The Key Advantages of Owning A Property

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What Owning a Property Does For You 

Owning a home is one of the biggest financial decisions you will ever make.  It’s a huge step that requires some upfront costs but comes with plenty of long-term advantages.  Aside form having your dream home that you can stylize to make it uniquely yours, you also build equity and long-term wealth, have consistent housing payments (avoid those skyrocketing renting prices), and enjoy other perks below:

Fixed Mortgage Payment

Purchasing a new home come with upfront expenses including your down payment and closing costs.  Along with that you’ll face maintenance costs time to time.

With a fixed mortgage rate your homeownership mortgage payment cost doesn’t change.  This even secures the stability from year to year on your mortgage payment with increased property taxes and homeowners’ insurance.  Renters deal with the up and downs of price increases on their lease.

Your Investment Appreciates

Home appreciation rises with the tides as it fluctuates on local market trends.  Home prices generally increase over time providing one of the major benefits of owning a home. 

According to a report by mortgage data firm Black Knight, the 25-year average appreciation rate of homes in the U.S. is 3.9% per year.

For example: If you buy a home today worth $200,000 and it increases in value by 3.9% annually, your home would be worth about $233,073 after five years.

Home values vary across the United States and fluctuate from yar to year.  You can use our property rate link to estimate your home’s current value.

Build Your Wealth Overtime

The equity of your home you accumulate belongs to you, calculated by subtracting your mortgage balance from your home’s market value.  Here are 2 ways to build home equity:

  • Make your monthly mortgage payments
  • Track your home’s appreciation over time

You receive that home equity as cash when you sell your home.  Renters, on the other hand, won’t recoup any housing costs they spent while living in their homes.

You Have Assessible Cash

You can tap into your equity to help fund home improvements or pay off personal debt as an additional advantage.

Borrow the money and use your home as collateral, while this may put your home at risk if you fall behind on payment, these options could be cheaper than other alternatives.

Ways to tap into your equity:

  • Home equity loan
  • Cash-out refinance
  • Home equity line of credit (HELOC)
  • Reverse Mortgage

Tax Advantages

There are tax advantages of owning your home as well.  From mortgage deductions to capital gains, these can help you save money each year.

Mortgage Interest Deduction

Through 2022 you can deduct any mortgage interest you paid on your federal income tax return by itemizing them on Schedule A.

Mortgage Insurance Premiums

You can also deduct money paid toward your mortgage insurance premiums on your federal income tax return

Property Tax Deduction

If you itemize your tax return you can deduct tax payments, local income taxes, and sales taxes paid to your state.

Capital Gains

If you acquire profit while selling your home, you might not have to pay taxes on the earnings.  You just need to show you lived in that residence for at least two years out of five years.

You Can Build Credit

A mortgage can positively impact you credit for financial health.  Making your payment son time helps improve your score and could help you diversify your credit mix and increase the length of your credit history.

Your credit utilization also decreases as you reduce your loan balance, which positively influences your credit scores.

For more information contact a trusted lender on our team to assist you with your next home purchase, refinance, or any other financial move.

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