Homeownership can be a huge milestone for someone looking for a place they can finally call their own. But when you become a homeowner, you get more than just a permanent residence. You get an investment in a financial asset. These benefits could include building equity, home appreciation, and more.
See why the financial benefits of homeownership could make it worth pursuing for you.
Equity is the amount of your home that you own. In technical terms, it refers to the difference between what your home is worth and what you owe your mortgage lender. When you pay your mortgage each month, you could increase the amount of equity you own. If you’re able to, you could build equity even faster by making mortgage payments that are larger than your monthly minimum requirement.
Instead of paying rent to a landlord, you can make payments toward a physical asset that holds value. This is a popular reason many people consider purchasing a home a financially savvy endeavor.
2. Home Appreciation
Based on historical data, we know that home values may increase the longer you own a home. That’s why real estate could be considered a great avenue to help build personal wealth. As your home appreciates, you could be able to sell your home for more than you paid and make a profit.
Location can be a strong indicator of home appreciation. If your home is in a top school district, is a part of an up-and-coming neighborhood or is located in an area with development plans, those could be green flags that your home may appreciate in the future.
3. Increase Credit
Buying a home could be an excellent way to help strengthen your credit. Since many mortgage loans are long-term, they can boost your credit history if you never miss a payment, which increases your score. As your credit builds, it could become easier for you to venture into other forms of financing, such as buying a new car, home or investment property.
4. Tax Deductions and Credits
One major tax deduction from homeownership is the mortgage interest deduction. Since your home mortgage interest may be tax deductible, it could mean a reduction in the overall federal taxes you owe. This benefit is most prominent in the early years of a 30-year fixed mortgage, when a large portion of your monthly payment goes toward interest.
Another popular tax deduction that may be available to some homeowners includes property taxes. Additionally, if this is your first house, you may qualify for a first-time homeowner tax credit that can grant you up to $15,000 in refundable federal tax credits. Consult a tax professional for more specific homeownership tax guidance.
Start reaping the benefits of homeownership by getting in touch with a Starlight representative. Schedule an appointment with one of our Home Guides to get started.
For informational purposes only, not to be construed as quote or offer of credit. Starlight Homes is not a lender or mortgage broker. Programs, prices, rates, terms and conditions subject to change without notice. Actual rates may vary. Supply of homes and homesites at these prices are limited and subject to availability. All loans subject to credit approval. Other restrictions may apply.