For many people in the United States, owning a home is still a quintessential part of the American Dream. Taking the jump into homeownership can be an intimidating process, especially for first-time buyers. Despite this, more than 2.5 million people became first-time homeowners in 2010, even in the recession facing America. The number of homeowners is continuing to grow each year. Here are some of the greatest benefits of homeownership.
- Increase in Freedom, Security and Stability — As a renter, you can be subject to inspections by a landlord. Being able to settle into a home of your own allows you the freedom to alter the home as you please or increase the security without risking an issue with a landlord. There is the possibility with renting to move between different units, which decreases stability, especially for families. By owning a home, you can expect to be there for many years to come.
- Increase in Ability to Make Home Improvements — Homeowners can more easily remodel their homes, making both cosmetic and functional home improvements, which would be difficult as a renter, Homeowners can make improvements that will serve as valuable investments for the future. Investing in remodels and upgrades can significantly pay off in the long run, whereas renters see no capital gains for improvements they make.
- Increase in Tax Advantages — An immediate monetary benefit of homeownership is the ability to deduct interest payments made on a home loan on property taxes. In the early years of home ownership, most monthly payments go towards interest payments, so first-time owners reap rewards quickly.
- Increase in Home Equity — Being a homeowner increases your net worth because of home equity from selling your home in years down the line. In the future, homeowners can use home equity they have built to purchase homes for home improvements, which will likely increase a home’s net worth, or even get cash for emergencies.
- Increase in Long-Term Wealth — Despite the recent uncertainty in the housing market, in the long run, investing in a home is a valuable financial decision leading to significant increase in home value in the future. The Federal Reserve Board has found the average homeowner ultimately develops a net worth of $184,000 while the average renter’s net worth is only $4,000. Ultimately, homeowners live essentailly “rent-free” once they have paid off their mortgage and are responsible only for taxes.
Investing in your future through homeownership opens many doors. Building for a financially stable future, as well as one filled with memories, shows the true advantages of owning a home.