For those people still wondering if they should buy their first home, consider these interesting pieces of information I just came across:
1. To stimulate the economy, Congress has passed a tax credit of up to $8,000 for first-time buyers. The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. Example: Homes costing $80,000 and above would yield a maximum tax credit of $8,000 for the buyers. The tax credit does not have to be repaid. It is a credit and will show up as a refund for most people. Example: You paid $10,000 in taxes this year and after completing your taxes figured out the IRS owed you a $500 refund. You would now get the $500 refund plus the $8,000 credit or $8,500 total refund.
2. While renting is a smart option for many people, most financial experts say those who can buy should. The sooner a person gets into a home the sooner they start building their personal wealth. A home is the largest financial asset most people have due to equity and appreciation over time. Average annual appreciation rate nationally is 5 to 6 percent since 1977. Central Florida’s appreciation rate has easily surpassed that! At 3% annual appreciation, a home purchased for $150,000 would grow to $364,000 in 30 years. Even at 1.5% annual appreciation, this same home would still grow to $234,462 in 30 years.
3. Still not convinced: how about this? The U.S. Federal Reserve Board of Consumer Finance says the average net worth of renters is $4,000. The average net worth of home owners is $184,400!