By purchasing a new home, you’re building equity and receiving tax benefits because you’re a homeowner. But there are even more benefits to buying now.
New homes need less maintenance than older homes and come with a warranty. In addition, major appliances, fixtures and components are covered under their own manufacturers' warranties.
When you pay rent, you build equity in your landlord's property. When you pay a mortgage, you build equity in your own property.
To help evaluate the financial benefits of homeownership, we've crunched the numbers. The figures shown below represent a typical situation in the Madison area. As you can see, homeownership has its benefits.
|Closing Costs and Fees||N/A||$0|
|Annual Insurance Premium||$240||$550|
|Rent/Monthly Principal & Interest||$1,500||$1,685|
|Monthly Deposit for Taxes||N/A||$642|
|Monthly Deposit for Insurance||$20||$46|
|Private Mortgage Insurance||N/A||$92|
|Total Monthly Payment||$1,520||$2,465|
|Income Tax Savings||N/A||$200|
|Monthly Payment After Taxes||$1,520||$2,265|
|Property Appreciation Per Month||$0||$1,021|
|Net Monthly Cost||$1,520||$1,244|
|Market Value After 5 Years||N/A||$415,690|
|Equity After 5 Years||N/A||$112,590|