Posted On: September 4th, 2017 7:08PM
For many of us homeownership is an essential part of adulthood; like earning our own money, investing it and putting down roots. Just like our parents and grandparents did before us. As a REALTOR®, I have been asked on occasion what the benefits of owning a home are.
If you are currently renting, know that while you might not have maintenance or mortgage repayments, the money you pay monthly toward rent has no ROI (Return of Investment). What you are paying in rent could be going toward owning a home and accruing equity.
As buying a home is one of the biggest financial commitments most of us will ever make, let’s consider these five benefits of homeownership:
1. Investing in our future. Most other large purchases, a car for example, will devaluate over time and even though the property market has had a few lows over the years; the national median prices of homes has gone up. Monthly payment against a mortgage reduces part of the capital of the loan so that the debt decreases as the price of the property continues to rise, allowing you to collect equity for further investment.
2. Tax benefits. The interest paid into a mortgage is tax deductible, especially in the first years when a larger amount of the monthly repayment is toward interest. Private mortgage insurance and purchases related to the home are also tax deductible.
3. No increases. With a fixed-rate mortgage you will be paying the same amount for its duration. This will never be the case when renting because of likely yearly escalations. The extra money in your budget allows for other investments.
4. Home improvements. Changes can be made to your own home according to your needs and additions and improvements increase its value. Due to equity collected over the years the financing for these alterations will be easier. When renting, most people have to move as family needs change which can be financially and emotionally draining.
5. Benefit Socially. Studies have shown that people who don’t move around a lot have less emotional stress and are more involved with their communities, establish lifelong friendships and don’t need to disrupt the schooling of the children.
Yes, I am biased as a REALTOR®, but I always counsel my clients based on their particular needs. Let’s talk soon if you are thinking about a purchase, especially if it’s your first time buying.