Prospective homebuyers often hesitate when they don't understand the true cost of ownership or the long-term value. This article will provide prospective homebuyers with more information and insight to help them better understand the true cost of owning a home and the value of homeownership.
Paying for a home is more than just the initial purchase cost - it's looking closer at the value of those costs now and down the road!
Usually, when you pay for something, you're just covering the cost of its purchase. You make a payment, and the money is gone.
This could be anything from your groceries to gas in your car and even your rent costs.
With a mortgage, however, your monthly payments are composed of multiple components, some of which can actually save (or even make) you money over time!
Let's take a look at three components of your home payments:
- The principal, which pays back the loan and can accumulate in the equity of your home. In most cases, you'll get this money back when you sell or refinance.
- A portion of real estate taxes and mortgage interest. If you deduct these from your income taxes, you may be able to save money (and even get some back) at tax time. For instance, the deductions for taxes and interest could lead to reduced income tax liability. There is also the potential to make a profit when you sell or refinance if there has been an increase in your home's value. It's best to talk with your tax advisor about this.
- Appreciation or increased value. While it isn't guaranteed, increasing long-term values have been the norm throughout history. You could potentially make a profit when you sell or refinance if your home has appreciated.
Yes, you have to make that monthly payment. However, the true cost of this can be much lower than what you pay when accounting for potential tax deductions and increased value.
Do you have any questions regarding mortgages, the home financing process, or more about current home valuations? If so, we're here to help! Feel free to reach out anytime.
We hope you will find this information useful as you continue to explore your homeownership goals.
