Buying a home is an essential part of achieving the American Dream- but why? With a range of demographics renting in greater numbers (particularly millennials), it’s tempting to wonder whether buying a home is worth the hassle in the first place.
With that said, the benefits of becoming a homeowner are varied, and there’s a range of perks that you might not initially think of. Here are some of the best:
Pride of Ownership
Owning your home means you have free range to paint the walls in any color, attach permanent fixtures, turn up the music, and decorate in accordance with your taste. This sense of stability and flexibility is a major draw for many potential homeowners.
Real estate moves in cycles, but over the years, real estate has consistently appreciated. Many people view their home investment as a hedge against inflation, and spreading your wealth across asset classes is a great way to ensure stability in times of economic duress.
Mortgage Interest Deductions
Did you know that home ownership is a superb tax shelter? As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. With interest being the largest component of your mortgage payment in the early years, owning a home is a great way to ensure your living expenses are tax-deductible.
While consumers that carry credit card balances can’t deduct the interest paid, equity loan interest is deductible (and often much less). For many homeowners, it makes sense to pay off this kind of debt with a home equity loan, allowing them to borrow against a home’s equity for a variety of reasons such as home improvement, medical expenses, or starting a new business.
Building Equity Through Mortgage Reductions
Every month, part of your monthly payment is applied to the principal balance of your loan, reducing your obligation. The principal portion of your total payment increases each month, due to the effects of amortization, and this ensures that an increasingly large percentage of your payments go to you.
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