Does it Make Sense to Buy a Home Today?

     Does it still make sense to purchase and own a home in today’s economy?  In recent months, the American public has been bombarded with  many alarming stories of people going into foreclosure with homes they cannot afford.  Clearly buying a home beyond your means or blindly speculating on investment properties are recipes for disaster.  On the contrary, the purchase of a home should be made carefully and wisely.  Home ownership still conveys some powerful and attractive benefits to the prudent purchaser.

     Financially, the home you purchase today can yield tremendous financial advantages to you in the years to come.  First, there are dynamic tax benefits you can enjoy with both the federal and state governments.   You can deduct from your annual taxes the money you pay for mortgage interest and property taxes.  In Florida, you receive a homestead tax exemption for your primary residence.   This lowers your tax obligations even further.  You can also deduct many of your associated purchase closing costs.  Doing this can literally put thousands of dollars back into your pocket each tax season. 

     When you sell your home, you can exclude profits up to $250,000 for an individual (or $500,000 for a married couple) from taxes. This exclusion does not require you to immediately buy a replacement home or to upgrade to a more expensive home.  This capital gains exclusion applies if you live in your home for at least two of the five years preceding its sale.  Looking at all the tax benefits given to home owners, it is clear that our society still places a premium on home ownership and rewards those who invest in a home.

     The sharp housing market downturn during 2007 and 2008 reduced home prices significantly.  Years from now, you will hear many people lamenting that they wished they had bought a home while the prices were so affordable.  With today’s low prices, homes are on sale at bargain prices!  This is not to say you can buy a home today and should necessarily expect instant appreciation on your investment.  Give the market some time to recover.  Rest assured, it will.  Over the long term, most experts agree that significant gains can be realized for those individuals making a wise purchase today.  Best of all, as you make those monthly mortgage payments, you will build equity in your home, something you can never do as long as you rent.

     The key to maximizing your financial benefits with a home is to shop carefully and make smart decisions.  Unless you possess the expertise and experience to do this yourself, you need the help and guidance of real estate and mortgage professionals.  Obtain the assistance of professionals who will provide you with honest, candid advice each step of the way.  Use a real estate agent and a mortgage officer whose judgment and abilities you trust.  Trust is imperative!  It does you little good to use the services of exceptionally talented and experienced  professionals if you don’t trust them.  So find individuals in whom you have confidence.  Use them for your home search, putting a great deal together and financing your purchase.  Going it alone minus a competent, trustworthy real estate agent and a skilled mortgage officer is an invitation for unnecessary problems.  Going it alone is also an easy way to sacrifice the full potential of your home buying dollars.  Think twice before taking this risk.  Assemble a team of experts to help you along the way.

     Another important benefit to home ownership is realized when you elect to obtain a fixed rate mortgage instead of an adjustable or variable interest rate.  Having a fix rate mortgage gives you financial stability from knowing precisely what your monthly payments will be for the next 15, 20 or 30 years (depending on the length of your mortgage).  You can budget for these payments and rest soundly knowing that your mortgage payments are not going to balloon beyond your ability to pay in the years to come.   As your salary increases in the future, your mortgage payments will not rise and you will soon find the proportion of your pay going towards your home shrinking.  Your payments will be locked into today’s low rates and prices.  This is a great feeling!

     Psychologically, there is a pleasant feeling that comes from owning your own home.  You don’t have to worry about a prying landlord looking over your shoulder telling you what you can or cannot do.  You don’t have to worry about your rent constantly going up.  Moreover, you forego all the headaches and frustration involved in getting a indifferent landlord to make needed repairs to an apartment or house.  Instead, the wise home owner budgets a few dollars every month and faithfully sets it aside in an emergency reserve account.  This money is available for use should something occur requiring repair.  The secret to building an emergency reserve account is developing the discipline to put a small amount of money aside each month without fail.

     Having your own home gives you the freedom to make improvements and alterations to your home to suit your own tastes and needs.  You don’t have to coax or plead with your landlord if you want some fresh paint on the walls or new carpeting.  Equally satisfying is the knowledge that you don’t have to worry about returning your home to its original appearance before moving out.  Most renters must leave an apartment or house exactly as they found it or risk losing their security deposit.  Even if the landlord allows a renter to depart without returning the wall colors, carpeting, windows, and lighting fixtures to their original appearance, the renter still forfeits all the money he/she spent making these upgrades.  In contrast, a home owner who makes wise home improvements can recoup a portion of (or sometimes all) their improvement costs when it is time to sell and relocate.

     When you decide to become a home owner, you gain a sense of security and pride that is absent when you rent.  When you take care of your lawn, it is your lawn.  When you paint, it is your home in which you are investing effort to maintain.  Your name is on the property’s deed; it is your home.  Legally, you have all the rights and privileges that come from home ownership.  These rights are safeguarded in our federal Constitution, in state laws, and local ordnances.  Renters have only a fraction of these safeguards.

     Finally, a little word of encouragement is in order.  Even the most cursory glance at today's real estate market will tell you that homes are for sale at bargain prices!   It is hard to recall such an attractively priced real estate market in many decades.  Years from now, many people will be kicking themselves for not buying during this exceptionally under-priced housing market.  Of course, the choice is yours.  If you have the means to buy a home during this low priced market, give it serious consideration.

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