Nothing beats that feeling you have when you have purchased your own home, the sense of pride and accomplishment. You finally get accepted as a "serious" person in society. Everyone looks at you with awe and admiration, and they want to hear the story. You, of course, are ever willing to tell them all about it. People who don't have homes yet ask you for advice.
Owning the house one lives in is one of the best decisions a person can make. The house is worth something, but more importantly, the land it's built on is also worth a lot. Every year the housing prices also increase.
Initially, only the wealthy could own land. Most average people couldn't own land as they didn't have the money to buy it. As time went on, some banks began to offer mortgages to people, which increased homeownership. These mortgages, however, had strict terms; for example, one had to pay up about 50% of the total amount upfront, and about the rest had to be paid within 5 years. As time went on, things improved, and banks could lend more money and require less starting capital. The money could also be paid over a more extended period and now can extend up to 30 years. Not only that, but you can even borrow more money on the house with mortgage payments left to pay. Visit this page to learn more.
The world has come so far, almost 60% of people own a home today. For those who already own homes but are wondering what good could come out of it and those who don't own homes yet but need a little more convincing, here are some benefits of getting home.
Financial Benefits of getting a home
Money, money, and more money! Buying a house helps you to gain more money in the form of equity. Equity is the amount of money you own on your home after you have bought it. If you paid 35% of the home's cost as a down payment and got a mortgage for the remaining 65%, the 35% you paid is your equity. The beautiful part is as you pay your mortgage monthly, your equity swells and increases right alongside. On the day you make your last mortgage payment, you own 100% equity. Isn't this wonderful? What makes equity more interesting is that land appreciates. That means if you bought the land for 500,000 dollars last year, by next year, it might be worth 700,000 dollars, and you're that much richer by just owning the land. I must buy another home immediately after writing this article!
2. Tax Exemption
Although this applies only to your primary residence, in which you have stayed in for every year you have owned it, it's still pretty cool. Once you sell such a house, the government will not have to touch the profits you make; it's all yours, 100%.
3. Non-Tax Deduction
Whenever you borrow money for an income-producing investment, the amount you borrowed is non-tax deductible. How does that apply to your home? Well, when you pay your mortgage, some of it goes to paying your principal, while the rest goes to paying off your interest. You could borrow back your principal each time and invest it somewhere it can make an income! Just like that, you're non-tax deductible (at least that portion of your principal). If you continue to do this, most of your principal becomes non-tax-deductible, and you continue to smile.
4. Property Tax Deduction
You can get a property tax deduction in many ways. One way to do this is to rent out a part of your home, and you can claim property tax for the period that the property was available for rent. If you work from home, you can also claim property taxes. You can also claim property taxes if you're a sales or commission employee. Once a part of your home is used to generate income, you can claim property tax deductions. So as a farmer, an angler, you can claim property tax deductions. If you are involved in developing your woodlots as a forest producer, you can also claim tax deductions.
5. A Mortgage is like a Savings Plan
As a little boy, my mother made me keep spare change inside a specially constructed wooden box. That box was opened only on special days like my birthday or Christmas. I could do whatever I wished with the money once the box was open. I bought my first computer with that money and some money from my parents. Having a mortgage is like having that little box wooden box. You get to save every month money that could have gone to other things without such long-term value.
6. Cheaper than Renting
In the short term, buying houses might cost more than renting a house, but as time goes on, buying houses becomes cheaper. Also, the money you put down to buy the house in the first place automatically becomes part of your equity. At the end of the day, once you're done paying your mortgage, you will have the capital to yourself, which a person who has been renting will not have. It's like getting all of the money you have paid back suddenly. Also, a person who simply rents will not benefit from getting loans at cheaper rates than the credit card rates that people have.
7. 2nd mortgage
One of the most significant financial advantages of owning a home is that you have the opportunity to borrow money in the form of a second mortgage. You can get the money as a single lump sum or as a line of credit that you can withdraw from and pay back into as you please (kind of like a credit card). There are several companies out there willing to give you the opportunity to get a second mortgage. With all these advantages, getting a home is one of the best decisions a person can make.