The benefits of homeownership involve more than simply putting a roof over your head. The goal of buying a house will be less meaningful until you understand the true value behind this investment. It isn’t simply to achieve the “American dream”!
Instead, buying a home unlocks a slew of advantages that can benefit not just you, but generations of your family, as you gain stability and build wealth. So let’s jump into the top eight benefits of homeownership.
#1: It Provides Stability.
Your monthly housing payment will never change if you have a fixed-rate mortgage. This is a massive long-term advantage over renting. Statistically, rents rise about 3% per year, though during the pandemic some regions’ rents rose by as much as 24%.
Buying a home means having predictable mortgage payments for as long as you own the house (or until you refinance). Inflation, interest rate hikes, and other factors simply won’t matter to you, as this payment will stay fixed and predictable.
#2: You Gain Equity.
Making that monthly mortgage payment will build equity, in addition to the equity gained by rising home prices. That equity can either be cashed out when you sell your home or used for a variety of purposes. You can use it on home improvements or repairs, to pay for college tuition or student loans, to consolidate high interest rate credit card debt, or even to buy another home.
Whether you tap your equity with a cash-out refi or a home equity line of credit (HELOC), it’s really no one’s business how you use that money. It’s your hard-earned equity, and your decision to use it as you see fit.
#3: You May Receive a Tax Deduction.
You can typically deduct the mortgage interest paid on the first $750,000 of your home loan. When it comes to the benefits of homeownership, mortgage interest deduction is a big one for any first-time homebuyer. This is especially true in the early years, when mortgage interest represents a greater percentage of your monthly mortgage payment.
Thankfully, there’s the possibility of even more tax deductions than that if you own a home. Private mortgage insurance premiums, discount points, home equity loan interest, property taxes, and home office expenses can also qualify as tax deductions.
These expenses can be itemized and claimed up to certain limits, or you can take the standard deduction set forth by the IRS. The standard deduction for 2022 was $25,900 for married couples filing jointly; $12,950 for single individuals and those who are married but filing separately; and $19,400 for heads of household. Make sure to consult with an accountant to confirm the specific tax benefits of homeownership for you.
#4: You Can Build Better Credit.
Many people think you have to already have excellent credit to buy a home. You should know that that’s not necessarily true. A lower credit score might mean you get less-favorable terms, but it doesn’t necessarily disqualify you from buying a home.
Every month you pay your mortgage on time should improve your credit score. And that higher credit score benefits you down the road, because those with a higher score can typically secure a lower interest rate if they choose to refinance.
A higher credit score is an advantageous benefit of homeownership for many other reasons as well.
It will come in handy when you’re applying for other loans and forms of credit. It can save you money on your home and auto insurance. It can make it easier to put utility accounts in your name. And those with a good credit score typically don’t have to provide a security deposit when they’re purchasing a new phone or opening a new account.
And don’t forget: Some employers look at credit scores, which means this little (or hopefully big) number can even impact your employment opportunities.
#5: You Can Personalize It.
Have you ever wanted to paint a wall (or even knock one down) before remembering that you don’t own the place? One of the benefits to buying a house is the ability to do whatever you want with it—within reason, especially if you belong to a homeowners association.
When you’re the homeowner, you can add a balcony, saw through a wall, create a walk-in closet, design the pool of your dreams. It’s your house and your long-term investment, so make sure you take full advantage of your purchase by making it yours.
You can even use this nifty list to determine which improvements and repairs provide the biggest return on investment when it comes time to sell. Your local real estate agent can also provide insight into what buyers most appreciate in your specific housing market.
#6: You Become Part of the Community.
There are long-term renters, of course, but many people associate renting with “temporary.” If that’s your mindset, it can be harder to feel like you’re part of the community because you may not find yourself engaging as much.
A home is not just a financial investment, but an investment in your neighborhood and community. You’re more likely to get to know your neighbors, participate in community activities and groups, and adopt a pride-of-ownership mentality when you set down roots by buying a house.
#7: It Creates Generational Wealth.
Homes generally appreciate over time, particularly if you plan to be a long-term owner. This added value not only builds equity, but it also gives you something to pass down to your children.
And speaking of equity, you can use the money from your home to help them pay for college, start a business, or even buy their own first home. Decisions like these can set your family on the track to financial success, all while holding on to the home.
#8: You Can Leverage Your Equity.
College education, starting a business, buying another home…they all require money. That’s where your home equity can come in. There are many ways to unlock these funds, including a cash-out refinance, home equity loan, home equity line of credit (HELOC), and a reverse mortgage. These programs can typically help you tap into your equity at a lower interest rate than a new loan, though they may require a home inspection or appraisal.
The next time you review the homes for sale in your desired neighborhood, take a second to appreciate all that homeownership can actually bring to you and your family. The benefits are numerous, and it may be easier than you think to qualify for a home loan.
Are you ready to get started? Our team is always here to discuss the benefits of homeownership if you’re thinking of buying a house. Give us a call today.