Why Should You Own a Home?
By Natalie Sweeney
Some people like the flexibility that comes with renting. When you rent, you can live in a neighborhood for as little or as long as you want - that is unless the owner decides to sell the home. You're also relieved of most maintenance responsibilities – your landlord usually handles repairs.
However, there are many financial benefits to owning your home. These are just a few....
In the early years of most mortgages, the majority of your monthly mortgage payments go toward interest on your loan. Over time, an increasing amount of the monthly payment goes toward reducing the mortgage balance, or "principal."
As you make payments, you reduce the principal and increase your share, or "equity," in your home's value. If your home increases in value due to appreciation, your equity will build even faster.
Building equity—or savings—in your home is important. For many people, it lets them plan for retirement and other long range goals.
Gain Tax Advantages
You are allowed to deduct mortgage interest and property taxes from your federal income tax and from some states' income tax. These deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the monthly payment.
After calculating your taxes, you may find that it's cheaper for you to buy than to rent.
Rely on Payment Stability
If you select a fixed-rate mortgage, you will pay the same monthly principal and interest payment for the term of your loan. Unlike rental payments, this type of payment will remain the same month after month, even when inflation leads to higher prices. However, your total monthly housing expense could vary if tax and/or insurance expenses change.