You’re getting married! Which means that even more decisions are to come in the near future. If you subscribe to the American dream of owning a home, having a pet, and raising children, then this is the post for you!
Planning a wedding and purchasing a home often coincide. While this is a very exciting time, you may find that you are overwhelmed or stressed by all of the to-dos that come with these big decisions. We have some tips for helping you navigate through the process.
First, find a wedding planner! This is the quickest way to relieve the planning stress. They can help you in more ways than you could image. From assembling your invites and addressing envelopes to compiling RSVPs and working on seating charts, some of the most tedious tasks can be outsourced so that you can enjoy the big stuff- ring shopping, cake tastings, linen choices, flower selection, etc.
If a wedding planner isn’t in your budget, delegate tasks to friends and family! You don’t have to do it all! Also, schedule dedicated wedding planning blocks of time. For example, on Wednesday take care of DIY projects and guest list planning. On Saturday, plan to shop for accessories and decor, review timeline, email vendors, select bridesmaids dresses and gifts. Write down everything you need to do, group these together by priority and then check off one thing at a time! Schedule all of your vendor appointments on the same day. Tip- consider taking off a day in the middle of the week – vendors tend to work events on weekend and find that they can give you more attention and focus during the week.
By giving yourself set days and times to focus on certain tasks, you won’t feel pulled in so many directions.
As for home purchase planning, do the same thing! Block off the time. One of your first tasks will be to meet with the bank and provide a lot of documentation regarding your finances.Once you understand what kind of loan you qualify for, you’ll be able to house hunt much more efficiently!
We’re pretty sure that if you are reading this, you’ve already determined the advantages of getting married! As for the advantages of owning a home, our dear friend and realtor, Rana Dexter, recently compiled a list of the top 5 financial benefits to owning a home. Here are some surprising perks that you may not have considered:
Benefit #1: Paying a Low Mortgage Rate
Undoubtedly, one of the best reasons to make the leap into homeownership right now is that borrowing money is cheap. Interest rates are at historic lows, below 4% for a 30-year, fixed-rate mortgage and below 3.25% for a 15-year term.
Here’s an example using the current interest rates: The principal and interest you’d pay for a fixed-rate mortgage of $150,000 costs about $700 a month over 30 years, or $1,000 a month for 15 years. Ten years ago these same mortgages would have cost $1,000 for the 30-year option and close to $1,300 for a 15-year loan because the interest rates were higher.
Over the long run, low interest rates can make owning a home much cheaper than renting, in many parts of the country. Of course you have to factor in additional expenses—such as property tax, insurance, maintenance, a down payment, and closing costs—when considering whether you can truly afford to own a home.
Benefit #2: Paying Low Home Prices
The second financial benefit to buying a home in our current economy is that real estate prices are depressed. In other words, real estate is still a bargain in most areas of the country.
If you’re a first-time homebuyer, you have a great opportunity to get into the real estate game at prices you might never see again. As home prices eventually trend back up, the appreciation allows homeowners to build wealth.
Benefit #3: Hedging Against Inflation
And speaking of prices going up, another often-overlooked financial benefit of owning a home is that it’s a solid hedge against inflation. Consider this: If you have a fixed-rate mortgage, the price you pay to have a roof over your head can’t change—no matter what happens to interest rates or the economy. The cost of your home is locked in for the term of your loan, such as 15 or 30 years. Even adjustable-rate mortgages come with an interest rate cap, so you know the maximum potential mortgage payment. On the other hand, when inflation causes the price of goods and services go up, rent prices can skyrocket, which can make owning a home much more affordable when inflation rears its ugly head.
Benefit #4: Building Equity
The fourth financial perk of owning a home is that you can build equity, which is the value of a property that you actually own. For example, if your home is valued at $175,000 and you owe $100,000 to the lender, you have $75,000 in equity. What’s really great about a fixed-rate mortgage is that each payment is made up of a principal and interest portion. With each monthly payment, you automatically reduce your outstanding loan balance by a slightly larger amount. Therefore, every payment you make means you own more of your home and owe less. This is a stark contrast to paying rent, which is a pure out-of-pocket expense. Although real estate values can go up and down, over the long term they have appreciated. If your home value goes up at the same time that your debt goes down, that’s a really powerful combination. Owning real estate gives you the opportunity to build wealth from price appreciation, paying down your mortgage, or from both.
Benefit #5: Saving Money on Taxes
Yes, homeowners have additional expenses such as property tax and maintenance. However, the following 4 costs are tax-deductible if you itemize deductions on your tax return:
- Mortgage interest: You can deduct the amount of interest you pay on your home loan each year up to a total of $1 million of debt. If you also have a home equity loan or line of credit, the interest you pay for it is also deductible up to $100,000.
- If you want to know more about who’s entitled to claim this valuable deduction, check out the Mortgage Interest Deduction FAQ Video at SmartMovesToGrowRich.com. You’ll find out what’s permitted in different situations, like when you buy a home with someone else or make mortgage payments but aren’t listed on the mortgage or deed.
- Points: You can deduct “points,” which is interest you pay upfront at closing for your new home mortgage. This is the case even if you negotiate to have the seller pay points for you.
- Property taxes: You can deduct any state or local taxes charged for your real estate.
- Private mortgage insurance (PMI): You can deduct some or all PMI premiums you may be charged when your down payment is less than 20% of your home’s value. You’re ineligible for this deduction if your adjusted gross income exceeds $109,000 (or $54,000 if you’re married but filing separately).
In addition to these annual tax breaks, one of the biggest tax savings for homeowners occurs when you sell your home. That’s because up to $250,000 of profit (or $500,000 for a couple who filed taxes jointly) is not taxed as long as you’ve lived in the home for 2 of the previous 5 years before the sale. This benefit it called the capital gains exclusion and it’s available no matter your age and as many times as you sell a primary residence in your lifetime.
Money-saving tax breaks are fantastic, remember that many expenses—such as homeowners insurance, homeowners association dues, maintenance, renovations, and local tax assessments for improvements, like new sidewalks—are not tax deductible.
Should You Buy a Home?
There’s a lot to consider when it comes to buying a home—both financial and non-financial. It certainly isn’t cheap and could leave you in a bad spot if you need to pick up and go. But if you know you can stay in a home for at least 5 years and want to put down roots in a community, the long-term financial rewards of buying can really add up.
Convinced that this is a good move for your future? Then start getting your finances in order, chat with your bank and then get in touch with Rana! Here is her contact information: