Benefits of Being a Homeowner
Are you on the fence about purchasing a home? Maybe you worry about the responsibility, but owning your own home comes with a lot of benefits that you just can’t get as a renter. Here are some of the most compelling reasons to finally get off the fence and dive into homeownership.
Build Equity in Your Home
Your monthly mortgage payments can help you build equity in your home. Equity is calculated by subtracting the amount that you owe on your loan from the home’s total value. As you make your monthly payments, a portion will go toward the principle of the loan, which increases your equity. This is like having your own built-in savings plan should you decide to sell the home at a later date. You may also be able to borrow against the home’s equity when you need extra funds for education, medical, or home renovation expenses.
Get Tax Breaks
As a homeowner, you’ll be able to take advantage of some serious tax breaks that renters can’t. As of 2019, you can deduct the interest on the first $750,000 of a mortgage loan. Under the new State and Local Tax (SALT) deduction established in 2018, you will also be able to deduct up to $10,000 in state, local, and property taxes combined. To receive either of these benefits, taxpayers must itemize the deductions on their return.
Have Predictable Payments
Did you know that the average annual rent increase is around 4% nationally? You won’t have to worry about this as a homeowner if you opt for a fixed-rate mortgage. You can be assured that your house payment will always be the same each and every month throughout the full term of the loan. With a rental, tenants may experience rent increases any time they renew their lease, which can be extremely stressful for someone on a budget.
Make a Good Investment
When you own your home, every dollar that you put into it benefits you. Renting is like throwing away money that you will never see again. Why not use that money to invest in a home and build a future for yourself and your family? In some cases, mortgage payments can be less expensive than rent. Even when their mortgage is a little more than they were paying in rent, many people find that the added benefits of homeownership is well worth the expense.
As you build equity in your home, keep in mind that you will own it outright someday. This can make for a solid retirement plan where you can live rent-free for the rest of your life. It can also provide any family members who inherit the home with a sense of security whether they decide to live in the house or sell it for a nice nest egg.
Build Credit History
You’ve always paid your rent on time, but chances are that history isn’t reflected on your credit report. However, with a home loan, the lender will report to the credit bureaus each month. As long as you make on-time payments, they will positively affect your credit through the life of your loan. After a few years, you might find yourself eligible for the best, most exclusive rates should you decide to purchase a new car or take out a loan for another major expense. At this point, you’ve shown lenders that you are a responsible borrower who presents a low risk of defaulting.
Have Freedom to Renovate
When living in a rental property, any renovations you want to make usually require landlord approval. However, as a homeowner, you are the one in charge. Want to repaint your kitchen a sunny yellow? You won’t have to ask anyone for permission to do it. Looking to plant a vegetable garden in your yard? Go for it! When you’re a homeowner, you have the freedom to customize your home to your heart’s desire. Plus, after several years of on-time payments, you could qualify for a competitive home equity loan to help you create the home that you have always wanted.
Get More Privacy
One nice benefit of being a homeowner is that there’s greater privacy. You won’t have to deal with your landlord popping by the property unexpectantly, which can be anxiety-inducing for any tenant. Landlords can also restrict how many people you have staying in the home, even temporarily. Do you have extended family members who want to visit over the summer? When you have your own home, you won’t have to ask anyone’s permission.
Experience Real Stability
One of the biggest personal benefits to becoming a homeowner is the sense of stability it offers. You won’t have to wonder what will happen once your lease is up, if your rent will increase, or if you’ll have to move to yet another rental. You will finally be able to relax, knowing that you have a permanent place to live in for as long as you want. You can develop lasting relationships with your neighbors and have a real stake in becoming more active in your community. If you’re a parent, you can help your children make lifelong friends who will be likely to attend the same schools and take part in the same extracurricular activities as them.
Take the Next Step
Many people put off homeownership because they don’t think they’ll be able to qualify. The truth is, there are a lot of home loan options available today that are designed to give more people the opportunity to become a homeowner. Don’t have a lot of money saved in the bank? Down payment assistance is often available for first-time buyers. A mortgage broker can help you explore your options.
At Summit Financial, we assist our clients through each step of the home-buying process. With a network of 30 lenders, our mission is to match each client with the right home loan for their needs. To learn more about the benefits of becoming a homeowner, contact us today.