7 Essential Benefits of Getting a Mortgage
According to the U.S. Census Bureau, the homeownership rate for 2019 is 64.1%. As homeowners, most people think they need to pay off their mortgage as soon as possible, but guess what?
Here are seven benefits of getting a mortgage (that's right, building your credit isn't the only one). With this list, you'll discover why it's not always to your advantage to pay off your mortgage as soon as possible.
Keep reading to discover the benefits of taking out a mortgage!
1. Build Your Credit
Buying a home is no small purchase, which leads many people to obtain a mortgage in the first place. Sometimes, you just don't have a choice. Buying your first home is an exciting moment in your life—your credit rating shouldn't slow you down.
If your credit rating is low, obtaining a mortgage for your new home can help improve your credit rating with time.
As long as you're paying your mortgage payments on time, that is.
Once you've built a higher credit rating, you can see about getting a lower interest rate. A higher credit rating also gives you preferred status when you're trying to get a bank loan.
2. Borrowing Leverage
Over time, paying your mortgage payments also helps you build buying power.
Equity can help you obtain a second mortgage. You might need that one to pay for college, remodel your new home, or other unexpected expenses.
If you have an emergency or expensive purchase down the road, you can use the equity as a line of credit.
That borrowing leverage can help you with investments, too.
When you take out a mortgage, you're also opening your life to new opportunities.
3. Tax Breaks
As a homeowner with a mortgage, you can also benefit from a few additional deductions on your annual income tax return. This include:
Check Schedule A, Form 1040 for these deductions.
You can even deduct a piece of your homeowner's insurance and other home expenses if you're working from a home office.
Itemize your deductions. When tax season rolls around, you can deduct the interest paid on your mortgage.
If you're in a higher tax bracket, you'll receive a bigger deduction.
You might even get a deduction from your state tax obligation.
Make sure to check with your tax advisor before claiming these deductions. That way, you have all the proper forms filled out and ready to go.
4. Low-Interest Debt
Unless you're getting a zero-interest loan from a family member, a mortgage is the most affordable option for borrowing money.
Most credit card companies only offer a rate for the first year. Meanwhile, mortgage interest rates are low right now. If you aren't in a rush to pay off your home, you can even move that money to another debt.
Pay off those student loans and credit card bills. Getting rid of your high-interest, recurring debt first can help you focus on your mortgage.
If you don't have other debts to deal with, why not invest? With a mortgage, you have access to spare cash for stocks and index funds. Instead of wasting money, a mortgage allows you to build your funds over time.
5. It Gets Easier
Your life will change over the years. Your income will (hopefully) rise, your credit rating will improve, and your house will grow in value. During that time, you won't have to worry about your mortgage increases.
Paying off your mortgage might feel like a struggle at first. After all, it's a new recurring cost for you to deal with. You also have to look at your mortgage payment relative to your current income.
With a fixed-rate loan, however, you don't have to worry about your mortgage payment increasing over the years. Instead, that rate will seem small compared to your growing income.
As a result, paying off your mortgage will get easier as the years pass.
6. Build Equity
Once you obtain a mortgage, you own your home. Think of that ownership as an investment, not a recurring payment. Investments, including your home, increase in value as the years go by.
As that value increases, you're also building valuable equity for yourself, too.
Equity will give you a notable net profit on the sale of your home someday.
Building equity is one of the main reasons people choose to own their homes. That equity can help for bigger costs in the future, including your retirement fund.
Your equity will grow as you pay off your mortgage. However, paying your mortgage off quickly isn't the only way to grow your equity quickly, too.
Instead, think about how the value of your home will grow over the years.
That increased value will boost your equity, too.
7. It's Yours!
According to research, low mortgage rates have increased home buying power by 15% this year. In fact, homebuyers can purchase a home $45,000 more expensive for the same mortgage payment. These mortgage rates are making it easier for people to afford their new homes.
Once you acquire a mortgage, your home is yours. You'll file a deed in the courthouse with your name listed as the home's registered owner.
At that point, you can do whatever you want! Repaint your home the color of your dreams, renovate the kitchen, break down walls for more space. The choice is yours!
Acquiring a mortgage gives you the power to change your home any way you want.
Of course, if you're a member of a homeowners' association (HOA), those rules reign.
Still, having a mortgage means you own your home. That kind of freedom can open so many possibilities you'd never have as a renter.
Happy Homeowners: 7 Essential Benefits of Getting a Mortgage
Own your home and experience the freedoms of homeownership! With these seven benefits of getting a mortgage, you can see why more people are choosing to own. Acquire a mortgage today to experience these benefits for yourself.
Still have questions about getting a mortgage? Schedule a consultation with a homeownership coach today for answers to all your questions.