Five big advantages of being a homeowner
Being home will never feel better than when it’s your own home.
As a homeowner, you can truly make your home your castle instead of conforming to what a lease or landlord dictates. Buying a home is a big step and a big financial commitment, but there are many benefits that homeownership brings that extend beyond having a place to call your own.
Here are five additional advantages of owning your own home.
1. Long-term wealth building
Homeownership is a long-term investment with immediate benefits. Your monthly mortgage payment goes toward paying off your home, and not your landlord’s home. Over time, you’ll completely own your property and have an asset that’s worth hundreds of thousands of dollars. Renters keep paying month after month without owning an asset or building equity. The sooner you buy, the larger the potential reward will be later.
2. Build equity
Equity is the difference between what your home is worth and what you owe. If it would sell for $350,000 and you owe $150,000, you have $200,000 in equity. The equity in your home grows with each monthly payment as you pay down your mortgage. Equity also builds as the value of your home increases. The more your home is worth together with each monthly payment, the more equity you have, which builds your financial resources for the future. That equity can be used for a down payment on another home if you sell the first home or you could borrow against the equity with a home equity line of credit (HELOC) or home equity loan for home improvements, paying off debt, college tuition, and more.
3. A hedge against inflation
Housing can be one way to hedge against inflation, helping reduce the impact it has on your purchasing power as prices go up. Like most goods and services, rental costs are not immune to inflation. Rent hikes are common, which means your housing costs could keep going up from year to year. By owning your home with a fixed-rate mortgage, you’ll pay the same amount each month for principal and interest regardless of inflation. On top of rent hikes, you could be forced to move if your landlord doesn’t renew the lease or sells the property.
4. Tax deductions
If you itemize on your tax return, mortgage interest can be deducted on the first $750,000 of the purchase price of the home. Property taxes can be deducted up to $10,000 if married ($5,000 if married filing separately) and some closing costs at purchase time. Interest on a HELOC or a home equity loan is tax deductible under certain circumstances.
5. Increase your “good” debt
Another financial benefit of home ownership is the opportunity to improve your credit score. A mortgage is considered “good debt,” which should increase your score, as long as you make on-time payments. It also proves you are credit worthy for other considerations, like a business loan or a new line of credit.
Contact your CCM loan officer
Those are just some of the many advantages homeownership brings. Your CrossCountry Mortgage loan officer can help you determine if buying a home is the right decision for you.
You can also use our mortgage calculators to discover answers to many of your home buying questions.