New home prices are becoming increasingly competitive with rental prices. There is also currently a better inventory of available new construction homes compared to the inventory of rental homes. In addition to these compelling aspects of new homes compared to rentals, there are some key financial advantages of homeownership of which the average first time homebuyer is often unaware.
Investment & Tax Benefits
The most obvious financial benefit of homeownership is that it is an investment. Ideally homes appreciate in value over time and the money you invest in a mortgage each month will be returned with profit when you sell the home. Many factors impact this, and you must plan on owning the home for a duration of years for this to be the case. A less apparent facet that new homeowners might not be aware of are the tax advantages of homeownership. When comparing a monthly mortgage payment to a monthly rental payment, they are not “apples to apples.” Your mortgage payment will also typically include escrowed funds that will be used to pay tax and insurance on the home. This will be rolled-in as part of your monthly amount whereas renters' insurance, for example, is an additional amount on top of your monthly rental fee. Your mortgage payment will be further divided into a portion to be applied toward the principal balance of the loan and a portion to be applied towards the interest you are paying on the principle balance. In the beginning years of a loan, the largest chunk of the payment will go towards interest. The good news is that what you pay towards interest (and property taxes, and any mortgage points you paid to secure a better interest rate) is tax deductible. This can make a huge impact come tax return time and can potentially offset some of the cost of homeownership. So while a monthly mortgage payment might seem higher than a rental payment, it is going towards more things and you might see some of that money again in your tax return.
Ask a Sales Counselor at any new construction community to give you a rundown on the pros of homeownership, they will be able to address any questions or concerns you may have. Shop for available new homes in Berkeley, Charleston, and Dorchester counties.
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