Your new home
Couple's first house is both symbol and investment
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When trying to decide
whether to rent or buy, remember that a home can be an important
factor in building a solid financial foundation for your marriage.
Your once-a-month rent payment is no longer cash flowing into someone
else's pocket. With each mortgage payment, you are "buying" something
tangible, building up equity. Although the bursting of an over-inflated
real estate bubble in 2008 has put housing prices in a slump, over the
long term, your equity will grow the longer you own your home.
Homeowners are different. When you live in
a neighborhood or building that is basically owner-occupied, your
neighbors, like you, are willing to invest more of their time, money
and efforts into improving their property. Consequently, the value of your
property remains stable, and in normal economic circumstances, increases.
A home is an investment that helps you keep
up with inflation. Although not all homes appreciate at the same rate
and some years are better than others, real estate has historically
kept pace with and has usually appreciated faster than the rate of
inflation.
The benefits of home ownership are many. All
interest paid on a mortgage is deductible for tax purposes. Property
taxes are deductible and you may receive special tax deductions for
energy efficient improvements. You can even borrow against the equity
value of your home to finance other purchases, and get a tax deduction
on your interest payments.
A home of your own creates security
for your retirement years. Unlike rent, which goes on forever, the
mortgage on your home will be paid eventually, providing you with "rent-free"
living for your retirement.
Even if your first home isn't your "dream
home," you will be growing your way up to it when you buy any home.
With appreciation and possibly some improvements, it may provide you
later with enough equity to make a down payment on your dream home.
Nearly every young couple has the problem of arranging financing
for their first home. Here are everal methods successfully used in recent years. Be sure to check
with your banker or real estate agent to see if these financing options are available.
- Loan: You may borrow your down payment so long
as it is a secured loan (guaranteed by assets such as a car, furniture, etc.)
- Gifts: A planned inheritance could be given early
in this time of need.
- Co-investment: Parents can join in a home purchase
as tenants in common. Parents make the down-payment; you make the
monthly payments as rent. Both share eventually, in the capital gain
from any appreciation at the time of sale.
- Outright investment: Parents purchase in their own
name, rent to the couple, with an option to purchase, at cost, in the future.
- Co-signing: In all of the approaches above it is
assumed that parents may be required to co-sign a mortgage note with
the new couple to supply credit-rating and income qualifications.
It should be noted that several of the suggested
ideas amount to good business opportunities for both the couple and sponsoring parents.
Whether it's wood or brick, a townhome,
condominium or a single-family dwelling, one thing is certain
about the first home you and your husband buy. It is a symbol of
your commitment to each other. It represents the independence and
freedom of choice you have exercised in beginning to build the
financial foundation of your marriage.
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