Benefits of Homeownership Beyond Equity Growth
When purchasing a home, many homebuyers focus on the long-term financial benefits of ownership. As their property value increases and their mortgage balance decreases, there’s an opportunity to earn equity. They can later sell the house and use this equity to purchase a bigger home or use money from the sale to supplement their retirement income.
But even though a home can be a rewarding long-term investment, the ability to earn equity isn’t the only reason to purchase a property. Here are four additional reasons.
1. You can live in the home for as long as you like
If you don’t own your home, your landlord makes all the rules, so they can decide to renew or not renew your lease.
For this reason, there’s no true security when you’re living under someone else’s roof. It can be difficult to put down roots because you never know when you’ll have to pack up and relocate your family.
It’s true that homeownership is a huge responsibility, but you’ll also enjoy a greater measure of stability. This is your property, so you can live in the home until you decide to move on. You don’t have to worry about losing your home as long as you continue to make your mortgage payments.
Not only can you enjoy stability and pride of ownership, you can also make the home your own. You don’t need permission to renovate your bathrooms or kitchen, increase your square footage, paint, or remove a wall.
2. You’ll enjoy predictable monthly payments
Buying a home also makes it easier to manage your money long-term. If you purchase a home with a fixed-rate mortgage, you’re able to lock in your interest rate and pay the same mortgage payment each month.
You might experience slight fluctuations from year to year due to increases or decreases in property taxes or homeowner’s insurance. But for the most part, your payment remains unchanged. Rent, on the other hand, can increase on a yearly basis. So, the property you rent today could cost considerably more in four or five years.
3. You’re protected from rising prices
Even though a fixed-rate mortgage payment doesn’t increase from year-to-year like rent payments, property values do rise over time. So, if you delay homeownership for three or five years, home values in your area could increase during this time, and you could end up paying more for a home. For example, a house you’re thinking about buying today might be $10,000 or $15,000 more expensive in five years. Additionally, mortgage interest rates can also rise over time, further increasing monthly payments.
Buying now protects you from rising prices and rates, saving you thousands over the life of your mortgage loan. As a result, you could end up paying far less than someone who buys a comparable property in your neighborhood at a later date.
4. You could decrease your tax liability
If you’re a self-employed worker, or if you always owe the federal or state government each year, itemizing your tax return allows you to write off several mortgage-related expenses. This can include property taxes, private mortgage insurance, mortgage interest, as well as certain expenses involved with getting a mortgage.
Speak with your tax professional for information on mortgage expenses you’re eligible to deduct. Your consultant can also help you decide whether it makes more sense to itemize or claim the standard deduction each year. Unfortunately, you can’t do both.
The long-term financial rewards of homeownership drive many people to purchase a home. But while a home can serve as a forced savings account and help build your personal net worth over time, don’t overlook other potential benefits of being a homeowner.
Are you ready to move forward with your first home purchase (or maybe a repeat purchase)? Give us a call and one of our loan experts will be happy to assist you. Cherry Creek Mortgage offers several home loan programs for buyers at different stages. We’re confident in our ability to help you find the mortgage that’s right for your situation.