Three Main Benefits of Homeownership

Aside from the personal satisfaction that comes from home ownership, there are a number of other benefits.

Taxes

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Here’s how it works.

Assume:

$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
______
$12,577 = Total deduction 

Then, multiply your total deduction by your tax rate.

For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

Other than your tax deductions, homeownership has multiple additional benefits.

Equity & Wealth Building

Most homes increase in value over time, steadily building your equity. This creates wealth and and can help in a number of other financial goals (other major purchases, retirement or funding a child’s education to name a few).

Protection from Inflation

Once you buy a home, most of your mortgage costs are insulated from inflation. The only expense that can rise over time are property taxes and your homeowner’s insurance. As long as you lock in a fixed rate, your mortgage will remain the same no matte what the market is doing overall.