If buying a home is on your list of goals, there are several benefits you should know about.
Here's a look at four significant benefits of homeownership:
With a fixed-rate mortgage, your monthly mortgage payment won't change, ever, unless you refinance.
As rental prices go up every year, your mortgage payment will remain the same. Providing you with stability year after year.
As your income increases each year, your monthly housing expense will remain the same. Allowing you to have more money to spend on other investments.
You accrue equity on your home with every mortgage payment you make. A portion of your mortgage payment goes towards the loan's interest, and the remainder is used towards the principal, which means you are paying down the loan every month.
This is known as equity. As the home prices go up, your equity will go up. You can eventually leverage the equity by borrowing against it for home improvements or investments.
Or, if you feel like it's time to sell, you can use that equity to put a down payment on a larger home.
As a homeowner, you have the freedom to do what you want with your space. Want some pink walls with red cabinets? You can do this. It's your home. You can do what you want without anyone's approval.
As a homeowner, you can receive tax deductions every year. Most homeowners can deduct the mortgage interest payments and the property tax payments from their federal taxable income.
If you own a home and have a mortgage of less than $750,000, you can deduct the interest you pay on the home loan. This is one of the most significant benefits to owning a home versus renting-as you could get massive deductions at tax time.
When you own a home, you can also deduct your property taxes. This is a deduction of up to $10,000.
If your property taxes are added to your monthly mortgage payment and paid through an escrow account, you will see the amount you paid in taxes on your IRS Form 1098. You can apply that deduction directly to your taxes.
You can read more about the tax benefits here.
Please note: Talk to a tax professional regarding these deductions before making the decision to move forward with buying a home. The tax codes change from time to time. To get the most up to date info - talk to your tax professional.
Homeownership can be an excellent financial investment depending on your specific goals and situation. Understanding the benefits of owning a home can help you make a more educated decision. In fact, you may not have known about some of these or known the degree to which they can benefit you. Just remember to talk to a tax professional regarding the tax benefits.
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