Homeownership: Opportunity is Knocking
Written by the National Association of Home Builders
Homeownership is an important part of the American way of life. Today there are many opportunities in the housing market – including low mortgage rates and new homes that are built to fit your lifestyle – to find a home that is right for you. But market conditions can change, and these opportunities may not be around for long, so home buyers shouldn’t wait.
Low Interest Rates
Today’s low interest rates are helping home buyers find affordable housing options. But, it’s important to keep in mind that interest rates are sensitive to market forces and can change quickly. Even a slight rate increase can push monthly payments to the point that a buyer might miss out on their first choice for a new home.
How Interest Rates Affect Mortgage Payments:
Large Downpayments Not Necessary
While lenders are looking more closely at borrowers today than in recent years, there are options for purchasing your home without a 20% downpayment. For example, the Federal Housing Administration (FHA) offers loans to first-time home buyers with downpayments as low as 3.5%. However, these loans require mortgage insurance.
To ensure that the process goes smoothly, buyers should consider pre-qualifying for a mortgage and having financing in place before shopping for a new home. Buyers also may find that some home builders have arranged favorable financing for their customers or offer financial incentives.
Built to Fit Your Lifestyle
Designed to accommodate today’s busy lifestyles, new homes – including urban condos and single-family homes – feature open floor plans, flexible spaces, low-maintenance materials and other amenities that make them more appealing than ever before.
With energy costs near the top of consumer concerns, it’s good to know that new homes can be more energy efficient than ever. Innovative materials and construction techniques mean that today’s new homes are built to be much more energy efficient than homes constructed a generation ago. Not only can they be more affordable to operate, new homes also are significantly more resource efficient and environmentally friendly.
And in many areas, prospective home buyers who wish to live in age-qualified communities for those 55 and older will find a large selection of homes tailored to the evolving lifestyles of the baby boom generation.
Benefits for Home Owners
Homeownership also provides important benefits to owners.
Tax Benefits: For Home Owners Only
Unique tax benefits that apply only to housing help lower the cost of homeownership. Both mortgage interest and property taxes are deductible. Moreover, for married couples, profits of up to $500,000 on the sale of a principal residence ($250,000 for single taxpayers) are excluded from tax on capital gains.
The Advantage of Leveraging
Leveraging is another advantage of homeownership. A buyer can purchase a home and receive the full benefit of homeownership with a cash downpayment that is only a fraction of the total purchase price. This is called leveraging, and it makes the rate of return on a home purchase greater than on other purchases with the same value, such as stocks, where the buyer must put up the entire price.
Building Personal Resources
For most Americans, homeownership is a primary source of net worth and an important step in accumulating personal financial assets over the long term. For most families, home equity represents the largest share of net worth.
There Really is No Place Like Home
Although there are many positive financial aspects to homeownership, a home cannot be valued in monetary terms alone. Not only can homeownership be a stepping stone to greater financial well-being, it provides a permanent place to call home and great personal satisfaction.
Academic research also shows that homeownership provides a wide range of social benefits and strengthens the nation’s people and its communities.
Homeownership is truly a cornerstone of the American way of life.