Tips for Homeowners

For most people, buying their first home is a major milestone in their lives.

Having a safe space to live on your own, start a family, or have a yard for your pets can bring immense joy to your life.

If home ownership is part of your path to financial freedom, here are a few pointers on making your mortgage work for you.

Homeowners to Gain Financial Independence

#1. Owning a Home is Cheaper than Renting

The first step to achieving financial freedom as a homeowner is by buying a home. As the price for rental properties continues to climb, monthly mortgage payments when owning a home can actually be cheaper than renting a home. By living within your means and purchasing a home that has just the right amount of space for you and your family, you can save money each month, bringing you one step closer to financial freedom.

#2. Save Up for a Down Payment 

For first time homeowners, saving up for a down payment may seem like an impossible task in the current economic climate, but saving up to make a larger initial down payment will save you money in the long run. With average mortgage interest rates of 4.21% for a 15-year mortgage and 5.09% for a 30-year mortgage, making a larger down payment will lower the overall amount of interest accrued over time, saving homeowners thousands of dollars in interest payments.

#3. Start Small, Think Big 

Whether you’re a young professional or newlywed couple, buying your dream home right off the bat is not usually a realistic scenario for most people. Even if first time homebuyers are not able to afford their dream home, investing in real estate is generally much cheaper than renting property and allows homeowners to start building equity that may become useful for future renovations or upgrades.

#4. Pay Off Your Mortgage Early 

Homeowners can pay off their mortgage early by making additional payments towards what is owed for their monthly mortgage payment. By using an online mortgage calculator, homeowners can see how much money they will be saving in interest fees by adding even just a few extra dollars to their payment each month. Skipping that daily Starbucks run can bring homeowners one step closer to financial independence. 

#5. Turn Your Mortgage into Cash 

For homeowners who have at least 50% equity in their home, applying for a reverse mortgage loan is a quick and easy way to get some extra cash. The way this works is that a mortgage company takes part of the equity in your home and converts it to cash payments to the homeowner. These payments are typically tax free and act as an advance on equity accrued over time. There are dozens of companies offering reverse mortgage loans and utilizing reverse mortgage reviews can help you choose the best one for you. 

#6. Tax Benefits of Owning a Home 

When filing taxes, homeowners may qualify for certain tax deductions on mortgage interest, property taxes, and more. Additionally, owners investing in energy efficient improvements are eligible for certain federal tax breaks or credits like the federal residential solar energy credit for homeowners that install solar energy panels for their homes.

Additionally, homeowners receiving rental income from homes are entitled to certain tax deductions on annual taxes and while rental rates may change due to inflation, mortgage interest rates will not. Homeowners utilizing their real estate as rental properties can increase their cash flow by charging renters a monthly fee that is greater than their monthly mortgage payment. That money may in turn be used or set aside for any repairs or renovations to the home.

#7. Home Value Appreciation 

Home appreciation is the term used to describe a real estate investment increasing in value over time. Although prices of real estate in the housing market can fluctuate greatly, homes typically gain value as time goes by.  Homeowners can make a profit from selling the property to new owners or earning more income through monthly rent payments made by tenants.

#8. Mortgage Pay Off 

One of the most rewarding aspects of owning a home is having the mortgage entirely paid off. For homeowners in it for the long haul, paying off a mortgage is the ultimate way to achieve financial freedom. Although paying off a home mortgage takes thirty years on average, once it has been fully paid off, homeowners will have the satisfaction of owning their home outright without having any additional payments to make aside from general maintenance or renovations.

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