5 Financial Reasons to Buy a Home

The Dream Lives On: the Future of Homeownership in America was produced by Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University. He additionally serves on the publication leading body of the Journal of Housing Research and Housing Policy Debate. In this paper he reveals five important financial reasons why people should consider buying a home as opposed to renting.

The five explanations are accompanied by a selection from the study:

1.) Housing is commonly the one leveraged venture accessible.

“Not many families are interested in borrowing money to invest in stocks and bonds, and not many lenders are eager to give them the cash. Subsequently, homeownership permits families to amplify any appreciation on the value of their homes by a leverage factor. Even with a substantial 20 percent down payment results in leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting less than or equal to 10 percent down, their leverage factor is 10 or more.”

2.) You’re paying for housing, even if you’re renting.

“Mortgage holders pay debt service to pay down their own principal while households that pay rent pay down the principal of a landlord.”

3.) Owning is typically a type of “forced savings”.

“Since numerous individuals have a difficult time saving and need to make a housing payment one way or another, owning a home can overcome individuals’ tendency to concede funds to another day.”

4.) There are generous tax benefits to owning.

“Mortgage holders have the ability to deduct mortgage interest and property taxes from income… On top of this, capital gains up to $250,000 are bypassed from income for single filers and up to $500,000 for married couples assuming that they sell their homes for a gain.”

5.) Owning is a support against inflation.

“Housing expenses and rents have tended over most time periods to go up at or higher than the rate of expansion, making owning an engaging recommendation.”

We realize that homeownership makes sense for many Americans for many social and family reasons, as well as working towards the American Dream. It also makes sense financially. Bend, Oregon is a perfect town to live in the American Dream.

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