Rosalyn Carter said – “There is nothing more important than a good, safe, secure home.” It seems millions of Americans agree with her. Home sales have hit 6.7 million in yearly adjusted rates in January. Meanwhile, 31 percent of buyers in 2020 were first-time homeowners. It’s an impressive feat considering the world is suffering from a pandemic.
The robust housing market was due to all sorts of reasons — people were moving away from the cities, and interest rates were also at an all-time low. Experts expect this to continue this year. So should you jump on the bandwagon and buy a house?
There are many reasons to do so, but here are the 6 foundational benefits of homeownership.
Equity is something often linked to homeownership. In real estate terms, equity is the market value of a house minus the liens on it. Your mortgage is an example of a lien.
You build equity every time you pay your mortgage. When you send your payment for the month, it’s taken out of the principal balance. As the lien amount goes down, your equity goes up.
It helps that most property values also increase over time. Some people even look at mortgages as a forced savings plan. You are building valuable equity that you can use in the future.
Taxes are a necessary evil. As a homeowner, you can enjoy several tax breaks. These tax benefits are available for townhomes, condominiums, and manufactured houses. The tax breaks happen through deductions.
For example, you can get a deduction on your mortgage. The tax code lets homeowners take out mortgage interest from their taxes. Interest payments are the biggest part of your mortgage fee. Many homeowners feel this in the first few years after buying a home.
You can claim the origination fees on your loan. It doesn’t matter whether the seller or buyer paid these points, but you can only deduct this in the first year after you buy a house. You can also deduct property taxes on your main house and second home.
Many prospective homeowners receive a house buying tip about mortgage types. The most popular kind is the fixed-rate mortgage. It means you will be paying the same amount every month.
There’s a sense of stability knowing how much you will pay every month as it helps you plan your budget. Having complete control over your expenses is something that renters don’t have. Your rent can increase every year when you renew your lease.
Mortgage rates can change, though. It happens when a homeowner’s insurance or the property taxes go up but is usually a minimal amount. It also takes years before property taxes change.
How much do I need to make to buy a house? A house is a major investment. You need to have enough for a down payment. There’s also the appraisal fee and homeowners insurance to think about. The initial cost of buying a house is more than what you will pay for rent, but owning your house is cheaper in the long run.
Try to compare the monthly rent in cities against a mortgage. You will find the mortgage fee is smaller. For example, the rent of a 2-bedroom apartment in New York can cost $1,000. This doesn’t include utilities. But the mortgage for a 3-bedroom house in the suburb is around $900. You’ll be paying less for more space.
Out of the 6 foundational benefits of homeownership, buying a home will help you build your net worth. Consider this: the median net worth of a homeowner today is $254,000. Meanwhile, the average net worth of someone who rents is $6,270. There is no comparison.
The equity you will build will help improve your financial standing in the long term. Homeowners who live in their houses for at least five years can get a profit when they sell the property. But you should take good care of the property if you want its value to go up.
People often wonder what to look for when buying a house. The answers differ per buyer. Some prefer a large backyard with a pool, while others want a large kitchen. And that is one of the best things about homeownership. You can choose a house based on what you want.
Many homeowners customize their homes according to their taste or needs. Some will add more rooms as their family grows. They might convert old bedrooms to something else when the kids leave the nest. Home improvements can also add value to your home.
It’s different when you are renting. Renters have no choice but to accept how the house looks. They can’t change the wallpaper, even if it’s horrendous. They, too, have to abide by the owner’s rules.
Privacy is another benefit of owning your home. You don’t have to deal with paper-thin walls and loud neighbors. You can develop friendships with neighbors as you’ll be living in the same neighborhood for years. Moreover, no one can enter your property without your permission.
Did you find the article informative? Good. You’ll also like this post on “Why Waiting Too Long To Buy Can Hurt Your Retirement Chances.”
Buying a home is easy with Reach Home Loans. Our loan officers will guide you every step of the way. You can contact us at 954-780-5565 or message us here.