4 Benefits of Homeownership You Can’t Afford to Ignore
By Chad Neiss – Vice President, Mortgage Lending
You’ve been watching more than your fair share of home remodeling shows lately. And, who can blame you? With television networks devoted to backyard, kitchen, and whole home remodels, you can’t help but dream about life without the limitations that come with renting. But, it does make you wonder if homeownership is really worth the expense. A down payment, closing costs and the added responsibility that comes with homeownership may have you second-guessing whether the advantages of buying outweigh renting.
Here are four benefits of homeownership you can’t afford to ignore.
1) Homeownership Puts the Brakes on Rent Increases
When you purchase a new home, you can secure a predictable monthly mortgage payment. This occurs when you choose a fixed interest rate mortgage. A fixed interest rate means that your monthly payments of principal and interest remain the same for the life of the loan. Landlords, unlike mortgage lenders, can increase rent at the end of each lease period. It’s easier to budget for other long-term financial goals when you have a consistent housing payment.
2) Homeownership Allows You to Express Your Personality
Do you have a desire to paint your interior pink, have more than one large pet, grill out, start a home business or expand your outdoor living space? All of these things are now possible when you own your home. Homeowners enjoy certain freedoms that are nonexistent when compared to renting from a landlord. Of course, restrictions may apply if you choose a neighborhood that has a homeowner’s association. Generally, you’ll be free to install those new hardwood floors or shaker cabinets you’ve always wanted. Homeownership allows you to make each room a reflection of your unique style and personality.
3) Homeownership Comes with Financial Perks
Building equity in your home is arguably the most significant perk of homeownership. Equity is the difference between the current market value of your home and the amount you owe on your home mortgage. Homes are often the largest appreciating financial assets for many Americans. The amount of appreciation or equity available in your home will vary by market conditions. There’s no guarantee, but over time your home should increase in value. What is guaranteed is that there is no equity at the end of a standard rental agreement.
The financial flexibility homeowners experience often includes:
- A high return on investment at the time of sale;
- The ability to take cash out of the home, e.g., home equity loan or home equity line of credit, based on the amount of available equity; to pay for college, home improvements or to purchase a second home; and
- A rent-free retirement
When you build equity in your home, you help lay a solid financial foundation for you and your family.
4) Homeownership Has Certain Tax Advantages
Even with recent changes to tax laws, homeownership still provides significant tax savings for most Americans. You may be eligible for substantial tax deductions that are unavailable to renters. While new homeowners pay more in mortgage interest at the beginning of the loan period, they are often able to turn this into a benefit. The interest paid on your mortgage and even certain home-equity interest payments can help reduce your overall federal tax obligation. You should consult your tax advisor.
Purchasing a home is a big decision. More money will likely be spent on buying a home than any other purchase in your life. When weighing the advantages of renting vs. buying a home, know that you don’t have to make the decision alone. Contact us to let us help you simplify the first time home buying process. We can help you enjoy the benefits and freedoms that are possible with homeownership – sooner than you might think.