1. You Can Avoid Rising Housing Costs
As inflation tightens its hold on the United States, both house prices and the cost of rent continue to rise. When you purchase a home with a fixed mortgage, however, you can lock yourself into set monthly payments that will never increase. This financial stability can be a major advantage, especially when you need to make room in your budget for other expenses such as home repairs or a new car.
2. A Portion Of Your Monthly Payment Comes Back To You
It's sad but true - when you write your check for rent, you send that money to your landlord knowing that you will never again see a single penny of that money. However, making your monthly mortgage payment is entirely different. While the majority of your payments go toward interest (especially towards the beginning of your term), some of it goes towards paying off your principal. When it comes time to sell your home, you can get money back from the sale - possibly even more than you originally paid for the property.
3. You Build Home Equity
Every dollar that you put towards the principal of your mortgage loan comes back to you in the form of home equity. Equity refers to the dollar amount of your home that you actually own; the home's current market value minus your outstanding loan balance. You build equity by paying back your loan, as well as by increasing your home's value through upgrades and remodels. Home equity can be used to fund any number of things - a child's college education, major remodels, retirement, and more.
4. You Get Tax Deductions
Homeownership is one of the few major expenses that still qualifies as certain tax deductions. In most cases, homeowners are able to deduct the money they spent on mortgage interest and (if applicable) private mortgage insurance (PMI). These deductions can be a huge help when tax season rolls around. However, it is important to be aware that many of the other costs of homeownership (upgrades, repairs, etc) do not qualify as tax deductions.
Homeownership Helps Build Wealth
In summary, homeownership helps families build long-term wealth. In fact, KeepingCurrentMatters.com postulates that homeowners' family wealth will be 45x that of renters' by the end of 2016. If you are looking for a way to invest in your future, buying a home could be a great financial move.
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