The Top Benefits of Owning a Home: Do You Know Them All?
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
—President Franklin D. Roosevelt
Buying a home may be a mainstay of the American Dream, but it’s also a monumental task: You have to clean up your credit, apply for a mortgage, visit tons of homes, scrape together a down payment, and then move all your worldly possessions after you close the deal. Whew!
So then why do millions of Americans go through the trouble? Because they know that the hassles they must endure are usually far outweighed by the benefits of owning a home.If you need some inspiration to start house hunting or just want to make sure you’re taking advantage of all that homeownership has to offer, check out our list of its top perks, which should repay your hard work from now until well into retirement.
Benefit No. 1. You can expect predictable monthly housing payments
Usually, landlords can raise your rent whenever a lease expires—and sometimes by as much as they please. But as a homeowner, if you get a mortgage with a fixed interest rate, you can lock in a predictable mortgage payment for as long as 30 years.
As such, instead of worrying about fluctuating rents, “Homeowners can create a budget knowing that their monthly mortgage payments won’t rise—ever,” says Brian Davis, a real estate blogger at SparkRental.com.
Bonus: Your mortgage payments, unlike rent, go toward your own home ownership, not your landlord’s.
Benefit No. 2. It’s often cheaper to own than to rent
Sure, there are upfront costs of buying a home, like that down payment. But a down payment doesn’t have to be huge. With certain mortgages like Federal Housing Administration (FHA) loans, it can be as low as 3.5% of the purchase price of the property; with loans from Veterans Affairs or the U.S. Department of Agriculture, down payments can be as low as 0%. Plus, “After that, the monthly outlay of owning a home is much less than paying rent in many markets in the U.S.,” says Davis.
Benefit No. 3. It’s a great financial investment
Owning a home can provide you with a valuable asset and financial stability. While a home’s value can rise at varying rates, based on where it’s located and how the economy is doing, you can generally expect real estate to appreciate by 3% to 4% per year, driven by inflation and natural population growth. Stocks may rise faster—or drop. So by comparison, real estate often proves a relatively safe investment. A home also has one noteworthy bonus that stocks can’t lay claim to: It provides a roof over your head!
Benefit No. 4. Owning your first home may offer a tax break
In certain instances, homeownership can come with tax benefits. One of the biggies continues to be the ability to deduct the interest on a mortgage of up to $750,000. (Folks whose mortgages kicked in before Dec. 15, 2017, can deduct the interest on up to a $1 million loan). Another consideration is that mortgages that have recently been taken out may yield greater tax savings.
“The way mortgage payments are amortized, the first ones are almost all interest,” says Wendy Connick, owner of Connick Financial Solutions in Crescent City, CA. Just keep in mind that taxes are highly complex, and that consulting with a tax expert such as a certified public accountant in your area is wise before you decide on the best solution for your particular circumstances.
Benefit No. 5. You have the freedom to make modifications
What renter hasn’t thought, “I’d really love to paint/alter/knock down this wall, to…”? But, of course, you can’t—not without the landlord’s blessing. And even if you are allowed to renovate your rental, it’s the landlord who will ultimately benefit. (Especially if you do a really awesome job of it.) Because after your lease is up and you have moved, the renovations remain. Homeowners, on the other hand, typically don’t need permission. They can paint any room any color, replace the cabinets, retrofit their living room as a detailed replica of the Millennium Falcon from Star Wars, or make pretty much any other modifications they wish. While government building codes, permit requirements, and homeowners associations (HOAs) place some restrictions on what you can do (particularly to a home’s exterior in the case of HOAs), there’s generally just a lot more leeway when you own. You can live by your own home decor rules, whatever they may be.
Benefit No. 6. You have more privacy
Houses—particularly those made of concrete and stucco—provide a greater sound barrier and more privacy from your neighbors than many rental apartments. Plus, “When you own, you often can also make your own modifications, such as putting up a fence for added privacy,” says Liane Jamason, CEO of Florida’s Jamason Realty Group.
Benefit No. 7. You acquire a built-in rainy day fund
Homeownership provides you with the opportunity to borrow money on the equity you will build up by consistently paying your mortgage.Securing a home equity loan at a relatively low interest rate will enable you to get financing for an emergency, large project, or other expense. That said, dipping into this rainy day fund should be done responsibly, and only for necessities. Tapping home equity to pay for medical bills, college tuition, or crucial home repairs can make sense; while using it to splurge on an Aspen ski trip probably does not, for most people.
Benefit No. 8. You can plan for a secure retirement
A home can be the ultimate nest egg, providing you with a great investment for retirement. The longer you own a home, the more it will eventually be worth if real estate values steadily rise over time (which historically has been true). There is also data that supports the fact that homeowners have a larger net worth than renters, by a wide margin. As you get older, you can sell the home and use the proceeds to purchase or rent something smaller. Another option: Rent out your home while you travel, to offset the costs of your post-retirement globetrotting.
Benefit No. 9. It’s yours!
This may seem fairly obvious, but it’s worth emphasizing: With a rental, you run the risk of getting kicked out at the end of your lease (and sometimes earlier). With a home, you can live there indefinitely. And isn’t it comforting to know you’ll always have a roof over your head?
