At first glance, there seems to be one big reason to buy a new home instead of a used home; it´s NEW! Most of us like new things, like cars, clothes and shoes!
New is nice, but the real benefits of purchasing a new home lie just below the surface.
1. Buying a new home will dramatically improve the quality of life for you and your family. If you’re renting, you know the frustration of sharing walls or washing machines with your neighbors. In your new home those won’t be a problem, and with your new backyard, you’ll be able to watch your children playing. Homeowners by nature are less transient than apartment dwellers. You´ll have to opportunity to help establish a community and build relationships with neighbors. With a new home, you and your family are the first and only residents, and the home is designed solely with you in mind. The feelings of pride from owning your own home will extend into everything you do.
2. Building your family´s wealth is another big reason to buy a home. When you buy a home it most likely will start to appreciate, which means it will start getting more valuable. The value of your monthly housing payment over they years will be a better and better business deal for your family, because you can eventually sell the house for more money then you bought it for. Here´s how your home appreciates; let´s say you pay $175,000 for your new home. In your area homes are appreciating at about 4% per year. After the first year in your home, instead of the $175,000 you paid for your home, it would be worth $182,000 ($175,000 X 4%). Your home has grown $7,000 in value and so has your family´s wealth!
3. There are also tax breaks associated with owning a new home. The largest of these will allow you to reduce your taxable income by the amount you´re paying in interest on your mortgage. This will require itemizing your tax return, so you´ll need to move away from the 1040 EZ form many people fill out each year and start using one of the more detailed forms (like the standard 1040). This exemption is only available to the property owner, so if you´re renting or leasing, you´re allowing your landlord the benefits of the tax break. Deducting the interest you paid on your mortgage from your household gross income should reduce the income you have to pay taxes on by several thousand dollars, and less money to the government is more money to you and your family.
4. The fourth reason to purchase a new home is the revenue you´ll realize when you sell the home. Moving from apartment to apartment may spice up the variety in your life, but it probably won´t put any money in your bank account. Selling a home that you own, will. First, when you sell your home, you´ll be asking the price the home is worth, not what you paid, so you´ll have a more valuable home when you´re ready so sell (see appreciation above.) Second, if you´ve bought a new home, it will be much easier to sell because of all the energy efficient features and materials. Finally, the government will negate capital gains taxes on a big chuck of your sale price. Let´s say you´ve purchased a home for $175,000, lived in it for several years, and now only owe $100,000 on the mortgage, but your home has appreciated in value to $250,000, so when you sell the property, and pay the bank back the $100,000, you´ve got $150,000 in your pocket. If you put this money into your next home, the government will not require you to pay income taxes on this capital gain you just received. If it was money you earned on the job, you could be required to pay 28% of it to the government, but if you put it into your next home, it´s all yours.
5. Finally, the opportunity for choice. A new home is defined by your lifestyle and needs. You will select a floor plan that perfectly fits your family. It will be designed around your life with your colors and options. It’s a unique opportunity offered to people that buy a new home. You select every aspect of the house and watch it be built starting from dirt, to the frame, and finally to making it a home. The joy you feel on moving day is the beginning of enjoying the American Dream.