The benefits of owning a home go far beyond just piece of mind, and many of these advantages are directly tied to financial stability. So if you’re a first time home buyer in Minnesota and are hoping to soon make the transition from renting to owning, here are just some of the financial benefits linked to home ownership.
Improve your net worth
Building equity almost acts as a savings account of sorts, and each time you make a monthly payment, you’re increasing your equity. Having equity in a home significantly boosts your net worth and also presents other financial opportunities should you want or need to borrow against your home’s equity.
Mortgage interest tax deductions
Did you know that home owners are allowed to deduct mortgage interest from their taxes? In the early years of paying down your home loan, a significant amount goes straight to the interest component of your loan, so this can be a huge annual savings.
Locking in a monthly payment
If you’re currently renting, chances are your landlord will steadily increase how much you’ll pay based on a variety of factors like rising property taxes or improvements happening in and around your community. But once securing a mortgage, your monthly mortgage payment will remain the same each and every year, until you decide to refinance or switch things up of course—which will be determined by you rather than a landlord.
Capital Gains exclusion
If you buy a home and use it as your primary residences for over two years, you’ll be able to avoid paying capital gains tax and keep profits of up to $250,000 if you’re single, and up to $500,000 if you’re married.
Property taxes are also deductible
Like mortgage interest, property taxes are also tax deductible, but only for your primary residence or vacation home. Safe to say this applies to most first time home buyers, so that’s also something to keep in mind when weighing renting versus owning.