Six Advantages of Homeownership
Why owning a home rocks!
When you think of buying a home, what comes to mind? Painting the walls your favorite shade of blue? A fenced yard for the kids? The ultimate man cave? A spa bathroom? These are satisfying reasons to buy a home, but there are strong financial and community incentives, too.
Whether you are currently looking for a home or just thinking of “someday,” you’ve probably made your own list. You’ll find many lists online, including this one from Freddie Mac that’s right on target. Here’s ours.
Build equity over time
If that doesn’t sound very exciting, how about this: The median net worth of a homeowner is 44 times greater than that of a renter, according to a recent Federal Reserve Survey of Consumer Finances. Think about that: 44 times greater. When you rent, you pay your landlord’s expenses (mortgage, taxes and insurance) while your landlord builds equity (value in the home). When you buy, you pay your own mortgage, taxes, and insurance, and you can build equity for yourself. Consider this also: Even after the 2008 economic downturn, when many homeowners lost equity, those who kept their homes saw their equity return and grow as home values have increased steadily over time. Owning your own home is an established way to provide stability and security for you and your family.
Stable monthly payments
When you rent, your monthly payments will probably increase over time. When was the last time your landlord offered to lower your rent? If you buy with a fixed-rate mortgage, your monthly principal and interest payment (PI) will be stable over the life of your loan. Other housing expenses, like homeowners insurance and property taxes, will probably increase, and you will need to budget for maintenance, but knowing that your PI payment won’t change can help you better plan for the future.
Tax benefits
In general, mortgage interest and your property taxes are tax-deductible. Rent payments are not. Depending on your income and the amount you pay in interest and property taxes, these tax savings may offset some of the costs of owning a home. They can also create funds for home improvements or other expenses. (Note: This is not tax advice. Always consult your own tax advisor regarding the tax implications and deductibility of mortgage interest and/or property taxes.)
Owning may be cheaper than renting
Depending on your local market, it may be cheaper to own than rent. In a recent study there was an almost even split in major metro areas over which was less expensive, owning or renting. Not surprisingly, the markets where renting is favored included San Francisco, Los Angeles, San Jose, and San Diego. Buyers do better in the Midwest and Southeast. One option is to buy a home and have a rent-paying roommate, but be sure your financial calculations include the possibility that you won’t have a renter every month.
Pride of ownership
This is the fun part of homeownership. You’ll have a place you can truly make your own, from paint colors to bathroom fixtures to a vegetable garden. One thing to remember: If you are looking at homes in a community with restrictive covenants, be sure you understand what is and isn’t allowed. You may not be able to paint your garage door turquoise or decorate your front yard with vintage gas station signs and folk art chickens. If that’s a deal breaker, look elsewhere.
Build your community
When you put down roots as a homeowner, you may find a greater sense of belonging and a stronger motivation to build your community. Suddenly it matters more that the local library stays open, or the park nearby is a safe place for kids to play. The local mom and pop grocery store is more than a convenience: It’s a cornerstone of the neighborhood, so you patronize it, helping it survive and thrive. When you support local businesses, you improve the local economy, which makes the neighborhood more attractive and brings more homeowners.
Ready to learn more?
Curious about your ability to buy? Your licensed CrossCountry Mortgage loan officer is here to help and can provide a rent vs. buy comparison. We offer several mortgage programs that are good choices for first-time homebuyers.