Benefits of Homeownership
Recently, Freddie Mac reported on the benefits of homeownership, but also by pointing out why renting isn’t always the best option. According to their report, here are the five benefits that “should be at the top of everyone’s list.”
- Homeownership can help you build equity over time.
- Your monthly payments will remain stable.
- You may have some tax benefits.
- You can take pride in ownership.
- Homeownership improves your community.
But, what do these mean exactly? Let’s expand on each of Freddie Mac’s points:
Homeownership can help you build equity over time:
But, why is this important? Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. However, their latest survey, which includes data from 2010-2013, reports that a homeowner net worth is 36 times greater than that of a renter. Also, in a Forbes article, the National Association of Realtor’s (NAR) Chief Economist Lawrence Yun reported that the net worth gap is 45 times greater.
Your monthly payments will remain stable:
When you purchase a home with a fixed rate mortgage, the majority of the payment remains constant. But, rents continue to skyrocket. Your housing expense is much more stable if you own instead of rent. Plus, you don’t have to worry about rental leases expiring before you’re ready to move.
You may have some tax benefits:
According to the Tax Policy Center Briefing Book, there are several tax advantages to homeownership. Here are four items from the Briefing Book: Mortgage Interest Deduction, Property Tax Deduction, Imputed Rent Profits from Home Sale.
You can take pride in ownership:
Most surveys show that a major factor in purchasing a home is the freedom you have and you can design the home the way you want to. Also, you can choose paint colors to yard accessories, but you don’t need a landlord’s permission to make the house feel like a home.
Homeownership improves your community:
The National Association of Realtors recently released a study titled Social Benefits of Homeownership and Stable Housing. The study explained: Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors. Plus, owning a home means owning part of a neighborhood. A homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, can produce interactions with neighbors.
Bottom Line
There are many benefits to homeownership, and that’s why it is still a critical piece of the American Dream. It can be important for you and your family to consider homeownership.
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