The Financial Benefits of Owning a Home

Owning a home is one of the main ways most Americans accumulate wealth as they age. As long as people purchase houses they can actually afford, homeownership can be very financially beneficial. Considering that home values increase around 3 to 4% each year, it is usually quite likely that a home will increase in value over time. Here are some of the other benefits of homeownership.

Amassing Equity

The main way that owning a home increases wealth over time is through equity. Each time a mortgage payment is made, equity is gained in the house. Equity is lowest during the first few years of ownership as most of the mortgage payment goes toward paying interest. However, over the life of the loan, the amount of principal paid increases each month, thus increasing equity in the home. Equity is also amassed from the increase in the value of the home or land. By upgrading and maintaining the appearance of the home, owners can actively protect or even increase the value of their property.

Home Ownership Tax Incentives

Thankfully, the tax code provides many benefits to homeowners. The mortgage interest rate deduction allows homeowners to deduct up to $750,000 of total mortgage debt, including any home equity credit. Additionally, property taxes paid on primary residences and vacation homes are tax-deductible. Origination fees for closing costs incurred when purchasing the home can be deducted from taxes during the first year of owning the home.

Control of Housing-Related Costs

While it may seem like there are a lot of expenses involved with owning a home, the costs are more fixed than when renting. Unless they're refinanced, mortgages do not increase over time. Conversely, rents are constantly changing with the market. As people age and move further in their careers, their incomes often increase. With the widening disparity between increases in income and rental prices, the return on increased income will not be as great from someone renting compared to a homeowner.

Buying a home is a big decision, but it has a lot of financial benefits. Vutech & Ruff has decades of experience helping Columbus, OH clients buy the home that best fits their needs. No matter what your goals are, we have a realtor on our team with the experience to get the job done. Take a look at recent listings and contact the realtor that fits your needs at Vutech & Ruff.