Home ownership has some great financial benefits. Here are three that come to mind immediately: increasing equity, the chance to build your net worth, and appreciating home values. It’s never too early to think about how homeownership can propel you toward a stronger future. Let’s look at a couple of these reasons more closely, examining how and why they are true.
Personal finance advisor Dave Ramsey explains:
“Every payment brings you closer to owning the house. When you pay your rent, that money is spent. Gone. Bye. Not returning. But when you pay your mortgage, you work toward full ownership.”
When paying your mortgage, vs paying rent, your gaining equity in your home every month. Eventually, you’ll have it paid off and won’t have a monthly payment. As your mortgage balance goes down, the equity in your home goes up. Combine this with the home appreciating in value, your equity can accumulate quickly. Equity contributes to your net worth. As your net worth grows, you’ll have more stability and savings which offers great peace of mind.
Most people don’t consider this when deciding whether to purchase or not, but it can be a big factor in your finances. The same article states:
“You have tax advantages. Many of the costs of owning a home—like property taxes—are tax deductible. And if you’re paying off a mortgage, you’ll get to count your mortgage interest as a deduction when you file your tax return.”
If you have a mortgage, it’s a huge financial advantage to have some tax relief tied to the interest you pay each year. Check with your tax professional to determine what other benefits home ownership might offer.
Monthly Housing Costs Are PredictableA third benefit is the fact that monthly costs start to become more predictable with homeownership. With most loans, the principal and interest part of your payment never changes over the course of the loan. This is great news 10, or 20 years from now when rents have doubled or tripled. Historically low interest rates have made mortgage payments lower than rent for a comparable house.
If you’re ready to start feeling the benefits of stability, savings, and predictability that come with owning a home, let’s connect to determine if buying sooner rather than later is right for you.