Do You Know All the Benefits of Homeownership?
Owning a home can be attainable for anyone. We’ll discuss how homeownership helps you build long-term wealth and things to consider before you get started.
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Main image courtesy of Twin Cities Habitat for Humanity.
Has owning a home always been a dream of yours? If so, you’re not alone, as most Americans equate homeownership as one of their major life goals. Owning your own home may still seem like a dream, but you can make it a reality by starting to save and planning ahead. Before you know it, you’ll be ready to purchase your first home!
Everyone’s personal situation is different, so you’ll need to take the time to consider whether or not you’re ready to own a home. Whether you’re still renting, or waiting until the time is right to start looking at homes, you’re probably weighing the pros and cons of homeownership. If you’re looking for more information on the path to homeownership, and the stability and peace of mind it can bring, keep reading because we’re going to cover:
- How do you know if you’re ready to own a home?
- The top benefits of homeownership
First, are you ready to purchase a home?
You’ll want to take a look at your financial situation to make sure you’re ready to own a home and start building your equity
While owning a home may seem like a great idea and the next logical step for you, it is a large investment, so you want to make sure you’re ready for it. You’ll want to examine your current financial situation and ask yourself some important questions first.
- Is this a good financial decision? Before purchasing a home, you need to make sure you have the right amount of money saved to do that. The housing market varies, and depending where you live, homes may be more or less expensive than the national average. How much money you’ll need for a down payment, closing costs, and for the monthly mortgage will vary.
- Does your job require you to relocate often? If you’ve been renting because it offers you the freedom to move around for your job, you’ll want to consider that before you purchase a house. It can take a few years for a house to start to build equity, so if you’re looking for a short term living situation that you can change frequently, renting might be a better idea.
- Do you still need to build credit? Before extending a loan, banks will need to look at your credit score and determine how financially stable you are. If you’re still working on building credit, renting for a little while longer might be a better decision.
- Are you looking for more stability and a way to build wealth? If you want to start building wealth and equity, and your finances are ready, you may want to reach out to a real estate agent or realtor to start your journey to homeownership. When you walk away from a lease, you don’t have anything to show for it, however, when you start paying on your mortgage, you’re gradually building wealth, equity, and a legacy you can pass on.
The benefits of homeownership
There are many benefits to owning your own home!
If you’re ready to start down the homeownership path, you should know about the benefits you’ll experience by owning your very own home.
- Long term savings
Although the upfront costs of home ownership may be steeper, in the long term you’ll see savings. When you get a home loan with a competitive interest rate, you’ll know exactly what you’re paying each month. When you have more control over your monthly expenses, you can start to save more money or build wealth elsewhere.
- Appreciating investment
When you’re able to purchase property, it is very likely that it will continue to appreciate, or increase in value, over time. This means that regardless of the price that you purchase your home at, it will most likely continue to rise until the time comes to sell it, which you can then do at a profit! When you’re renting an apartment, you have no rights to the property, as it is owned by a landlord.
- Build equity
This is one of the biggest benefits to owning a home, and it is why many people make it their goal to one day purchase a house. Each month when you make payments on your mortgage, you increase the value of your ownership in an asset (your home). Each year you increase your equity, which can come in handy should you need to borrow against that equity and take out a home equity loan or home equity line of credit to help with improvements or an emergency situation. You’re creating lasting wealth for yourself and your family when you purchase a home.
- Tax advantages
In addition to building equity and having your home value appreciate over time, there are also tax advantages to owning your own home. Perhaps the biggest incentive to homeowners is the Mortgage Interest Deduction, which allows homeowners to deduct the interest paid on their mortgage to lower the amount of taxes owed. However, as a homeowner, you may also qualify for:
- Property tax deductions
- Capital gains
- Financial education to pass on
When you go through the homebuying process, you learn a lot about the financial ins and outs of the procedure. Teaching your children how to manage monthly expenses and make a mortgage payment gets them on the path early to understanding how to successfully purchase a home. Passing on financial literacy is a great way to leave a lasting legacy, and proof that anyone can own a home.
- Strong sense of community
Homeowners tend to stay in their properties longer, contributing to stronger community ties and a greater sense of stability. When you own a home, you take pride in its appearance, which keeps the community as a whole more active and engaged. This can even translate into greater civic participation in local affairs.
- Privacy, freedom, and control of your environment
With your own home, you’ll no longer share walls with other people or have common areas that everyone uses. Homes offer a greater sense of privacy and the freedom to design and make improvements to your space as you see fit.
- Lower crime rates
With stronger ties to neighbors and the community, areas with homeowners may experience lower rates of crime, including property crime. When neighbors are looking out for each other, crime deterrence is higher. This sense of security is one of the major benefits of purchasing a home.
If homeownership is your dream, there are many benefits awaiting you. Make sure you’re in the right place financially, reach out to a real estate expert, and you’ll be ready to start down the path to homeownership!
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