates are near  historic lows and home prices in many parts of the country are down.  This  is the perfect recipe for home appreciation.  Additionally, many foreclosed  homes are available for a fraction of the original cost.  This can  translate to a higher profit if you decide to sell once the market  rebounds.
  • Property Tax Deductions – For income tax purposes, real  estate property taxes for a vacation home and first home are fully  deductible.  The IRS (Publication  530) provides detailed tax information for first-time buyers that may answer  many questions about what deductions homeowners are eligible for.
  • Preferential Tax Treatment – If you own your home for more  than a year and receive more profit than the allowable exclusion after the sale  of your home, the profit will be considered a capital  asset.  Capital assets are given preferential tax treatment.
  • Equity Building – Many factors such as credit  qualification, loan flexibility, and annual  percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your  goals.  Yet, a new trend being used by some homeowners is to actually add  money to their monthly payment to decrease the principal balance of their loans  at a much faster pace.  This trend is called equity building.  Equity  builders usually select a home loan with a lower interest rate (and a shorter  term loan such as a 15-year fixed) to help build equity faster.  This rapid  payment process allows borrowers to:
  • Pay off the principal balance faster
  • Lock in near-record-low interest rates
  • Shorten the length of their home loan
  • Own their home faster
  • Pay substantially less mortgage interest

Equity building is a beneficial trend that’s becoming more and more popular  with fiscally responsible homeowners.  Also, home equity is the largest  single source of household wealth for most Americans.

  • Pride – Homeownership offers many benefits to many  different types of people.  For some homeowners, playing your music as loud  as you want and painting the walls the color of your choice is a perk.  For  me, homeownership will permit me to build an NBA regulation size basketball  court on my own property.  For my coworker Joel Jarvi, home ownership may  allow him to build the indoor  slide of his dreams.  No matter who you are, homeownership is a  purchase, commitment, and journey that’s sure to bring you pride.

Furthermore, when the uncertainty surrounding the housing market fades and  the market rebounds, homeownership may in fact transform that pride to profit  through a home sale.


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