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Your Bank > Education and Advice > CNB University

Home Ownership Has Many Advantages

M Whalen
Matt Whalen is Mortgage Loan Originator and can be reached at MWhalen@CNBank.com or 585-385-2370 x50962.

In the spring, "for sale" signs tend to bloom right along with the flowers. Something about the season prompts people to get out, look at homes, and think about moving.

For first-time homebuyers, however, the thought of buying a house is often intimidating. In many ways, renting just seems easier. A security deposit and a month’s rent may be all the cash a renter needs to provide up front. Renters usually don’t have to buy appliances or lawn mowers — all the expensive items homeowners may need. And, when it’s time to move, many leases call for only short notice.

Still, for individuals who intend to stay in one area for a while, the financial advantages of home ownership can be hard to beat.

For Example. Let’s say you — or your child or grandchild — are now paying $800 a month in rent. That would be enough to make payments on a $100,000, 30-year, 6% mortgage ($600 a month), plus cover $200 a month in property taxes. So, with an additional $10,000 for a down payment and money for closing costs, you could buy a $110,000 house, townhouse, or condo — with no increase in monthly payments.

Build Equity. Instead of getting nothing in return for a monthly rental payment except a place to live, repaying a mortgage builds equity. By repaying the mortgage in our example, you would build approximately $7,000 of additional equity after five years, $16,400 after ten years, $29,000 after 15 years, and $46,000 after 20 years. These numbers don’t count any money you might make if you sell the house at a profit.

Save Taxes. Home mortgage interest and real property taxes are generally deductible as itemized deductions, potentially saving you thousands of dollars in income taxes over time. And, when it comes time to sell, as much as $250,000 of capital gain ($500,000 on a joint return) may be excluded from your taxable income, assuming you meet IRS requirements.