Becoming a homeowner comes with plenty of benefits. If you’re a first-time homebuyer, it’s important to understand the benefits of owning a home before you start searching.
Of course, some of the benefits are pretty easy to spot, but others may not be as easy to see. Let’s look at some of the most common benefits of owning a home and a few other less mainstream benefits.
5 Common Benefits of Owning a Home
1. Cheaper than Renting in the Long Run
While the upfront cost and the monthly cost may not be cheaper than the rent you pay, over time, owning a home is cheaper. Yes, you will need to pay property taxes and homeowner’s insurance. However, when you pay your mortgage payment, you aren’t paying for someone else’s home.
When comparing the rent for the same type of property to the home you own, it’s cheaper to buy, over the long-term. Sometimes, your mortgage payment will even be cheaper than the rent you currently pay.
2. Build Equity
Buying a home gives you the ability to build equity. Equity is the difference between the appraised value of your home and the amount of any liens against the property, like your mortgage.
As you pay down your mortgage and your home appreciates in value, you gain equity. This equity can serve many purposes. Homeowners often refinance to use the equity for remodeling or even to pay off other debts.
3. Tax Benefits
As a homeowner, you will need to pay property taxes. However, you also gain other tax benefits including the ability to deduct any mortgage interest you pay each year.
In the first few years of owning a home, you’ll notice your mortgage payment has a high percentage going towards interest. This means you’ll enjoy a nice deduction at the end of the year.
4. Ability to Remodel/Change as you Please
Very few, if any, landlords will allow you to make changes to a property you rent. They might let you paint, but that’s about it.
When you own a home, you gain the benefit of being able to remodel and change things as you please. If you want to change the look of the kitchen, you can. If you want to add a second story to a one-story home, you can.
As a homeowner, you gain the ability to make any changes you prefer to your property. Whether it’s something simple or you want to completely redo the home, you have the freedom to choose.
5. Provides an Investment
Your home will provide a nice investment for the future. When you own a home, you will build equity through appreciation and paying down your mortgage. This investment will pay off as you get closer to paying off the mortgage.
4 More Benefits of Becoming a Homeowner
1. Establish Community Involvement
A benefit of owning a home many forget about is the ability to become more involved in your community. Most people rent homes from one year to another. When they buy, they stick around for many years instead of just one year at a time.
As a homeowner, you’ll likely establish relationships with neighbors and other people in the community. It’s easier to follow local politics and put down roots in your community when you buy.
2. Better Stability
Owning your home puts you in charge. As a renter, you’re counting on someone else to do the right thing with the property. You won’t have the same level of stability as you will likely move from one rental to another.
Gaining the stability of knowing you have a place to call home provides many benefits for most people. It can have a positive impact on you emotionally and psychologically.
3. More Privacy
While you can certainly rent a single-family home, you won’t have the same privacy as buying a home. If you rent an apartment, you already know that privacy isn’t even close to the same as living in a detached house.
However, even when you rent a single-family home, you have to deal with a landlord. This means you don’t have full privacy like you do when you buy a home. As a homeowner, you won’t have a landlord asking to show up or sending workers over when something breaks. You’ll gain privacy and control over your property.
4. More Secure Retirement
Owning your home offers the benefit of a more secure retirement. Whether you stay put after paying off your mortgage or you decide to move, you’ll have a home you own to sell or keep.
Assets help when you decide to retire. If you buy a $300K home now and it appreciates over the next 30 years, you could be retiring with a $500K home. If that home is paid off, you now have $500K for retirement if you sell the home.
Most retirees will downsize, which means you might go from that $500K home to a $150K condo in a new location. This leaves you with $350K to invest and use to live off of during retirement.
There are several wonderful benefits of owning a home. Before you start looking for the right home for you, make sure you understand the benefits you gain when you stop renting and start owning your home.