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Homeownership Builds Wealth Over Time
Homeownership can be a very savvy financial move – but only if you buy a home that you can afford.
Every month you will build equity
The equity in your home is the amount of money you can sell it for minus what you still owe on it.
For every mortgage payment that is made monthly, a portion of that payment reduces the amount you owe. That reduction of your mortgage every month increases your equity. The way a mortgage works is that the principal portion of your payment increases slightly every month, year after year. It’s lowest on your first payment and highest on your last payment. So, as the months and years go by, your equity grows!
Mortgage Tax Deduction Benefits
Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people, this is a huge deduction, since interest payments can be the largest component of your mortgage payment, especially in the early years of ownership
Closing cost deductions: The first year that you purchase your home, you are able to claim the points (also called origination fees) on your loan, whether they are paid by you or the seller. Because origination fees of 1% or more are common, the savings are considerable.
Property tax is deductible: Real estate property taxes paid on your primary residence are fully deductible for income tax purposes.
Tax Deductions on Home Equity Lines
In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan. This allows you to shift your credit card debts to your home equity loan, essentially paying a lower interest rate than the credit card interest rates and get a deduction on the interest as well.
A Mortgage Is Like a Savings Plan
When you pay your mortgage every month and reduce the amount of your principal, this is like a forced savings plan. For each payment made, you are building up more valuable equity in your home. In essence, you are being forced to save—and that’s a good thing.
In closing- You need to live someplace. Instead of paying off your landlord’s home or building, pay off your own
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