5 Financial Reasons To Buy A Home

We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper -The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”
Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, let's get together to evaluate your ability to do so.

c90350bc 68e6 4260 9583 9482b27e078e c2088e05 03b5 4a01 8059 4e36bd0e6a5c 8e223875 097c 4c36 8ba1 71118a6fc190 187567f6 9870 482c 8569 8482e937d3b6 a5dd9621 6302 4efc b63a a494d2be3ec9 d3214eaa 4ac5 4e93 a101 918cf3788517 92cca8f0 1bc0 4b37 b330 8c95301ce6bd 448026d7 ff93 4174 9e10 f483373e517a aec0dd5e 9b61 43ee 8874 dd5ab47143c3 5cca1416 517e 4281 a60a 72d69cb53347 9053265e 27e5 4149 9a32 f22fcabe408a 2cac8ee6 b647 4885 9993 3325fba7eca8 5fdbc805 4d44 4257 9cb2 1eacde4b79b1 b3d28a4e 1095 4db6 be2e 3f8d87f1d383 657b9e9f 5a14 4437 b653 2f774f7ffcac 5413780a 6a40 44a4 8db1 a0c85cd57045 f4d17a62 fc16 41f9 a08e e4de30237928 caa2e7ca 8815 4ce2 a2fc 674f5944a624 4c946ffb ab64 4848 a5f2 5b6323db70a3 e853e7dc db8a 4ad6 92ce b740de5c48d9 4c00781a 4ecc 4a9a a9dd 3f48485734b0 18800e95 8fd6 4477 8d23 5d1fe5700178 5459aa7b 2f7e 4a43 b90f c7e76bc0f45a