Ah, the great American dream of homeownership. The white picket fence, the two-car garage, and the spacious backyard. While it does sound like a cliché, owning your home is essential to building wealth. No, you won’t have to be the next Jeff Bezos or Mark Zuckerberg to acquire your new home—nor will you have to swap your life savings or take out breathtaking loans. In this post, we’re going to look at how owning a home can help you build wealth without having to be a millionaire.
Equity Appreciation- A property bought today will likely appreciate in value over time. The longer you own your home, the more equity you build. Your equity grows as the loan balance decreases, and the property value increases. The best part is this is free money for you to use at your leisure. You could sell your home for a profit or refinance the loan through the process of cash-out-refinance, where you mortgage your home to meet other needs. Increasing home value can also help secure better loans and lower interest rates.
Homeownership Tax benefits- Owning property opens up the possibility of claiming tax deductions. You can deduct the interest paid on home loans and property taxes, which will lessen your tax burden in a big way.
Monthly savings- Rent is considered the largest recurring expense. Owning your own home means you’ll have a fixed rate on your mortgage, which won’t fluctuate as rent does. You’ll also save money on rent increases and high fees when moving apartments.
Reduced mortgage terms- Your assets can be put to work by increasing your mortgage payments with homeowner equity. If you commit to paying more than the monthly payment, you will also be shortening your mortgage term, which means you’ll have every monthly payment going toward the principal balance. In turn, this will save you thousands of bucks in interest rates in the long run.
Leverage to acquire Other Investment Properties- An excellent way to start making a passive income is to invest in rental properties. As a homeowner, you can borrow against your equity to buy other properties. This will provide you with more sources of income without creating financial stress.
Owning a home will provide you with numerous financial advantages, including equity appreciation, tax benefits, savings on monthly rent, and the leverage to purchase additional investment properties. You may not have to be a millionaire to reap the advantages either. By making monthly mortgage payments, you can establish money for potential investments or upgrade your home to increase its worth. Remember that owning your home is a long-term strategy that can provide financial security for you and your loved ones in the future.
