Owning a home is often viewed as not only a personal and emotional investment, but a smart one as well. Home ownership can come with a variety of financial benefits that are overlooked or unexpected.
In this article, we are going to highlight five benefits of owning a home that you might find helpful, no matter whether you’re considering buying a home or already have a mortgage. If you leverage some of these benefits, you can set yourself up for a more financially secure future.
1. Building Equity
When you own a home, a portion of your mortgage payment goes towards building equity in the property. As you pay down your mortgage, you are essentially increasing your ownership stake in the home.
Over time, this can result in significant equity that can be tapped into through means such as a home equity loan or line of credit.
2. Tax Deductions and Benefits
Mortgage interest and property tax payments are typically tax-deductible, which can result in significant savings. This is particularly true in the early years of homeownership when the majority of your mortgage payment goes toward interest.
Additionally, if you sell your primary residence after living in it for at least two years, you may qualify for a capital gains tax exclusion, allowing you to keep more of the proceeds from the sale.
We strongly recommend that you consult your tax advisor regarding interest deductions and capital gains taxes, as they will be able to determine what you are able to do/are eligible for.
3. Potential for Appreciation
Real estate historically is a solid long-term investment. One reason is due to the potential for property values to appreciate over time. While there are no guarantees in the real estate market, owning a home in a desirable location or a market with strong growth potential can result in significant appreciation in the value of your property.
Ultimately, this can lead to substantial financial gain if and when you decide to sell your home in the future.
4. Stable Housing Costs
One of the often-overlooked financial benefits of home ownership is the stability it provides in terms of housing costs. When you have a fixed-rate mortgage, your monthly principal and interest payment remains the same for the duration of the loan.
Some variable housing costs can include property taxes (they can increase yearly, depending on your area and local government) and if you live in an area with a Homeowner’s Association (these fees can be monthly or quarterly and can change depending on the HOA).
In contrast, renters are subject to yearly rent increases that can result in uncertain and potentially escalating housing costs. When you own a home, you have the security of predictable housing expenses. This allows for better long-term financial planning and budgeting.
5. Rental Income Potential
For homeowners who have the financial flexibility to purchase additional properties, home ownership offers an opportunity to generate rental income. Whether through another property on the same lot or through purchasing investment properties, renting out real estate can create a steady stream of income.
This additional income can significantly boost your financial situation, especially during retirement. It provides a passive source of income and can cover your own housing expenses.
Final Thoughts
The financial benefits of home ownership extend beyond pride and physical shelter. Building equity, stable housing costs, and rental income potential are just a few of the financial benefits that come with owning a home.
Whether you are a first-time homebuyer or a seasoned homeowner, it’s important to consider these financial advantages as part of your overall financial planning and wealth-building strategy. By leveraging the benefits of home ownership, you could enjoy a more secure future.
Get a Home Loan with TwinStar
Embark on your home ownership journey with us! Our friendly team of local experts can help guide you through the mortgage loan process and make sure you are prepared and confident when it comes to pursuing your dream home.
For more information, visit our Home Loans page or call 800.258.3115.
All loans subject to credit approval. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications and collateral conditions. Mortgaged property must be located in Washington or Oregon state. Certain restrictions may apply. Contact a mortgage loan officer for more details. Equal housing opportunity lender.
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