The Benefits of Owning Your Own Home
The Benefits of Owning Your Own Home
Are you thinking of becoming a homeowner? Here's everything you need to know about owning your own home and its benefits.
Home buying can be challenging, whether you are a first-time buyer or a seasoned pro. Moving into a new home can be exciting and stressful, and we want to help you make the process as smooth as possible.
For many Americans, homeownership is a significant milestone in life. There are many physical and emotional benefits to owning a home. With the security and financial stability, as well as the freedom of making the home your space, there are many reasons why you should buy and own your own home.
While owning a home is a big step and requires a lot of upfront costs, many long-term advantages are not always obvious. Homeownership may seem daunting at first, and the housing market can be scary, but the payoff is highly rewarding once you make that purchase.
If you are interested in owning a home, you are taking that step into building a sense of pride, accomplishments, and financial stability. No matter where you choose to buy a home, you will be able to make it yours personally. Keeping an eye out for available real estate in your area is important when you are considering buying.
Here are the benefits of owning your own home.
Chapters
1. Appreciation
Historically, real estate has had long-term, stable value growth and served as a good hedge against inflation. Census data shows the median home price jumped from $172,900 in Q2 2000 to $417,700 in Q4 2023, a more significant 6% appreciation per year on average.
Home appreciation is a moving target primarily based on local housing market trends. Generally speaking, house prices increase over time, which is one of the main reasons why you should own a home. Homeownership provides a solid foundation for long-term financial planning and security.
While there will also be fluctuations in the short term, owning a home will give you the opportunity to benefit from potential appreciation overall. As property values increase, net worth does, too, making it a great way to build generational wealth.
Home values will vary widely depending on where you are located, the housing type, the market, and many other things, even the time of year. However, you can use the U.S. Federal Housing Finance Agency's House Price Calculator to estimate your home's current value based on your closing date and purchasing price if you are intersted.
2. Equity
When you choose to own a home instead of renting, you have the opportunity to build home equity. Equity represents the variance between the value of your home and the outstanding mortgage balance. Initially, a substantial portion of your mortgage payments will be allocated towards interest; however, as you continue to reduce your mortgage debt, the value of your home appreciates, resulting in an increase in your home equity.
Home equity is a valuable household asset that allows homeowners to fund various projects. You can leverage it as collateral for a home equity line of credit or a loan to cover home improvements or other expenses. Accessing your home equity is an essential benefit of homeownership compared to renting a house.
The two ways you can build up your home equity are:
- Make your monthly mortgage payments
- Track your home's appreciation over time
Keep in mind that you will also receive the home equity as cash when you sell your home. Renters do not receive any reimbursement for housing costs while living in their rental property.
3. Tax Benefits
One significant benefit of owning a home is the mortgage interest dedication. Home mortgage interest is tax deductible, which could mean a reduction in federal taxes you owe. The benefit is usually most helpful in the early years of a 30-year fixed mortgage when most of your monthly payments go toward interest rather than principle.
According to the National Association of Realtors, if you itemize deductions on your federal tax return, the U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes (up to $10,000 according to your current tax law), and some of the costs involved in buying a house. However, keep in mind that you should talk to your accountant to see if it's advantageous for you to itemize.
The mortgage interest deduction is one of many tax benefits for homeowners. You can also:
- Mortgage Insurance Cost: If you take less than 20% down payment or take out a loan backed by the Federal Housing Administration, you can generally pay mortgage insurance premiums, and depending on your income, you may be able to deduct your mortgage insurance premiums
- Porepty Taxes: You can deduct up to $10,000 worth of property taxes if you are single or married filing taxes together. The deduction limit drops to $5,000 if you are married but filing separately
4. Build Credit
A study of millennial users found that millennial homeowners had a medical credit score of 692, compared to 601 for non-homeowners. Higher credit scores give homeowners an extra advantage. When mortgage rates drop, homeowners can get lower rates and payments, while renters are stuck with duplicate monthly payments.
High credit scores will also help homeowners avoid trouble with payments as well. If you make consistent on-time mortgage payments, your credit score will improve, which will make it easier to obtain credit in the future.
Homeownership is an excellent way to strengthen your credit history by increasing your credit mix. Since credit mix accounts for 10% of your overall credit score, having various credit types like mortgages, car loans, credit cards, and car show lenders allows you to handle all these different types of credit.
5. Control and Freedom
Whether you're painting your kids' room, adding on to the house, or customizing a game room, owning a home will give you the power and control to modify the house however you want. You do not have to ask for permission to make changes.
Homeowners have the freedom to make the space theirs. This freedman ranges from single to more significant changes and renovations. This ability to make a house a home is one of the most rewarding aspects of homeownership.
