Is Homeownership Right for You?

By: Craig D. Antonelli, President of Antonelli Construction, LLC and

Chairman of the Rochester Homebuilders Association

During this unprecedented buyer’s market many people are trying to decide whether or not it is the right time for them to buy a new home.  There are many limited time incentives driving a renewed interest in home buying, but becoming a homeowner is a big decision that should be carefully considered from the short and long term perspectives.

How can you determine whether or not homeownership is right for you?  Here are some answers that might facilitate your decision making.                                                                                                                                                                           

What makes NOW a good time to buy a home?

Even though the most recent tax credits have expired, there are a multitude of other reasons that now, more than ever, is a good time to buy a new home.  Consider other tax advantages that are still in place for new home buyers like mortgage interest deductions, real estate tax deductions and capital gains savings.

Many home owners will see savings on their federal income taxes for years to come.  Deductions are often available for the mortgage interest and the real estate taxes you pay each year on your home.  These savings can add up significantly over the years. For example, a borrower with a $60,000 annual income with a $180,000 mortgage at a 5.5 percent interest rate would see a savings of $5,939 over the first five years.  In addition, real estate tax deduction savings can accrue based on the value of your home and how much you initially paid.

Additional tax savings can be realized when selling your home.  As of today, there is a capital gains tax exclusion on the money you make from the sale of your primary home (under a certain dollar amount). This long term benefit increases the return on your investment and adds to your financial wealth.

I would recommend you check with your tax advisor to see which of the many tax benefits of homeownership are out there, how they work and take advantage of them.

With rents often cheaper than mortgage payments, why is it better to buy?

Unlike renting, owning a home builds equity and helps grow your personal wealth over time.  Since housing investments historically appreciate over the long term, when you own a home you will realize a return on your investment when you sell.  You will not get this return on your investment when renting.

In addition, with a fixed-rate loan, your monthly mortgage payment will remain the same for the life of the loan.  This does not hold true for rent, which typically increases each year due to the increasing costs of living.  If you continue to rent long term, you may find that your monthly rent will eventually be higher than a mortgage payment would have been if you had purchased earlier.

And, don’t forget about the utilities used.  Typically the monthly utility bills will be higher when renting an older home or apartment than they would be in the new efficient home of the same size.   These hidden costs may consume your perceived monthly cash savings.

Are there other benefits to homeownership?

New homes accommodate today’s busy lifestyles nicely.  These homes feature open floor plans, flexible spaces, improved safety features, low-maintenance materials and other amenities that make new homes more appealing than ever before.

Homeownership typically represents the largest source of net worth for most families.  Beyond being a good investment, it also provides a place to raise your family and create lifelong memories.  Additionally, there’s ample research demonstrating that homeownership produces significant individual and community benefits as well.

The bottom line is this:  Becoming a homeowner is a big decision that should be carefully considered from the short and long term perspectives.  But to me, the answer is obvious.

With the tax savings that are still available, the mortgage interest rates being at unprecedented LOW LEVELS, and the GREENER and more efficient homes being built with the buyers in mind, it would be imprudent not to consider purchasing a new home.  Now is a good time to buy.

For more information on why now is a good time to buy, contact The Rochester Home Builders Association at www.rochesterhomebuilders.com

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