Filed Under (Real Estate) on 07-17-2012
Home ownership requires a significant commitment of money and energy –first to find the home you like in Colorado, and then to maintain it. Some very good reasons to buy a home make it worthwhile.
1. Emotional security: Having a place to call home for you and your family provides a sense of emotional security that does not exist for tenants. If it is your home, no landlord can announce a rent increase, or that your lease will not be extended.
2. Financial security: As a homeowner, you feel secure knowing that the largest portion of your monthly housing expense will not change. This is because most houses are bought using “fixed financing,” which means that the interest rate charged for the financing is established when you buy.
If, on the other hand, you rent, it is likely that your monthly rent payments will increase over time. In fact, according to data from the Apartment Association of Metro Denver, the average rents in Denver increased 4.1 percent in the first quarter of 2012 compared to 2011.
3. Investment: Over time, as a homeowner, you are investing in real estate. Each monthly loan payment you make consists of principal and interest. Each principal payment goes towards paying off the loan, and increasing the amount of ownership you hold in the property.
4. Appreciation: Another reason for buying, not renting, is that property historically has increased in value over time, or “appreciated,” making real estate a good investment. Real estate is especially attractive when you consider that the purchase is a leveraged investment. That means that you only have to put a small portion of the total cost of the property down, and you use credit or borrowed funds (in the form of a mortgage) to complete investment.
Still, appreciation is not guaranteed. In Denver, the average home price increased between 7 percent and 12 percent a year from 1989 to 1999, according to information from the City and County of the Denver. On the other hand, property values have seesawed since 2000. According to current statistics, home values are again on the rise in 2012.
5. Tax savings: Homeowners are able to take a tax deduction for the interest paid on their mortgage, making your overall mortgage payments lower than they first appear.
6. Pride – and freedom – of ownership: Owners get to paint and decorate and landscape their homes to their own specifications. There is real pride in having a well-maintained yard or freshly stained fence, when they are yours.
For more information about the legal, financial and practical issues related to buying a home, see The Colorado Home Buyer’s Guide, by Vicki S. Porter.