02 Jun What’s Great About Buying a Home in the Greater Seattle Area
Buying a home in the Greater Seattle area? Home ownership is attainable with the right strategy and should be considered as part of your retirement plan for your future. Let’s take a look at some economic drivers for the greater Seattle area and reasons why buying a home is a good strategy to help build your long-term wealth and success, even during this COVID-19 pandemic.
Diverse Economy
Seattle is a home to some of the richest tech companies in the world. This includes Microsoft, Intel, and Amazon. Google, Facebook, and other top companies have been making their way to the area over the past decade.
Outdoor Recreation and Relaxation
The Puget Sound is uniquely situated in the Northwest corner of the United States next to one of the seven temperate rain forests in the world located on the Olympic Peninsula. Residents are treated with the breathtaking views of Mount Rainier, Cascade Mountain Ranges, and the waters of the Puget Sound.
Healthcare
Seattle has some of the best doctors and innovative healthcare advanced solutions that include finding a vaccine for COVID-19. The biotech industry contributes to the diverse economic success of the great Seattle area.
Schools & Universities
University of Washington, Western Washington, and Puget Sound Universities provide cutting edge biotech and engineering innovations while promoting new solutions for a growing population . The Greater Seattle Area is known for leadership in climate, health, and agriculture solutions. With engineering, biotech, and other industries having a strong foothold in Seattle and the Puget Sound, it keeps the area economically competitive and exciting to experience.
Retirement
Home ownership helps plan retirement along with many other benefits that come when you buy a home. With a proper plan and strategy, there are many ways to get into home homeownership and get a return on your housing expense.
Appreciation
Looking back into the sales history of a home, it is amazing to see what $20,000 could buy you. In today’s coastal markets, $20,000 is usually only part of your down payment for a home. Thus, historically, homes have greatly appreciated. When looking at appreciation, it is important to look at the land and neighborhood. Location is often key to maintaining good value in your home. Generally, homes appreciate on average from 3-5 percent per year keeping up or beating inflation. Thus, adding to the benefit of buying a home.
Equity
Equity is the difference between what your home is worth and what you owe on the home. Building equity takes time but can have some great benefits. Equity helps to increase your net worth, creates an “emergency fund,” and can be used to re-invest. Some savvy investors use their equity by taking a cash out refinance to reinvest into other investments. Equity is like adding to a savings account. You are essentially paying yourself instead of paying your landlord while increasing your options of how to use your money.
Capital Gains
Upon selling your home, there are capital gain benefits for up to $250,000 for a single person and $500,000 for a married couple that are tax free. If you are in a 25% tax bracket, your savings could be between $62,500-$125,000 on taxes. This is an incredible benefit that you do not have to pay taxes on.
Tax Deductions
Deducting expenses on your home and writing off your mortgage interest can provide added tax savings. Sometimes, there are benefits with state and local taxes, too. If you have a business and a home office, this could be a source of tax savings. Speaking to your tax advisor will help you navigate through the specifics of the potential savings that you could have.
Set Monthly Mortgage Payments
One of the great benefits of buying a home instead of renting,is that you are setting yourself up with set monthly mortgage payments. With renting, your rent is generally going to increase over a long period of time and will go up. With buying, you have a lot more control. You set an expectation for your monthly mortgage when you buy. Property taxes can fluctuate the mortgage payment. However, you can refinance at a later time to lower your payment.
Cheaper
As mentioned above, you will have set monthly mortgage payments on a standard 30 year mortgage. There could be beneficial options to refinance during the 30 years to reduce your payment. When renting, you are not in control and cannot leverage your housing expense. Buying a home in the Greater Seattle area gets you more for less.
A Place to Retire
Most people don’t want to keep renting forever. Paying off a home, will allow you to live a retired life without most of your income going towards housing. If you choose to move later in life, you can use the proceeds to move to a more affordable location. At least having a home paid off, will give you more options when the time comes.
A 30 Year Lease in Your Control
For the next 30 years, you will have more control of how to manage your housing expenses. You will not get a rent raise every year. You get to vote on raising or lowering property taxes in your area. You can lease out part of your home and leverage your mortgage payment. You can use the equity built in your home as an emergency fund. You can set your own rules for your house. You can have holiday parties or throw community supporting events. You will have pride in your home. You will be able to control your privacy and security. You can choose if you want to own pets. Want to take up a new hobby or work on an invention? Perhaps the garage or backyard will allow you to do so. Most of all, you will be able to be more in control of your financial destiny by managing your own “30 year lease.”
Affordability
Some may think they cannot afford a home without speaking to an expert real estate agent. My team and I help people navigate through their options on how to get started and advise on next steps in how to get there. Let’s explore your options together and find a strategy that best suits you. Let’s figure out how to stop paying rent and invest in your future.
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Sources Cited: https://www.investopedia.com/updates/first-time-home-buyer/