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For many years, owning a home has been a major milestone in the American Dream. Is it right for you? While homeownership requires a substantial upfront investment, it has several long-term benefits. Let’s look at some of the advantages of owning a home.

1. More Stable Monthly Payments

When renting, you don’t have any control over how much you pay. Your landlord can decide to raise your rent – sometimes by quite a bit. When you own a home, especially if you have a fixed-rate mortgage, you know what you’ll be paying every month. These stable payments can make it easier to budget and can give you one less thing to worry about.

2. Long-term Savings Opportunities

While there are costs to buying and maintaining a home, having predictable monthly payments can end up being less expensive than dealing with regular rent increases every time you renew your lease. Rent hikes or paying high rent for a new house or apartment can really wreak havoc on your budget.

3. Increase Your Net Worth

Owning a home is a good investment, as its value generally goes up over time. If buy a home today worth $200,000, and it increases in value by 3.9% annually, it would be worth about $242,163 after five years. That’s a benefit you won’t get from renting, where you put money in but never get it back.

4. Build Equity

Simply put, equity is the value you have in an asset. In this case, it would be the difference between the home’s worth and what you owe on the mortgage. You can build home equity in two ways:

• Make your monthly mortgage payments, which reduces the amount you owe.
• Your home may appreciate over time, which increases its value.

Renters don’t get this benefit because you can’t build equity by paying rent.

5. Tap into Equity

Another benefit of building home equity is the ability to tap into your home’s value in various ways:

• Home Equity Loan - This is essentially a second mortgage. You can generally borrow up to around 90% of the equity in your home.
• Home Equity Line of Credit (HELOC) - This provides access to a line of credit, and you can usually borrow approximately up to 90% of your home’s equity.
• Cash-Out Refinance - With this option, you take out a new mortgage for more than you currently owe, use that money to pay off the original loan and cover closing costs, and keep what’s left. You can typically borrow up to 80% equity.

First Harvest has a variety of Home Equity solutions that can help you harvest your home’s borrowing power and achieve more!

6.Tax Breaks

Unlike renters, homeowners enjoy several tax benefits. If you itemize deductions on your federal tax return, you can claim the following:

• Mortgage Interest - You can deduct any mortgage interest you paid, and depending on where you live, you might also get a state mortgage interest deduction.
• Private Mortgage Insurance - You can also deduct money you paid for mortgage insurance premiums.
• Property Taxes - You may deduct money you paid in property tax payments, as well as local and state income taxes and sales taxes.

Down the road, depending on how much profit you make when you sell your home, you might not have to pay capital gains taxes on the earnings. Be sure to consult a tax advisor to learn how buying a home can impact your taxes.

7. Build Credit

Your payment history makes up 35% of your credit score, so on-time monthly mortgage payments can help keep your score in good shape. Paying on time can also help you build credit, which can make it easier to get other types of financing.

8. Freedom to Personalize

One of the biggest benefits of homeownership is getting to make it your own. Unless you live in a community governed by a homeowners association, you can tear down walls, make additions, and decorate your home in almost any way you like. That’s something renters can’t do. Plus, renovating your home may also increase its value, so it’s a win-win situation.

9. Create a Sense of Community

Compared to renters, homeowners usually stay in the same place longer. This helps build neighborhood pride and stability, along with an increased sense of community. Maintaining a desirable neighborhood can also increase the value of your property – an added benefit.

10. Build Your Financial Knowledge

There’s a lot involved in buying a house and handling mortgage payments and ongoing maintenance. Parents can use that knowledge to help their kids learn about finances. A solid financial education is one of the best things a person can have.

Ready to Make a Move?

Before you dive into homeownership, you’ll want to consider the current market, your finances, and your financial goals. If you’re seriously considering buying a home, it’s a smart move to get pre-qualified. This will help you determine how much you can afford and what your monthly mortgage payments might look like. If you have questions or want help planning for a home purchase, our team of seasoned mortgage professionals can help make the homebuying process simple! Connect with us today to explore your options.