5 Benefits of Homeownership
There will always be pros and cons to everything, but the list is long for the benefits of owning a home.
Over the course of the past year through the pandemic, the housing market has truly been thriving among the many industries that have suffered immensely. Currently, interest rates are down and many people are seeing this as a silver lining in such a bleak time, capitalizing on these rates for them to benefit from for years to come.
Today, we’ll discuss 5 benefits of homeownership for those who are either considering purchasing a home.
Most people wouldn’t consider themselves to be “investors,” but that is essentially what you are when you purchase a home.
The word ‘investor’ can often have a negative connotation to it because of the risk involved, but owning a home is actually a low risk investment and you are truly investing in yourself.
If you can easily roll the dice on yourself, your ability to maintain a stable job and pay a monthly mortgage (or more if desired) for a dedicated period of time, the odds are in your favor!
With time, built up equity and a good housing market, the return on your investment could be more than you think.
If selling the property after paying so much into it seems like the wrong choice for you, turning it into a rental property and earning residual income is also another great option. Either way, it’s a win-win.
2.Gaining equity, creating wealth
As you make payments on your home and begin to pay it off, you are slowly earning equity. Equity is the difference between what you owe on the house and how much the property is worth.
Overtime, your house will increase in value as it adjusts to the market and as you make additions and improvements to the home. If the timing is right and the market is in favor of the sellers, that becomes a good time to consider selling your home in order to make the most return on your investment. Depending on the value of your home, if your house is completely paid off by that time or close to it, you could make a hefty return.
While you are renting an apartment or home, you’ll notice when tax season comes around that you don’t receive any benefits to paying for someone else’s mortgage...funny, right?
You’ll be asked if you own a home but you will not be asked if you are a renter. That is because there are various tax benefits you’ll receive as a homeowner that will come in the form of deductions.
Some of these benefits include:
- Mortgage interest
- Real estate taxes
- Private Mortgage Insurance
- Profit from the sale of a home
While adding to your assets does increase the time and complication of the tax process, it can ultimately lower your tax bracket which then lowers the amount of taxes that you owe. Finding a reputable CPA is helpful when you are newer to homeownership or want to make sure you get the most out of your taxes!
4.Build Your Credit
When you purchase a home, you are making a long term commitment to your monthly mortgage payments. Luckily, this payment will not be unexpected and you should be budgeting for this amount every month so you don’t lose your house.
Because of these consistent payments, your credit score will benefit. Making regular payments on time, maintaining a positive payment history and a long credit age--this will all enhance your credit.
5.Payments are not forever
Taking out a loan over a 15 or 30 year period ensures that you will be making payments for that amount of time. After that allotted time, it is not set in stone that you will be paying any mortgage payment at all. You will have the option to never pay a mortgage payment again.
When your house is paid off and you have equity built, you won’t be required to pay a monthly payment, other than taxes and utilities.
You can then start building up savings or sell your home and make a large return on your investment like we mentioned earlier.
With renting, there is no end in sight. You are always going to be paying a mortgage payment, it just won’t be your own. So, after 15 or 30 years of paying rent, you will still have to pay a monthly payment without a date of when that will stop.
Homeownership takes patience. There are long processes and long periods of time that are associated with it. But overall, the return is high whether it is in reference to making a return on investment or simply having more freedom later on.
If you’re ready to make the next step in becoming a homeowner but don’t know where to begin, eHome America’s Homebuyer Education Course might be the right next step for you.
Be fully prepared for the entire process, from start to finish, and avoid unexpected surprises.