Financial Benefits of Owning a Home

financial benefits of owning a home
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While personalization, neighborhood, and space are all benefits of owning a home, they don’t begin to touch on the financial benefits. When it comes to owning a home, the financial benefits are evident, particularly around tax time. Here are 4 financial benefits of owning a home.

Financial Benefits of Owning a Home

Equity

You’ve probably heard that homeownership builds wealth over time. This is especially true in today’s market. If you are looking to move to Pacific Northwest, you are not alone, and that demand is raising home values. If you buy your home today and plan to sell it in 10 years, the amount of equity you’ll gain off of your home (granted conditions stay constant) would put you in a good spot financially for your next home. Equity is the lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!

Tax Deductions

The tax code allows homeowners to deduct mortgage interest from their tax obligations. For a lot of people, the interest is the largest part of their mortgage payment, so it’s a huge deduction. Additionally, the first year you buy your home you’re allowed to claim the origination fees. Finally, property tax is deductible for income tax purposes.

Forced Saving Plan

Paying your mortgage every month and reducing your principal is like having a forced savings plan. You are building up more equity in your home every month you pay a mortgage. This is a good thing, especially for those you are not likely to save on their own. This can be helpful down the line when you choose to sell your home or refinance. You’re able to put that equity into further real estate investments.

Long Term, Buying is Cheaper Than Renting

Looking at the big picture, buying is cheaper than renting. In the first few years it may seem that renting is cheaper because the monthly number might be smaller, but remember, when you rent you are giving that money to the landlord. When you buy a home, you are putting it back into your own home. You have to live somewhere so instead of paying off your landlord’s home or building, pay off your own! In 15 years you could have full ownership of a home, or you could have been paying $1000 a month to someone else.

You may also like: What Millennial Home Buyers Want in a Home

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