Some questions-Some Answers
This article is primarily directed at the first-time home buyer. Although there are many good reasons for buying a Las Vegas Home, being a homeowner is not necessarily for everyone. For one thing, people who prefer to rent, even though qualified to purchase a home, appreciate freedom from the frequent chores and maintenance issues that go with home ownership, and all the additional costs of insurance, water, trash pick up, higher utility bills, and so on that are part and parcel of owning a home.
On the positive side, owning your own home can give one a sense of stability and security, as well as pride of ownership and a stronger sense of belonging to the community then a renter might have.
However, although home ownership has historically been a source of wealth-building over time, homes have never bested inflation as well as stocks. So don’t necessarily buy a home with the idea of getting rich.
Buy a home because you want a place of your own, where you and your family can decorate as you wish, enjoy the privacy a single-family home offers, and find joy in your own piece of land where the kids can play, and you can garden or relax on your patio.
Certainly, be sure to buy only as much house as you can afford meaning, don’t stretch your finances to the limit for that extra bedroom and shop carefully for a lender with the most favorable interest rates and the type of mortgage that would best fit your needs.
As large a down payment as possible will avoid dealing with heavy monthly carrying charges and you will have built immediate equity. Paying down your mortgage will continue to build your equity, and the home will appreciate in value over time as well.
Your home’s equity can eventually be “tapped” through a home equity loan which can be used to pay down medical bills, credit card debt, finance education, or for a home remodeling project, for example, but your homes equity should never be used for frivolous purposes, such as a vacation.
A home equity loan should be a consideration only after carefully examining and analyzing your financial situation and the reasons for taking this step.
Particularly, at this time, when home prices are continuing to fall, withdrawing equity from a home could result in a situation where the balance still owed on the mortgage is greater than the home’s market value.
Among the many positive aspects of homeownership are the tax benefits. A home can be a superb tax shelter, and if and when you decide to sell, you will be exempt from capital gains taxes on your profits of up to $250,000 per individual and up to $500,000 per married couple if you have occuppied the property for two out of the last five years.
Tony Sena is a Las Vegas Real Estate Broker/Salesperson and Designated Property Manager with North American Realty of Nevada. He currently oversees a team of 10 real estate agents and runs the Property Management Division. He can be reached at 702.376.0088.