What do people mean when they say home
ownership is the key to financial security?
The benefits of home ownership are both financial and psychological:
- Home ownership is a durable (real) investment. Historically, housing has appreciated in value for decades. Although no one can say a specific home in a specific location will increase in value, generally speaking the odds favor most homeowners. Also, monthly mortgage payments (the part that reduces the
principal loan balance) becomes a solid form of saving.
- Numerous unique tax advantages are available to homeowners. Unlike other investment tax shelters, home ownership works for you even as you live in your investment. For example, the thousands of dollars you pay in mortgage interest (discussed below) is deductible. This tax deduction alone can
sometimes make owning your own home cheaper than renting with "after-tax"
- By accumulating equity in your home, you can later "move up" to another home, with good down payment on hand.
- Home ownership offers you the opportunity to take control of your housing costs. Mortgage payments (even on adjustable-rate mortgages) are more predictable than rent.
Owning your own home allows great freedom of choice in choosing your community, architecture, interior decor, appliance selection, plus whatever method of financing best suits your situation.