Buying a home is statistically the biggest investment you will make in your life. And it’s an incredibly good decision. So, why is home ownership so advantageous to you financially? Here’s a brief review of the main reasons owning a home is incredibly important if you are interested in financial security that will last a lifetime.
Equity is a very good thing
In 2020, reports showed that 50 million Americans had a mortgage. But it’s important to point out that home ownership is not about getting into debt – it’s about making an investment. Here are some statistics:
- Since 2019, home owners have seen a 6.6 percent increase in equity.
- Negative equity decreased by 15 percent for 2.1 million American homes in the second quarter of 2020 alone.
- The average American home owner gained $9,800 in equity in 2020.
In other words, people who own homes have an excellent chance to earn money in the form of increased equity. Depending on your state and market area, the equity increase of your home could amount to significant earnings that far exceed your down payment and the cost of home ownership. (Note: Please consult with your licensed tax professional, as I am not a tax or finance expert. I can recommend a few for you if needed.)
Tax deductions and incentives
Home owners in the United States enjoy numerous tax deductions, which is good news when it comes time to pay taxes each year. Here are some examples of how home owners are incentivized by the federal government to purchase homes:
- Mortgage interest tax deductions
- Home equity loan interest – interest on home equity loans and home equity lines of credit (HELOCs) can be deducted if it is spent on home repairs or improvements.
- Discount points
- Property taxes – you may be able to get a tax break for property taxes you owe on a home.
- Home office expenses
- Mortgage insurance premiums
- Medically necessary home improvements – if you need to install healthcare equipment or have other necessary improvements made to your home.
In 2019, the standard tax deduction for married couples related to home ownership was $24,400.
Other positive impacts of home ownership on your life:
- Financial security
- Neighborhood engagement – home owners who put down roots in a neighborhood have more at stake with their fellow neighbors.
- Net worth – it has been estimated that the net worth of a home owner is 44 percent higher than a renter.
- Happiness and stability
For more details about the benefits of home ownership, here is a free, downloadable PDF for you: https://bit.ly/3p06SOo