While renting a home is more flexible, buying a home has the bigger potential long-term payoff. From tax advantages to a higher quality of life, the benefits of home ownership can provide you both financial and emotional perks over time. Comparing the costs of buying are more complicated than for renting, so it’s important to look beyond just the numbers when searching for your next move.
The Benefits of Home Ownership
You Put Down Your Roots
When planning to start a family, it’s in a lot of people’s plans to feel established in a certain neighborhood. Although it’s better to rent if you won’t be staying long or if your plans are uncertain, it’s hard to feel established or take the necessary steps to put down your roots if you are switching neighborhoods every year. By owning a home, you’re able to feel settled into your neighborhood as your plan is to stay in the home for multiple years. Putting down roots can mean anything from getting to know your neighbors, to joining the local PTA, to being active on the neighborhood social media page.
Built-In Savings Account
One of the largest benefits of home ownership is the built-in savings account. Month by month you pay down the mortgage and increase your equity. Over a lifetime, home ownership helps you build wealth. When signing a rental lease, you are paying a monthly sum to your landlord, and you’ll never see that money again. Simply, when you own a home, you are enrolling in a forced savings plan. Additionally, as you build equity over time you are able to use that equity toward an additional investment of your choice. You can use it toward refinancing your current home, putting a down payment on a second home, home renovations, paying down debt, or using it to fund a boat or RV. Wouldn’t it be nice to have access to these funds when you want to pursue an additional project?
The significant tax benefits of home ownership may be enough of a reason to invest. Homeowners can deduct mortgage interest on their federal income taxes. This equates to a large deduction because interest payments are often the largest part of a mortgage payment in the early years of home ownership. Property taxes and closing fees may be tax deductible as well.
The freedom to personalize your space is one of the top benefits of owning a home. Being able to paint your kitchen any color you want, add outdoor living to your back yard, and change fixtures in your home is a huge plus of owning a home. Gone are the days of having to check with your landlord about any personalization change in your home! Personalizing your space can make your home feel comfortable and inviting which is a large interest for home owners.
Stabilizes Your Budget
As anyone who has rented a home knows, especially in the city, rent hikes are the norm and often out of your control. When you sign a lease, your landlord is able to raise the rent by a certain percentage at any time. When you buy a home and take out a fixed 15- or 30-year mortgage, you can expect your monthly mortgage payments to be the exact same every month for the life of the loan. This can really help home owner’s stabilize their budget.
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