Home prices have been on the rise for a while now and news stories abound with first-time homeowners being priced out of the market. As breaking into the housing market seems daunting today, some people may ask themselves if reaching for the goal of homeownership is truly worth it. The answer is yes! And here are the top 6 reasons why:
- Pay Yourself, Not a Landlord
One of the most frustrating parts of renting for many people is the feeling that they could be using their monthly rent costs to invest in their own place rather than giving it away to a landlord. When you buy a home, your monthly mortgage payment is providing you with a place to live as well as investment in a valuable asset.
- Freedom to Customize
As a homeowner you do not have to answer to anyone when you want to hang pictures, paint, or make renovations. Unless you have HOA rules, the home is yours to do with as you please. There is a lot of freedom that comes from owning a home.
While the housing market may go up and down over short periods of time, in the long run, home prices increase with inflation and demand. This is called price appreciation and it earns you equity. Equity is calculated as the difference between how much your home is worth and how much you still owe on your mortgage. The beauty of price appreciation is that it gives you instant equity without any effort on your part. For example, if you buy a home and hold on to it for 30 years, you may be able to then sell it for twice (or more!) what you originally paid. What’s more, if you do any updates or renovations, they can improve the value of your home and give you even more equity.
- Tax Deductions
There are tax benefits that come from owning a home that are not available to renters. If you itemize your deductions, you can deduct your mortgage interest, which accounts for most of your payments in the early years. You may also be able to deduct private mortgage insurance and property taxes.
- Access to Credit
Once you own a home and have accrued some equity, you might qualify for a home equity loan or a home equity line of credit. These are both loans that use your home as collateral, but they typically come with interest rates much lower than credit cards or personal loans. If you need access to capital in the future, owning a home can provide you with money at the best prices and terms.
- No Payment Surprises
As a renter, you are always subject to rent increases. Your rent can increase yearly or even more frequently. If you buy a home, especially if you use a fixed-rate mortgage, you will have a stable payment that never increases over time. Plus, owning means that no landlord can kick you out because he or she wants to sell the property. Owning gives you stability that renting cannot offer.
While it may take hard work and effort to save for a down payment, the benefits of homeownership can be long-lasting and liberating. Call us today at 804-424-2200 and we'll help you finance your next home purchase.