A greater sense of community, more living space, more stability for your children; the benefits of homeownership are endless. In honor of National Homeownership Month, we’ve compiled some of the biggest financial perks of accomplishing a significant part of the American Dream.
Building Wealth Over Time
Price appreciation is one of the largest measurable benefits of owning your own home. Homeownership is an investment that you can literally sit back and watch appreciate. For the last two years, home prices have increased around 5% year-over-year, according to CoreLogic.
Mortgage Tax Deductions
Who doesn’t want a tax break? According to Realtor.com®, Americans save around $100 million every year by deducting mortgage interest on their tax returns, but mortgage interest is just one of the many tax breaks homeowners boast.
Home sellers who have owned and occupied their home for at least two of the past five years can also earn up to $500,000 (for married taxpayers) on the sale of their home and pay no federal income tax.
Contributing to a “Forced” Savings Plan
Think of your mortgage payment as a monthly deposit into a savings account. You contribute the same dollar amount every month, but as you pay down interest, your principal payments are contributing more and more to your savings plan on a monthly basis.
Homeownership Is The Cheaper Option
While mortgage rates have been hovering at or near historic lows over the past few years, rental rates continue to skyrocket. In April 2016, rental price growth stood 3.7 percent higher than April 2015, which is the highest year-over-year price increase since before the financial crisis.
To see how homeowners financially compare with renters over time, click here.
Interested in buying your first home? Download our free Mortgage 101 Handbook for everything you need to know about the homebuying process from pre-approvals to closing.