4 Reasons you Should Buy Instead of Renting

Purchasing a home has long been seen as the American dream. The pride of ownership and knowing that your dwelling is completely under your control is very appealing. The housing market crash of 2008 has made many renters leery about buying a home, fearing that it will be too expensive and risky. However depending upon where you purchase a home, the amount of your down payment and the interest rate you are able to obtain, purchasing a home might actually be cheaper. Here are four additional reasons you should consider buying instead of renting.

1.     Create your own space – Unlike renting, where you could be charged for every nail hole or floor scuff you leave after vacating the premises (and don’t even consider repainting the walls!) – when you own a home, you are in control of designing your space to suit your tastes. This means you can remodel, repaint, hang pictures, shelves and light fixtures, and you don’t have to worry about anyone saying you can’t.

2.     Fixed monthly payment – While your rent can go up at any time, if you have a fixed rate mortgage, your monthly payments will stay the same for the life of your loan. Additionally, if interest rates go down, you can re-finance your loan for an even lower monthly payment. In comparison, your rent will most likely never be any lower than what you paid your first month.

3.     Tax breaks – Another great benefit of having a mortgage is the fact that you can write your interest payments off on your annual taxes. Additionally, you could also reap tax benefits for having energy efficient products in your home.

4.     Home equity – Unlike rent, your home is constantly building equity as you pay down your mortgage. Every dollar paid towards the loan’s principal is a dollar of equity built in your home. When you reach 20% equity paid, you can borrow against your home for other investments or home improvements. Additionally, that equity will add to the value of your home if you decide to resell.

Are you considering purchasing a home in Joliet or the surrounding communities?  Contact the professionals at Three Rivers Association of Realtors to find a real estate agent to guide you through the home buying process. We are a non-profit organization serving more than 1,000 realtors and affiliate members.

Home Sweet Homeowners Tax Advantages

With the current housing market in an upswing, many people are becoming new homeowners. To those who have just purchased their first home - congratulations! Being a homeowner helps fulfill the American dream! Don't forget about one of the new benefits you'll enjoy....tax breaks!

Take advantage of these homeownership-related tax deductions and strategies to lower your tax bill and increase your refund.

• Mortgage Interest Deduction - One of the best deductions itemizing homeowners can take advantage of its mortgage interest deduction. Interest you pay on your mortgage (up to $1 million) is deductible when you use the loan to buy, build, or improve your home.
• Prepaid Interest Deduction - Prepaid interest (or points) you paid when you took out your mortgage is generally 100% deductible in the year you paid it along with other mortgage interest. If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.
• Property Tax Deduction - You can deduct the real estate property taxes you pay on Schedule A. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement. If you bought a house in 2015, check your settlement statement to see if you paid any property taxes at closing. Those taxes are deductible on Schedule A, too.
• PMI and FHA Mortgage Insurance Premiums - You can deduct the cost of private mortgage insurance (PMI) as mortgage interest on Schedule A if you itemize your return. The change only applies to loans taken out in 2007 or later and the deduction is reduced if your adjusted gross income exceeds $100,000. besides private mortgage insurance, there's also government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing, and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction.
• Energy-Efficiency Upgrades - The Non-Business Energy Tax Credit lets you claim a credit for installing energy-efficient home systems. Tax credits are especially valuable because they let you offset what you owe the IRS dollar for dollar, in this case, for up to 10% of the amount you spent on certain upgrades. The credit carries a lifetime cap of $500 (less for some products), so if you've used it in years past, you'll have to subtract prior tax credits from that $500 limit.

At Three Rivers Association of REALTORS®,  we advocate to protect real estate-related tax deductions, aim to address real estate issues in the community, and work to provide a good housing market for the Joliet area. To learn more about us, please visit our website! And if you are ever unsure about how to properly complete your tax returns, make sure to consult a tax professional for help.