Uncle Sam Wants You to Be a Homeowner
If you are a renter, it’s time to think about how buying a home can propel you to a stronger financial future. The government has considered broad-based homeownership to be key to a stable society and they’ve encouraged it for over a century by making it easy to be a homeowner.
In early America, homebuyers had to make a down payment of 25-50% of the cost of their home and get a mortgage that came due every 10 years. They were at the mercy of the local banker to extend their loan every 10 years and it usually required another substantial balloon payment. In the 1930s, the government came up with amortized loans, which is where the monthly payment is the same throughout the term but the mix of principle & interest that’s paid varies month-to-month. The advantage is that you have the same predictable loan payment every month until the loan is paid off.
With an amortized loan, each payment brings you closer to owning your house. When you rent, that money is gone--spent--and only it only buys you another month of shelter. Further, your landlord can raise your rent when you renew your lease.
The government also offers tax breaks to ease the burden on homeowners. You can write off the interest you pay on your home mortgage as an expense on your tax return. With other investments, you pay capital gains on any profit when you sell. But the government gives homeowners a tax break when they sell--they don’t pay taxes on the first $250,000 ($500,000 if you’re married) of profit.
The government goes further. VA loans (available to military veterans), FHA loans (similar to VA loans but available to anyone), USDA loans (used in rural areas) and more carry low down payment requirements. A knowledgeable mortgage lender can explain how to qualify for these and other attractive loan programs.
If you’re ready to start enjoying the benefits of stability, savings & predictability that come with owning a home, let’s connect. Especially with today’s historically low interest rates, buying vs. renting is an easy choice.
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