will be within the walls of our own homes."
Harold B. Lee (1899 - 1973)
A home of your own
Perhaps you are tired of paying rent to a landlord. Perhaps you are ready to become part of a community. Maybe you need more space to raise a family, or you would like to begin your climb up the investment ladder, starting with your own little piece of land to grow on.
For whatever your reasons, you now believe that you are ready for a home to call your own.
Owning your own home can be a first-rate investment for a number of reasons.
stable housing costs
Traditionally, an advantage of homeownership is that, while rents typically increase year after year, the principle and interest portions of a fixed-rate mortgage payment remain unchanged over the course of the entire repayment period. That means, for a 15-year fixed mortgage, you can expect to pay the same monthly payment each month for the entire 15-year plan. Over the years, you pay the same monthly payment, no matter how much the inflation rate changes.
Houses typically increase in value over time. This is called appreciation. In Pinellas County, it is not unusual to find a house that sold for $50,000 ten years ago is worth $150,000 today. Unlike other geographic areas in Florida, Pinellas County is surrounded by water on three sides and is largely built-out, meaning there is very little undeveloped land. There is nowhere left for urban sprawl to spread. As a result, the various city centers of Pinellas County (St. Petersburg, Clearwater, Largo, Seminole, Pinellas Park, Tarpon Springs) have become revitalized commercial and residential districts. The effects have brought up property values as much as 220% in most areas.
Homeowners get significant tax breaks that are not available to renters. Most importantly, the interest paid on a home mortgage is usually tax-deductible. This alone can save you a substantial amount each year in federal income taxes.
A Florida advantage
Additionally, owning a home in Florida has some financial advantages over owning a home in other states. In Florida, all residents enjoy:
- no state income tax
- low caps on property taxes
- lower utility costs
- state incentives for home ownership
- generous programs for first-time buyers
An investment in your own future
When you buy a home, your monthly mortgage serves as a type of scheduled savings plan; over time you will gradually build what lenders call equity.
Equity is an ownership interest in the property that you can often borrow against, or convert to cash by selling the house. This happens because the value of the property increases over time, becoming worth more on the real estate market than the price you originally paid for it. In contrast, people who rent from a landlord contribute to the equity of the landlord's property, and never see the fruits of their monthly payment.