Buying a home carries many benefits. Some of these you may know and others you may not. If you’re considering becoming a homeowner, it’s worthwhile to take a closer look at the many potential benefits that come with the home purchase.
1. Home Equity
Home equity is one of the most obvious benefits of buying a home. While rates and markets vary, houses and real estate tend to appreciate with time. Not only that, but you also build equity in your home as you pay down the mortgage each month. This combination of appreciation and equity through loan pay-down combines to make a house a wise financial investment.
With the benefits of home equity, your mortgage turns into a forced savings plan. You are automatically putting money away and building value every month that you pay your mortgage.
2. Tax Deduction Benefits*
Tax codes give homeowners the chance to deduct mortgage interest from their tax obligations. At the beginning of your mortgage, this is a significant deduction. Interest payments are the most substantial part of your mortgage payment at the beginning, so that you can save big with this benefit.
The year you buy your home, you can claim any points you pay at closing as a tax deduction, which can add up to significant tax savings.
If you use the equity in your home to take out a home equity line of credit, you might be able to deduct the interest. An equity line of credit gives you the chance to move high-interest credit card debt to a lower interest loan product, while also earning a tax benefit.
Finally, property taxes are tax-deductible. If you live in a community with property taxes, you can write this off every single year that you own your home, even after you’ve repaid your mortgage completely.
*Consult with your accountant for tax advice.
3. Reliable Monthly Payments
When you get a fixed-rate mortgage, your monthly payments remain the same throughout the life of your loan. The only thing that can change is your property taxes, but you will benefit from knowing what your monthly payment will be over the long term. You will have greater control and budgeting stability over the housing-related costs you pay as opposed to renting, which can change from year to year.
4. Peace of Mind of Owning Your Own Home
Over time, you will eventually pay off your mortgage and own your home outright, and this gives you the peace of mind of ownership. You can own the house for life, and you are never at the mercy of a landlord.
5. Cheaper than Renting in the Long-Term
Buying a home is often cheaper than renting, especially as you look at the long-term benefits of owning your home. Eventually, you will begin building equity in that investment, instead of throwing money away in rent. You have to have a place to live, and it makes the most sense to use that as an investment if you can!
6. Positive Credit Impact
To have a strong credit score, you need to have some debt, but the type of debt you have matters. A mortgage is considered a good kind of debt because it is backed by collateral and may help you increase your credit score and put you in a better borrowing position if you need to borrow for other needs, like a car loan.
While equity is a clear benefit of homeownership, it’s just one. There are numerous other benefits worth considering. If you are on the fence about jumping into homeownership, weigh these benefits, and take the plunge. In the long term, it’s worthwhile.