- Every month you are building equity on your home. Equity is the amount of money you can sell your home for, minus what you still owe on it. When you make your monthly mortgage payment a portion of that is reducing the amount that you owe. That reduction increases your equity. Mortgages are set up to increase slightly every month. It’s lowest on your first payment, and highest on your last. Therefore, as time goes by your equity grows.
- Mortgage deductions: The tax code lets home owners deduct the mortgage interest from their taxes.
- Closing cost deductions: The first year you buy your home you can claim points on your loan, regardless of whether they are paid by you or the seller.
- Property tax is deductable: Both real estate property taxes paid on your primary residence and on a vacation home are fully deductible.
- Interest on home equity loans: You can also deduct the interest you pay on a home equity loan. This lets you shift your credit card debts to your home equity loan, and pay a lower interest rate.
- If you buy a home as your primary residence for more than two years, you will qualify for capital gains exclusion. When you sell you can keep up to $500,000 in profit and not owe any capital gains taxes.
- Paying your mortgage every month is like a forced savings plan. Each month you are building more value in your home.
Over the long-term, buying a home provides cost saving perks that aren’t available in renting environment