Buying a home, especially your first home, can be an excruciatingly difficult task. Somewhere between the mortgage, the credit checks and the moving expenses it’s easy to wonder “Is this really worth it?” It may not seem like at the time but owning a home has huge, sometimes hidden benefits in the long run…and sometimes even in the short term.
Predictability
Unless you are living in a rent controlled building your landlord has the power to raise your rent whenever he see’s fit. One of the often-overlooked benefits of a mortgage is that you lock in a monthly payment for as many as 30 years. The amount is predictable down to the penny and will never go up. This means you can create a reliable budget and have more control over your finances.
Wealth accumulation
Of course this is the number one reason people decide to buy a house.
But owning a home helps you accumulate wealth in other less obvious ways. You will be able to give less money to the government at tax time. The exact laws regarding this are always changing and the amount you save on taxes will depend on your particular situation but it’s safe to say that home ownership is a beneficial factor when it comes to tax time. As time goes by you will see your credit score improve allowing you to pay less for a loan. You may never need a loan but it’s nice to know that if you do your home will allow you to get a better rate.
It also allows you to profit from home improvements; it’s not unusual to see the smart homeowner invest five thousand dollars in home improvements to see an increase of ten thousand dollars in the sale price of his home. This is a recurring theme in the ownership vs renting conversation; expenses that over time accumulate wealth to create a more valuable asset.
[3 easy ways to use the equity in your home]
Freedom
It’s hard to put a price on freedom but owning your own home makes you the master of that home. Want to add a deck, paint the kitchen or add a dog or two to your family? As a homeowner you have the freedom to do all or any of those things. (Although we recommend getting the dogs AFTER you paint the kitchen) There is no rental agreement to consult or landlord to veto your plans.
Privacy
Hand in hand with freedom comes privacy. I grew up in an apartment and not only did I know my neighbors’ business I often witnessed it in real time, through the walls. If you rent an apartment, especially an apartment in a big city, you will be living right beside, above and below a collection of total strangers. If you are lucky they will be respectful and quiet strangers but if not your remedial options are extremely limited. In all fairness this is also the case when you own a home, however as a home owner you are free to add soundproofing, erect a fence or plant a huge grove of trees between you and the people next door.
Learn about the neighborhood BEFORE moving in.
Cheaper
Yes there is the upfront cost of a down payment and closing costs however once these are all accounted for owning a home is cheaper than renting. According to RealtyTrac buying is the more affordable choice in almost 60% of US markets. Realty.com has a handy calculator that can help you figure out the cost of renting vs buying in your neighborhood
Community
The other side of this coin is the fact that as a home owner you will feel more involved and invested in your community.Your taxes will benefit your community and if you wish you can have a voice in how they are spent
Security
With every mortgage payment you are accumulating wealth. A large portion of that money is, in reality, staying in your pocket. In the beginning it may not seem like much but as the years go by and you start to bite into that principal you will see your investment grow. It will be there as an emergency nest egg and as a retirement plan. You can use it as collateral for a loan. For many people their home is their most reliable asset, accumulating value both from the payment of mortgage and from the rise in their home’s value.
In conclusion
Home ownership is not for everyone but the truth of the matter is that we all need a place to live and it is only common sense that paying money to own something is a better long term strategy than paying that same money to rent something.