Customizing your home allows you to be unique and make it however you want. Any upgrades, renovations, or changes are all on you. Another advantage of owning is control. The only thing you will have to follow is an HOA if you have one, as well as codified laws. There are no more restrictions to how you live in your residence.
On the other hand, when it comes to renting, some rules and restrictions also come with fees, such as if you have pets. Still, if you own a home, you do not have to pay those extra fees because that property is yours, and each year's worth of mortgage payment pays down your balance, bringing you closer to owning your home for free without payments.
6. Source of Income
Owning a home can provide opportunities for income generation for homeowners. One of the most common ways to generate income is to rent out a portion of your property. You may rent out a room, garage, or spare living space within a home. Renting out parts of your property can provide you with a steady income to offset any mortgage payments or other expenses.
Homeowners can also generate income by renting their property out for vacations. With the rise of Airbnb and VRBO, renting out your home and sections of your house for people on vacation is very convenient. These short-stay rentals can be a huge source of income, especially if you live in a popular vacation destination.
7. Financial Stability
Homeownership provides a form of forced savings. When you make a mortgage payment, a portion of it goes towards paying down the loan principal balance. You build equity in your home and increase your net worth without actually putting money away and saving. You are improving your financial stability since you can tap into your home equity later on.
Building equity in your home is a ready-made savings plan. When you sell your home, you can generally exclude up to $250,000 ($500,000 for a married couple) of gain without owning any federal income tax. The IRS can provide more guidance on how to qualify as well.
Overall, home ownership offers stability for you and your family. You no longer have to worry about rent fluctuations or relocation expenses. As your housing cost stabilizes, you can also begin saving money for other things that are important, such as:
- Retirement
- Cars
- Travel
- New renovations
- College funds
- Medical needs
- Emergencies
Sometimes, renting may be the best option for certain people, depending on their lifestyles and preferences. However, most of the time, if you are just renting, you are essentially wasting money because after your rental agreement is over, you have no property to show for all the payments you made.
Methodology
We used information from different sources and our data to create this guide about the benefits of owning your own home. There were various data to use, so we put them together to help you understand the benefits of homeownership.
Above are a few sources we used to gather most of our information about the benefits of owning your own home.
FAQS
What are some benefits of owning your own home?
While owning your own home is a big step that requires some upkeep, there are many advantages to doing so. Aside from being able to call the place yours, you will also be able to build equity, have predictable housing payments, have freedom in personalization, and many other things.
Why is it important to buy our own house?
It is important to buy our own house because a home is an investment. A home is a tangible asset that gives you many different financial benefits, such as building equity, improving your credit score, and receiving tax breaks.
Why is home ownership so important?
Compared to renters, homeownership can improve your quality of life overall. Homeowners report greater self-esteem, stability, and feeling more in control of their lives. There are so many great benefits to calling a home, mentally as well as financially.
The Benefits of Owning Your Own Home - The Bottom Line
Overall, owning a home brings you a sense of pride in ownership. You have a tangible asset you are proud of, and you are able to create a home in that space that reflects that. Buying a house is such a huge accomplishment that it provides you with optional benefits like increased happiness as well as financial advantages such as savings and tax breaks.
There are many different benefits to homeownership. Whether you are looking for financial stability or longing for community, the perks of homeownership are why it is so attractive to Americans.
Once you are ready to buy a home, finding the right financing is key to making sure it all works out. Buying a home is a huge real estate investment, and it takes some time and money to do so. Owning a house and paying a mortgage does come with responsibilities such as maintenance and property taxes, as well as many positive things.
If you are ready to take that next step into finding your dream home and owning it, finding a trustworthy agent to help you with the home-buying process may be helpful. Finding the perfect home is essential because this is a huge purchase you are making. Do not be scared of the market and all that goes into owning a house because there are many advantages to doing so.
If you are considering moving or selling, contact us or visit our website. Our team at Raleigh Realty is here to help you with any home buying or selling needs.
Ryan Fitzgerald
Hi there! Nice to 'meet' you and thanks for visiting our Raleigh Real Estate Blog! My name is Ryan Fitzgerald, and I'm a REALTOR® in Raleigh-Durham, NC, the owner of Raleigh Realty. I work alongside some of the best Realtors in Raleigh. You can find more of my real estate content on Forbes, Wall Street Journal, U.S. News and more. Realtor Magazine named me a top 30 under 30 Realtor in the country (it was a long time ago haha). Any way, that's enough about me. I'd love to learn more about you if you'd like to connect with me on Facebook and Instagram or connect with our team at Raleigh Realty. Looking forward to connecting!
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