There are many reasons why lender are encouraging consumers to purchase a home instead of continuing to rent. In this article, Sun West Mortgage explains several benefits of owning a home.
8 Benefits to owning a home:
Increase Equity
It is a great feeling to realize you are not losing money, and to know that your money is actually working for you! As you are making payments on a mortgage, you are building equity. Your home is the portion of the property that you actually own through your payments. As you continue to live in your home, and make your mortgage payments, your equity in your home increases. Eventually, you can even use your home equity to purchase another property or investment.
Appreciation of Home Value
Although housing prices can fluctuate, in general, housing prices tend to increase over an extended period of time. This allows you to get more money back than you paid for your home, when it’s time to sell. That’s a great deal, when you consider the alternative, renting and having nothing to show for it!
According o Case-Schiller, “U.S. home prices continue to surge according to the latest S&P CoreLogic/Case-Shiller Indices, which found last June prices on an upward trend (at 6.2 percent year-over-year).” United States home values have increased 8.0% in 2017 and Zillow predicts values to rise 6.8% further.
Stability
Many homeowners believe that you can provide greater stability, as well as a stronger community network, for your family by staying in one location for a number of years. This network may prove beneficial in both the business world and your personal life.
Financial Credibility
Owning your own home will help you establish financial credibility with banking institutions. If you make your payments on-time, you can in turn increase your credit score. You will have the added benefit of strong credit history, when you finance in the future.
Forced Savings Program
If you have trouble saving, a mortgage payment could function as a secure savings program. Think of it like a large bank account, where you get to live. You won’t owe on it forever, but if you stop making payments, the lender repossesses the home. The threat of losing a home is often enough to motivate those who typically have trouble with financial responsibility to pay on time.
Independence
When you own a home, you can breathe easy. Owning a home takes reporting to a landlord out of the equation. Homeowners are fre from regular inspections and rent increases. Limitations on pets and remodeling will no longer apply to you. You also have the freedom to decorate and renovate however you see fit.
Increased Net Worth
According to the Federal Reserve, the average net worth of homeowners is much higher than renters, even if they are making the same annual income. For example, for those making an average income of 30-50k, the average net worth of a homeowner is $126,500, while the average net worth of a renter is $10,600.
Tax Benefits
According to Tax Policy Center, “The main benefit of owning a home, is that the imputed rental income homeowners receive is not taxed. Although that income is not taxed, homeowners still may deduct mortgage interest and property tax payments, as well as certain other expenses from their federal taxable income. Additionally, homeowners may exclude, up to a limit, the capital gains they realize from the sale of a home.” If you are thinking about purchasing a home as a rental property or as an investment, you may benefit from these tax laws.
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