For many people owning home is major goal in their life. Owning a home can seem like an intimidating task because of the obligations and responsibilities that are entailed in the process but do not let that scare you. Here are the 4 biggest benefits of owning a home.
1. Gain Equity: Home equity is the difference between how much you owe on your mortgage compared to the market value of your home. Your properties market value usually increases over time. Your equity also builds as you pay off your mortgage, the lower the balance of your loan the more equity grows. Equity is a valuable asset because you can do multiple things with it. You can sell your home and use the equity you get to purchase another home. You can also take out a home equity loan and get cash to make home improvements, pay for school, or even use it as an emergency fund. One of the most common uses of equity is too fund your retirement using a reverse mortgage.
2. Tax Benefits: Another pro of owning a home is that you are eligible to receive tax benefits. Homeowners have the option to deduct your paid monthly interest from your tax returns. This is a huge help during the first couple years of your loan term because your monthly payment is almost all interest. Borrowers who needed to pay mortgage insurance also have the opportunity to deduct those payments. The government offers these benefits because they want to encourage home-ownership because it promotes economic growth.
3. Build Up Your Credit: An important factor in your credit score is the length of your credit history. With mortgage loans usually lasting 15-20 years, if you make your monthly payments on time, you will improve your credit score and show that you are a trustworthy borrower.
4. Freedom to Customize and Make Changes to Your Home: When you own a home there is a sense of pride and comfort knowing that you have a place that you can call your own. One of the major advantages in owning a home compared to renting is that you have the freedom to customize or change whatever you like. A lot of the time with a landlord it is difficult to make simple changes to the house because lease agreements often forbid altering the property in anyway. Having the ability to perform home improvement projects can add value and increase your home equity.
If you have any questions about the home purchasing process, please feel free to contact anyone of our loan officers.