While owning a home can have financial benefits, the real benefits of homeownership extend beyond that. A home is a place you can call your own. Invest in your community, its parks and its schools. Your family can have stability and continuity by having a place they call home. Whether you are looking in the Clermont Area, Davenport or Winter Garden the benefits are universal no matter where you call home!
Owning a home comes with its risks and benefits, just like any financial commitment. There are many benefits to homeownership that outweigh the risks. Particularly, homeownership can have social, financial, and tax benefits.
THE FINANCIAL BENEFITS HOMEOWNERSHIP CAN PROVIDE
Many people strive to own their home. There are many benefits to owning a home, including building equity, strong credit and insurance savings. Continue reading to find out how homeownership can help you financially.
Building Equity
Your home equity is the difference in the value of your home and the amount owing on your mortgage. If you buy your home for $250,000, have $20,000 in debt, and it is now worth $300,000., your equity will be $70,000. Your equity will increase over time as your home increases in value. As you make monthly mortgage payment, your equity will increase. This will reduce the amount you owe. Equity is a variable that fluctuates with the value of your home. It can grow over time and increase as you make monthly mortgage payments. Market values can decrease which can impact equity. However, equity that is growing with the market value will increase. Building equity takes time.
Financial Stability
By building equity, you can increase your financial security by having money in your home that can be used now or in the near future. You can borrow money from your equity with a loan or line credit to help you build equity. You can also use your equity to invest in home improvements, business ventures and stock market.
Lower Monthly Payment
A home can help you cut down on your monthly expenses. Mortgage payments can often be lower than the average rent for similar-sized homes. Additionally, every dollar you pay toward your mortgage will help build your equity. Renting means that your monthly rent payments are used to pay another person’s mortgage. This helps build their equity.
Building Credit
If you have a home and pay your monthly bills on time, it can help you build credit faster. You may be able to get lower rates for financing, such as car loans, if you have better credit. Strong credit shows lenders that you can borrow responsibly and reduces the chance of you defaulting.
Lower Rates and Better Credit Cards Terms
A strong credit score can help you get better terms and offers on credit cards, such as lower annual percentage rates (APR).
Insurance Savings
You may be eligible for discounts if you buy your homeowners and auto insurance with the same company. Depending on which company you are dealing with, some insurance companies offer bundle deals that could save you between 10% and 25%.
Home Appreciation
Appreciation refers to the appreciation of your home’s value. The location of the property, its land, and nearby amenities such as parks and schools, all play a role in its appreciation. You can make improvements to the property’s interior and exterior, increase living space, or improve curb appeal. Your home’s value can be increased by making renovations. Market value growth is a major factor in home appreciation. Market value growth is dependent on where you live. Real estate prices can fluctuate depending on the state and region. Appreciation is similar to equity, but it takes time for it to grow. Appreciation in your home can help you build equity quicker and sometimes even allow you to make a profit.
HOMEOWNERSHIP – THE POTENTIAL TAX BENEFITS
While the mortgage interest deduction is most prominent tax benefit, homeowners have many other options. Research the tax benefits before you buy a house.
Property Tax Deduction Benefits
The property tax deduction is a great advantage to owning a house. The property tax deduction allows you to deduct any property taxes you pay in a year from your taxable income. This lowers the amount of taxes you owe. If you have a $90,000 taxable income and you have paid $5,000 in property taxes, you can subtract the property tax from your taxable income. The government will now calculate your tax owing from $85,000 rather than $90,000. Because the government considers that you owe less, your taxable income can be lower. Find out more about tax deductions.
Mortgage Interest Deduction Benefits
Homeowners can get a tax incentive by using the mortgage interest deduction. It works in the same way as the property tax deduction. You can deduct interest on your mortgage loan from taxable income. This reduces your taxable income as well as the amount you owe in tax.
Capital Gains Tax Exemptions
Selling your home via capital gains tax exemption is a great way to get rid of your home. If you are single, this exemption allows homeowners to avoid paying taxes on the sale of up to $250,000 and $500,000 for married couples filing jointly. If you are single, buy your home for $350,000 and live there as your primary residence for two of the last five years. Then you resell it for $595,000. Capital gains tax will not be applied to $245,000 of your profit. If your profit exceeds the allowed limit, you will be subject to tax on the remaining profit.
THE SOCIAL & EMOTIONAL BENEFITS HOMEOWNERSHIP
Homeownership offers many benefits beyond the tax and financial benefits. Your home is a place where you can make memories and personalize to your liking. You also have the potential to benefit your community and future generations.
Increased Sense of Community
Long-term homeowners will often stay at their homes, which in turn helps to build a stronger neighborhood. A stronger community can result in increased participation in local politics, volunteering, and other activities.
Financial Education
Learning financial education is essential for anyone who wants to buy a house. These skills will be passed on to future generations and help them make financial decisions, such as buying a house or paying off a mortgage.
Home Personalization
The best thing about homeownership is your ability to personalize and renovate your home to suit your needs. You can decorate your home with paint, pets, or any other thing that will make it your own. Home appreciation is also possible through personalization and renovations.
Is home ownership right for you?
The investment in a home comes with both risks and rewards. We’ve already covered the benefits. However, there are some risks associated with owning a home. These include closing costs and upfront down payments, home depreciation and illiquidity. Before you decide if buying a home is right, weigh the benefits and risks. If you’re ready to start your home buying journey, you can search our site or reach us anytime at 407-906-7176.