Looking for the first home can be an exciting time in the lives of many. However, it can also be a scary for time those who are concerned about the long-term commitment that they are making. Even the word mortgage can be viewed and translated into long-range goals and objectives, since many new homeowners are normally committed to a 30-year loan.
Although this long-term commitment can be major concern for many, buyers who purchase their first home can also associate this transaction with many different benefits. This is because first time buyers are normally given special incentives and there are inherent advantages in buying a home.
Some of the main benefits of buying the first home include financial stability, home equity, establishing strong credit, and saving money at tax time. Also, after working hard, the new homeowner will have an opportunity to participate in the American dream (owning a home).
One benefit to buying a first home is having financial stability. The homeowner has more financial stability because they know the amount that they will have to pay each month for an extended period of time (i.e. 30 years). This is not true for those who pay rent each month because it can vary widely based on the economy and other things. The amount that a renter pays can also change in 6 months or in a year. The amount due is based on the current lease. However, if the homeowner has a fixed rate instead of an adjustable rate more, they will know the exact amount each month and they can plan their budgets accordingly.
One of the benefits of buying a home and paying the mortgage is building up equity. Equity can be described as ownership and it increases as the homeowner makes their mortgage payments. Some people consider it as savings because the money can be taken out when it is needed. This means, the homeowner is making money, while they are paying of their mortgage.
Another benefit to buying the first home is rebuilding the crediting history and rating. While some buyers will have a high credit rating when they purchase their new home, others may have a low score. In these situations, the new home can build their rating quickly when they make payment on time every month. By paying the mortgage on time, creditors can review the history and view the owner as a positive risk. In fact, the new owner can watch their credit ratings increase by reviewing the three credit bureaus periodically.
Money Savings at Tax Time
When an individual rents instead of buys a home, they may have problems with finding tax credits and deductions at the end of the year. Without a home, many people owe the government instead of looking for a refund. However, when this same individual buys instead of rents, they will have additional tax savings at the end of the year. This is because the government allows deductions on the interest that is being paid.