Every corner of the personal finance world seems to hammer home the same point: Debt is the wealth killer. Debt is the single greatest threat to your college savings, financial independence, and retirement planning.

Except, as it turns out, one kind of debt defies these rules: mortgages. Paying money to buy real property can benefit your financial independence and serve as a financial tool for building wealth. Let’s talk about five reasons mortgages differ from other kinds of debt:

1. Having a mortgage can improve your credit score. Creditors consider mortgages “good debt.” Because it’s secured by the value of your house, lenders see your ability to maintain mortgage payments as a sign of responsible credit use and your home ownership a sign of financial stability. Credit-scoring agencies add points for consumers who are able to manage different kinds of debt. Having a mortgage that you pay each month makes you look like a better, more responsible user of credit.
2. Mortgage loans have lower interest rates than most other types of loans because mortgages are one of the safest loans that lending institutions can issue. If there’s a problem during the life of the loan, the real property is a guarantee that the loaned money can be recovered. As a result, mortgage rates generally track the “prime” rate—the interest rate the Federal Reserve charges institutions to borrow money from them.
3. A fixed-rate mortgage can help counter volatility. If you’ve got a fixed-rate mortgage, you know the amount you will pay each month. If inflation accelerates or if interest rates skyrocket, your payment stays the same. If interest rates drop, you can often refinance to save money. A fixed-rate mortgage can provide a bit of certainty in uncertain economic times.
4. Home equity you have built up can serve as an emergency fund. While you want to keep money in a savings account for emergencies, you can use the equity in your home to help you pay for major events, like needing a new roof. A home equity line of credit, such as TwinStar’s ChoiceLine, may provide you with funds at a lower rate than other types of loans.

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