Buying a house will likely be the biggest investment (with ample rewards) that you’ll make in your lifetime. Looking to learn more about the potential benefits that accompany homeownership before you decide whether to buy? Here are some of the main benefits of buying a home: Think of it this way: Instead of paying your monthly rent to a landlord or corporation, you can start buying into your own home equity. Consider your house a long-term piggy bank. As you build equity, your home value increases. You can also cash-out refinance a portion of your home equity if your family falls into debt or the kids need help financing their college degrees.Investing And Building Equity
The best-case scenario may be that you pay off your fixed-rate loan within 30 years as planned and enjoy your retirement with much lower monthly expenses. Buying is arguably much more attractive than paying landlords rent money until the bitter end.
Whether you decide to sell your starter home in 5 years or plan to downsize in retirement, you’re likely to walk away with a profit from just living there and waiting for the market to appreciate in value. Plus, that capital you make when you sell your house may qualify you for a capital gains exclusion, allowing you to enjoy that income tax-free. Speak with an accountant or tax preparer if you’re unsure what you qualify for.
Improving Credit
As you maintain regular mortgage payments, your credit score will increase over time. Of course, your credit score will take a downward dip once you take out the loan. That’s because, on paper, you have a sizable debt on your hands that you’ve yet to prove you can repay. As you make regular on-time payments, that debt will look more and more like responsible debt, which can help raise your credit score. Just be sure not to take out any large loans at least 6 months after taking out your mortgage.
Greater Privacy And Control Over Your Living Space
Unlike renting, or even owning condos or townhomes, buying a house lets you have total control over your home. You may not need to ask permission from a homeowners association (HOA) board or landlord to make a home renovation to match your lifestyle. No more limits on pets or toeing the line on noise restrictions with the apartment next door. Start a garden bed if you want to and adopt a litter of kittens. The only rules you need to follow are codified laws and those set forth by your lender or HOA, if there is one.
Tax Benefits
There are several potential tax benefits that come along with owning your own home. If you choose to itemize your tax deductions as a homeowner, you may be able to deduct your mortgage interest, property taxes and certain home improvements. However, it’s important to do the math and determine whether it makes more sense to itemize your deductions or take the standard deduction.
Longer-Term Stability
According to the U.S. Census (Table A-4), homeowners are more than three times less likely to move in a given year compared to renters. That same study shows that about 4.9% of homeowners moved between 2020 to 2021, compared with 16% of renters. Of course, the reason for those moves varies from job relocation to unsustainable increases in rent costs. Regardless, according to the findings from the National Association of REALTORS®, communities that have residents settled in for the long haul often have stronger social ties, civic engagement and social capital.
If one of the greatest allures of homeownership is passing down a home that’s fully paid for to your children, you’re not alone. Your neighbors will likely feel the same way, and will fight to create a stable, safe neighborhood for their children.
