Are you wondering if it’s time to put down roots? You may have a vague sense that owning a home is a logical step to take or a smart financial move, but you may not realize just how many homeownership advantages there are. Following are 10 of our favorite benefits for homeowners.
1. Build equity
Perhaps one of the most important benefits of homeownership is the ability to build equity over time as you pay off your mortgage. Unlike rental payments, which pay off your landlord’s mortgage instead, your principal payments help you pay off your own home and build a more secure financial future.
2. Enjoy tax advantages
Are there tax benefits of buying a house? With potential tax deductions for mortgage interest, property taxes, and other costs related to your home, the tax advantages of homeownership can be among the most generous. This is especially true early in your mortgage amortization period when more of your payment goes toward interest. Consult with a tax specialist to see if this applies to you.
3. Build wealth
Why is homeownership so important? According to the Federal Reserve, owning a home is positively correlated with higher net worth. On average, homeowner net worth is 40 times higher than that of renters. If you wish to achieve financial freedom or pass on a valuable asset to your heirs, homeownership may be an important part of the equation.
4. Leave an inheritance with advantages
The financial benefits of owning a home can carry through to future generations. If your home appreciates over time, your heirs may benefit significantly from your choice to purchase a home. That’s because they may inherit the property at its stepped-up, appreciated cost without having to pay taxes on the additional value. Few investment vehicles offer this advantage. Again, a tax specialist can confirm if this applies to your situation.
5. Increase property value
Do you have an eye for design or a talent for improving your space? Another benefit of buying a house: When you spend money making your home more appealing and user-friendly, you add value that may eventually come back to you in the form of increased equity or higher sale price down the road.
6. Combat inflation
Rent is subject to market conditions and inflationary pressures. If your neighborhood suddenly becomes more desirable or the owner makes improvements, the cost of living in your rental may also go up. When you are a homeowner, a long-term fixed-rate mortgage allows you to remain in your home at today’s purchase price for decades to come. That’s a significant advantage of homeownership.
7. Create an income stream
Is there space over your garage for an apartment? Do you have room in your backyard for an accessory dwelling unit? Is there a basement walk-out that you could convert into its own living space? As a homeowner, you have the option of optimizing your property to take in a tenant of your own. That can provide additional cash flow and may help you pay off your mortgage faster than you planned.
8. Make it your own
Not all advantages of homeownership are financial. When you’re a tenant, you’re limited in choices regarding home decorating and landscaping. If you’re tired of looking at that bland paint color in your apartment or want to start a vegetable garden, you’re at the mercy of your landlord’s rules. As a homeowner, you call the shots, so you have more freedom and flexibility to make your home your own.
9. Have a sense of stability
When you rent, your landlord has the option of raising the rent each year or whenever you sign a new lease. Eventually, that may price you out of your local market or cause you to move to find a more affordable place every few years. When you own your home and finance it with a fixed-rate mortgage, the consistent payment schedule may allow you a more stable and affordable place to live.
10. Be part of the community
Homeownership benefits go way beyond your front door. As a homeowner, you’re simply more invested in the local community. You have a say in the HOA or condo association. And as a taxpayer and property owner, your opinion carries weight with the town council or school board. Since you’re likely to stay in your neighborhood for the long haul, you’ll get to know your neighbors as well and become a more active participant in the life of your town.
As you’ve learned, the benefits of homeownership span from financial returns to emotional advantages. Making the move from renting to owning has the power to significantly improve your current and future quality of life. The future is bright for first-time homebuyers.
Want to go from curious to closing? Learn all you need to buy your first home in our free eBook.
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