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Buying a home can be one of the best decisions you’ll ever make. However, deciding if you should rent or buy your next home can be a very difficult decision. But once you understand the benefits of owning a home, you can have confidence as you move through the home-buying process.
Buying a home is usually a good investment. That’s because home values continue to rise, while rent prices are also reaching higher levels. So whether you plan on living in a home full-time or you decide to make it a rental property, buying a home can be a smart financial decision. This is even more true if you keep the home for a long period of time. If you look at the data, home prices have skyrocketed dramatically. Back in the 1940s, the average price of a home was around $30,000, according to The U.S. Census Bureau. In the year 2000, that jumped to nearly $120,000. While there aren’t many people who still have a house from the 1940s, this example shows you how home value can increase over a period of time. That being said, buying a home and keeping it around can do wonders for your wallet.
While it depends on your individual situation, mortgage interest and certain closing costs are typically tax-deductible. Furthermore, these tax breaks are higher early on in homeownership given the high-interest payments. In addition, mortgage insurance and property taxes might also be tax-deductible. This provides a huge benefit to homeownership, but things get even better: once you decide to sell your home, you can make up to $250,000 in profit and all of that is tax-free. Tax breaks add comfort for homeowners and provide key incentives that be very worthwhile.
Another key benefit that comes with homeownership is that you can improve your credit score. This is especially true for those who don’t have a long credit history or many installment accounts. Paying your mortgage shows that you’re a responsible borrower and that you can be trusted. Also, credit bureaus will reward you more for mortgage payments compared to payments for credit cards, student loans, etc. Additionally, very few landlords will report rental payments, so you’re not doing any favors for your credit score by paying rent every month.
Homeownership can be a scary thought, but understanding the benefits involved can help you make the right choice for your needs.
