The advantages of home ownership are far-reaching, and buying a home (especially in Tampa) is not nearly as difficult as many people assume. Everyone is aware of the basic advantages of home ownership like security and autonomy, but fewer are aware of all of the financial benefits.
Significantly Cheaper to Buy than to Rent in Tampa
It is 42% cheaper to buy than to rent according to studies. That’s right, in annual cost alone, a home owner would see significant savings over a renter.
Increasing your Credit Score
Being a home owner and making scheduled payments helps to increase your credit score and credit worthiness. It’s considered “good debt” because it is backed by collateral and demonstrates your level of responsibility.
What’s more, a higher credit score saves you money in a multitude of ways: you’ll pay lower interest on loans, less money for car insurance, cheaper cell plans and more.
Homeowner’s Net Wealth Projected at 45x’s that of Renters by 2016
The most recent Survey of Consumer Finances study conducted by the Federal Reserve found that homeowners, on average, have a net worth 36 x’s greater than the net worth of a renter. NAR’s Chief Economist Lawrence Young predicts the wealth gap will widen even further to 45x’s that of a renter by 2016.
Tax Benefits
This one’s a doozy! Homeowners enjoy significant income tax deductions that translate to big savings. There are several deductions associated with home ownership.
Mortgage Interest
Mortgages are paid using an amortization schedule that allocates the larger share of payments toward interest during the first half of payoff. All of that interest (if your loan is under $1 million) is tax deductible and it amounts to a big refund. The interest on loans over $1 million is still deductible, just not all of it.
Interest paid on loans for second homes that you use for a minimum of 14 days/year or 10% of the number of days you rent it (whichever is greater) is also eligible for this deduction. This holds true for any property that has cooking, sleeping and restroom facilities (RV’s and boats, too!).
Home Equity Lines of Credit
If you take out a HELOC, you’ll be able to claim that mortgage interest as well on loans up to $100k!
Property Taxes
Here in Tampa, we’re fortunate to pay much less in property taxes than homeowners in many other states, but you’ll be happy to learn that the taxes you pay on your home are also fully deductible on your income tax return.
Sizing Up Your Home
All these savings add up – from money you actually put away from tax deductions and lower monthly costs, to the money you’ll earn from your growing equity and shrinking mortgage, empowering you with the resources to buy your next home. Don’t delay waiting to be able to buy the home of your dreams or else you’ll be waiting far too long! Buying a starter home enables you to grow a larger down payment from equity and savings, as well as qualify for a great loan because of a stronger credit rating. Read more about sizing up your home here.
Window of Opportunity
Especially in Tampa, a growing metropolis where home prices haven’t yet peaked, buying at today’s prices and with historically low interest rates, is a one of the most important investments you can make. Considering how much cheaper it is to own than to rent, you will be spending money that you’d already have to budget anyway and that money will be adding to your personal wealth. Tampa housing prices rose 20% January 2016. That’s a 20% growth in wealth of home owners, not even taking into account paying down a mortgage or making improvements. Put your monthly housing budget to work for you!
