If you’re a first-time home buyer, you’ve probably been urged to purchase by friends and family, giving you advice on how to buy a home. But if you are still thinking over your options and considering whether or not you should rent or buy, it’s okay. It’s normal to have a few anxieties about the home-buying process.

Why should you buy a home?

There are plenty of reasons for why you should invest in buying a home. One of the great benefits to home ownership is the pride that you feel in owning your own home and the freedom you have within it. You do not need to consult with a landlord about what color you paint your bedroom walls. (Although you may wish to check in with your spouse before you make any major alterations.)

In a less sentimental sense, you receive benefits like property tax deductions when you own a home. The purchase of a first time home or vacation home is eligible for income tax purposes. If you’re looking for more information from the IRS for first-time home buyers, you’ll want to consult IRS Publication 530.

You can also receive benefits like capital gain exclusion once you have lived in your home for two of the past five years. This enables you to exclude up to $250,000 in profit from capital gains for yourself alone, or up to $500,000 in capital gains if you are a part of a married couple.

Buying a home also helps you to build equity, when you pay your mortgage. Part of each monthly mortgage payment that you make is applied to the principal amount of your loan, reducing the amount that you owe. Due to amortization, the principal and interest payment you make increases by a small amount each month. Your first payment is the lowest amount, and the last payment is the highest amount.

You also have the option of home equity loans. The interest on a home equity loan is often tax deductible, whereas credit card balance is not. There are many reasons you can borrow against your home’s equity, including home improvement, starting a new business, college or medical expenses. However, home equity loans can vary state to state.

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This is filed under Home Buying.


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