Even though it’s a major financial move, owning a home has many advantages. Along with pride of ownership, more privacy and control over your own home there are also great financial benefits to owning.
Building Equity: Unlike renting when you own a home you’re paying down the mortgage each month instead of a landlord. As you pay your mortgage each month your equity grows. When it comes time to sell your home, depending on how long you plan to live in the property, you may have enough equity to sell for a profit.
Tax Benefits: Interest on mortgage loans are tax deductible as well as closing costs paid upfront such as points. Real estate property taxes are also deductible. You can also deduct interest paid on a home equity line of credit (HELOC). Also, if you sell your home for a profit you will not own any capital gains taxes unless over $250,000 in profit for singles or $500,000 if married.
Buying Smarter than Renting: While the first few years of renting may be cheaper than buying, over time as rent pricing increase each year you will end up paying more. With a fixed-rate mortgage you will have steady payments each month and you will be building equity rather than having your money pay off a landlord’s mortgage.
Asset Diversification: While your home already is an asset, there are other ways you can maximize your homes ability to create wealth. Unlike other investments, you get to live in this one while it grows. If you have spare rooms in your home you could rent it out to pay down your mortgage faster. Also, if you use your home as your business, you may look into using the home office as a tax deduction.
Savings: Paying off a mortgage is healthy for your finances as it creates a forced savings account as you build equity in your home.