10 Homeownership Benefits You May Not Have Considered
Deciding where to live is one of the most important financial decisions a person will make in their life. When deciding whether to rent or buy, you should weigh the pros and cons of each option and consider whether you can fulfill the commitment. To help you in your decision-making process, here are the top 10 benefits to homeownership, which can help you make a choice that is right for your needs and budget.
1. You Have the Ability to Manage Your Monthly Housing Cost
Real estate prices fluctuate frequently, following market trends and economic movements. This movement, although it decreases from time to time, is usually upward. If you rent a property, it is very likely that your landlord will increase your rent at any time. On the other hand, if you take out a mortgage, your monthly payment will stay the same until the end of the loan term. In this way, you will be able to plan your finances with a greater degree of comfort. Buying a property and getting a mortgage can be time-consuming, but it pays off in the long run.
2. You’ll Build Home Equity with Each Monthly Payment
Once you get a mortgage to buy a condo, townhome, single-family home, or luxury real estate, you will start making monthly payments to pay off the loan. The first few payments go to pay the interest, but as you move forward, you’ll start paying the loan value. You also have the portion of the house value that you paid upfront. The sum that you have already paid and what you contribute to your home equity, which increases along with the property’s price. Home equity is an asset, one of the top homeownership benefits, that may not be as liquid as others, but it’s still an asset of financial value.
3. A Profitable Investment
If you rent a property you have no control over how much your landlord may increase the rent every lease renewal. However, if you buy a property, you will be building your own equity. This is one of the many financial benefits of homeownership. Even when prices decrease and increase most homeowners are still in a better position than if they were renting and building equity and profits for their landlord.
4. A Source of Ready Cash
Although home equity is not as liquid as cash, you can borrow against it when you need extra funds. It can be used as collateral for a fixed-rate, fixed-term home equity loan. This new loan can be used to pay for remodeling, college tuition, or other major expenses, such as buying a car.
It can also be utilized for taking out a HELOC (home equity line of credit), either adjustable or fixed rate. This HELOC can be used to borrow up to a certain amount, as long as you pay off the balance. Finally, you can apply for a cash-out refinance, where you get a mortgage larger than your existing debt. With this new loan, you can pay off your previous mortgage and use the rest of the money as you wish. While this is one of the many homeownership benefits, it’s not for everyone.Wondering if owning a home is right for you? If so here are the top 10 homeownership benefits you may not know about and should consider.
5. Owning a Home Offers Tax Advantages
Owning a home allows you to take advantage of several tax deductions, depending on your particular profile. Perhaps, the most compelling is the mortgage interest deduction. The amount you can deduct depends on whether you file your taxes as a single person or as a married couple.
Also, the proceeds of the deduction must be invested in building or improving your home. If you own a small business and set up your office in your home, you can also claim a deduction. It can be applied to the areas of your home that you use for your business needs. This is one of the many homeownership benefits.
6. Helps Build Your Credit Score
Your credit score will improve if you get a mortgage and pay consistently on-time month after month without missing a payment. In this way, you can build a solid credit reputation that shows you are responsible with your payments. If you want to apply for bank loans in the future, having a clean record is very beneficial.
On the other hand, if you rent a property and pay your landlord consistently, it won’t show. But if you’re renting, and you miss a payment, it can have a negative impact. In this case, your landlord may report your payment history to credit bureaus and if you’re evicted it can make finding a rental in the future difficult.
7. Freedom to Make Changes
When you rent a house, it is not really yours, you are just living in someone else’s property. If you want to redecorate the place, such as painting or hanging window treatments, you must ask permission. Your landlord can object to any changes you want to make, and their decision is final.
By contrast, if you own your own home, you can do whatever you want with it. If you don’t like the color of the walls, you can repaint them. If you don’t like the kitchen layout you can knock down some walls and change it. Besides, when the mortgage is over, you can be sure that the house is all yours. This is one of the ultimate homeownership benefits, owning a home outright!
8. Enjoy More Privacy
A house is separated from other properties. That means your neighbors won’t be as close (or as likely) to complain about the noise in your house. Renting an apartment can mean sharing walls and having neighbors upstairs and downstairs. The people who live next to you might get annoyed if you have kids playing too loudly or jumping around. Owning your own property eliminates all of these disadvantages of renting. You are free to do what you want and have whoever you want to come over.
9. Renting over Time Is More Expensive
Yes, the cost of renting may seem lower than the cost of buying a home. Getting a mortgage will give you big numbers, which can be scary at first. But as we said, the cost of your home will increase over time. Plus, as you pay your monthly payments, you will be paying down your debt and eventually owning your home. While the monthly cost of renting may be lower, over time, you are spending more money and getting nothing back. Plus, it’s expensive to move from each rental.
10. More Freedom and Control
All the benefits listed here point to one end: buying a property gives you more freedom and control. If you own your home, you can control what happens in it. If you want to renovate your home you can. If you want to earn extra income by renting out one of your rooms, you can do that too without asking anyone’s permission. Without legal permission from your landlord, none of this is possible if you rent. Keep in mind that the house is not yours, so you will always be bound by someone else’s decisions. This is one of the biggest homeownership benefits.
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About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “10 Homeownership Benefits You May Not Have Considered”
Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.