Benefits Of Being A Homeowner Versus Renter
In this blog, we will cover the Benefits of Being a Homeowner versus Renter and the mortgage process. The American dream is still being a homeowner. A home purchase is normally one’s largest and single biggest investment. There are many benefits being a homeowner versus renter. Many renters do not realize how simple it is to be a homeowner. Many renters are under the impression that they need a 20% down payment and great credit to qualify for a home mortgage. This is not the case. In the following paragraphs, we will cover the benefits of being a homeowners versus renter.
Why Choose Us at Gustan Cho Associates?
Gustan Cho Associates are experts in helping first-time home buyers realize the dream of homeownership become a reality. Our team of licensed loan officers at Gustan Cho Associates will help renters qualify to become first-time home buyers. We work closely with realtor partners nationwide.
We Are Able To Do Mortgage Loans Other Lenders Can’t Do
Over 75% of our borrowers are home buyers who could not qualify at other lenders because the other lenders have overlays. Lender Overlays are mortgage guidelines that are above and beyond those of FHA, VA, USDA, Fannie Mae, and Freddie Mac Mortgage Guideline. We are mortgage brokers licensed in 48 states with over 190 wholesale mortgage lenders with no overlays on government and conventional loans.
Weighing The Cons And Benefits Of Being A Homeowner Versus Renter
We will cover the cons and benefits of being a homeowner versus renter on this BLOG. Many renters feel that homeownership requires the following:
- Great credit
- Great income
- A lot of money to use for a down payment
- Reserves
That is not normally the case. Home Buyers can qualify for FHA Loans with outstanding collections and charge off accounts with a 580 credit score with Gustan Cho Associates Mortgage Group.
First-Time Homebuyer Mortgage Loan Options
There are great first-time home buyer loan programs where as long as the buyer can prove that they can afford the monthly housing payment, they should be able to qualify for a home loan. FHA loan programs require a minimum of 3.5% down payment. However, for homebuyers who do not have a down payment, the down payment can be gifted by a family member.
Many first-time home buyers are nervous about becoming first-time homeowners. They are afraid of committing to such a long-term commitment and responsibility. There are many benefits of being a homeowner versus renter.
Several Benefits Of Being A Homeowner Versus Renter
CONTROL:
One of the greatest benefits of being a homeowner is that homeowners have full control of the property since they are the owner of the property. Homeowners do not have to abide by the rules of the landlord where they cannot paint the home, have pets, have satellite dishes installed, install carpeting, attach fixtures, remodel, or have a stereo system too loud.
Benefits Of Being A Homeowner Versus Renter With Building Equity
Building equity :
Another great benefit of being a homeowner versus a renter is when the mortgage payments every month, part of the mortgage payments is the interest expense and part is the principal. Homeowners can deduct mortgage interest from their income tax. The principal paydown will reduce the principal of the loan amount. Also, real estate is one of the safest investments around. Homeowners will also reap the benefits of being a homeowner versus renter because more than likely, the home will appreciate in value.
Buying a Home While Housing Is Still Affordable
The real estate and credit collapse of 2008 has corrected the real estate market. So first-time home buyers can take advantage of the down real estate prices. Renters will not reap the benefits of being a homeowner versus renter but will be able to save money from the mortgage interest deductions and/or potential appreciation of their home. As a renter, they cannot deduct any rental expense and renters are helping their landlords pay down their mortgage and build wealth for landlords and not themselves.
Financial And Tax Benefits Of Being A Homeowner Versus Renter
Writing off mortgage interest deductions. Other benefits of being a homeowner versus a renter are that homeowners get to write off the mortgage interest every year whereas a renter does not have those benefits. Mortgage interest expense is fully tax-deductible. This is one of the greatest benefits of being a homeowner versus renter. Mortgage interest is the biggest portion of the monthly mortgage payment during the first half of the term of the loan. Writing off property taxes. The Internal Revenue Service allows property taxes paid on owner-occupied homes and second/vacation homes to be fully deductible from income tax. Again, renters do not have that privilege
Benefits Of Being A Homeowner Versus Renter Are Federal Tax Savings
Exempt from paying capital gain taxes on an owner-occupied residence. Other benefits of being a homeowner are that as long as homeowners have lived on their property for a few years, a homeowner can exclude paying capital gains. Homeowners need to check with their accountants on the amount they can exclude. But from my understanding, a homeowner can exclude up to $250,000 for an individual or up to $500,000 for a couple who are married from paying capital gains. This is different than a 1031 tax exchange where property owners do not have to purchase a like or larger property with the proceeds. Primary homeowners are totally tax-exempt from paying capital gains taxes from the sale of a personal residence.
Ability To Do Cash-Out Refinance
The benefits of being a homeowner are the ability to use equity loans versus credit cards. Other benefits of being a homeowner versus a renter are that a homeowner can get a home equity loan or a HELOC (Home Equity Line Of Credit}. Home Equity Line Of Credit. Having a HELOC is like having a credit card but it is secured with the equity of the home. Rates for HELOCs are probably lower than first mortgage rates and WAY LOWER THAN ANY CREDIT CARDS.
Benefits Of Being A Homeowner Versus Renter Are Tax Benefits
The benefit here is that homeowners can write off the interest from HELOC whereas they cannot write off the interest from any credit cards. Homeowners can use HELOC to pay off all high-interest rate credit cards or other debt.
Cash-Out Refinance Mortgage
Homeowners with equity in their homes can do a cash-out refinance mortgage and pay down debts with the proceeds. Lenders cannot dictate what homeowners need to do with proceeds on cash-out refinance mortgages. Homeowners who have equity in their homes and a lot of debt can use the proceeds of a cash-out refinance mortgage and pay off their high-Interest debts. Remember that credit card debt, auto loans, and other instalment loans are not tax deductible but mortgage interest expense is. It may be used to utilize this IRS benefit in getting a cash-out refinance mortgage and pay down or pay off all debts
Borrowers who are interested in qualifying for a purchase or refinance mortgage with a direct lender with no lender overlays can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, on evenings, weekends, and holidays. We service countless of first-time home buyers and will explain how easy it is and the benefits of being a homeowner versus renter. Many times, the new mortgage payment is the same and/or lower than what the rent payment is.
