It Really Does Pay To Be a Homeowner
Becoming a home owner is the American dream. Owning a home gives the feeling of place and security, however you have more to gain than just a place to put up your feet. Being a home owner helps you financially too. Here are some reasons why it pays to be a home owner.
It Allows You To Build Equity
If you subtract what you owe on your mortgage from the current value of your home, the remaining amount is your equity — the portion of your home’s current value that you own free and clear.
As a homeowner, you build equity with each mortgage payment you make, and as your home increases in value over the years, it creates even more equity for you.
“Think of it as a silent savings account,” said REALTOR® Laura Guild with Keller Williams Realty. “As you pay down your loan and make improvements to your home, you are building that savings account that you can tap into should you need it.”
Homeowners can borrow against their equity to meet a variety of financial needs, such as home improvements, medical expenses, or maybe a child’s education. Sometimes homeowners will even use a home equity loan or a home equity line of credit (HELOC) to pay off high interest debt. Keep in mind, there are pros and cons to tapping into your home equity, so be sure to speak with your professional lender before making any major financial decisions.
It Provides Stable Housing Costs
If you purchase a home with a fixed-rate mortgage, you’ll have the same payment for the term of the loan — typically 30 years — while renters may see their rates increase from year-to-year.
Homeownership also stabilizes home-related expenses like utilities. For instance, as a renter if you’re unhappy with your old, inefficient appliances, your only option is to request an upgrade from your landlord and hope he/she approves it. When you own a home, you have control over these decisions and can make changes that not only improve your home, but also potentially save you a lot of money.
It Comes With Tax Deductions
Another major benefit of owning a home is it can reduce the amount you pay in income taxes each year. Tax payers who itemize can deduct mortgage interest on their taxes.
Also, property taxes are fully deductible, and if you purchased your home after 2006, you’re able to deduct the cost of private mortgage insurance (PMI). However, there are some income requirements for the PMI deduction, and to take advantage of this break you must itemize your tax returns, rather than take the standard deduction. For any tax related questions, consult a tax professionals.
It’s a Great Long-Term Investment
Due to the upfront costs involved in purchasing a home, it’s not typically a great short-term investment. However, for those who plan to stay in their home for at least a few years, the return can be worth it, depending on market conditions.
“In the Lansing market we’ve been fortunate to see tremendous growth year-over-year for at least the last five years,” said Guild. “But, as we all know things can change quickly in real estate. While we can’t predict the future, we do know that, in general, homeownership is a profitable, long-term investment that offers substantial financial benefits.”
In addition to the financial incentives, Guild says the emotional benefits may be even more significant.
“There really is a sense of pride that homeownership invokes,” she said. “Not only are you financially investing in your future, but owning a home can provide stability and security, and allow you to put down roots and strengthen ties within your community.’
This is just a sampling of the many benefits of homeownership. To find out more information, reach out to a local REALTOR® and lender who can answer all your questions and help you decide if buying a home is the right financial move for you. You can find a list of experienced area professionals by visiting the Greater Lansing Association of REALTORS® website at www.lansing-realestate.com.
This article originally appeared on Lansing State Journal: It Really Does Pay To Be a Homeowner
