The Benefits of Homeownership
June is National Homeownership Month, a way to increase awareness of the benefits of homeownership. Today, 65.3% of Americans are able to call their homes their own, a rate that has risen to its highest point in 8 years. So how do you know if homeownership is right for you?
From financial to non-financial, and even how owning a home helps your local economy, here are some of the advantages of owning your own home.
PERSONAL FINANCIAL BENEFITS
Investing Your Money
Think of owning a home as an investment, not just a purchase. Instead of filling the pockets of a landlord or rental company, you are investing your money into your future.
All investments carry a degree of risk, and the housing market will have its ups and downs, but when you buy and maintain a home and property over many years, the rate of inflation alone will mean the value will increase. There are no guarantees in life, but owning a home is one of the safest investments around.
Building equity is the most important financial benefit of homeownership. Equity, or personal interest in the property, increases as the mortgage is reduced. Every time you pay your mortgage, your equity increases, but it take patience and time to see it grow.
Equity does not mean profit. If you are looking for a return on your investment beyond owning your own home, profit comes over time as you pay down on the principal and allow your home’s value to increase. If you buy in the right neighborhood, choose to sell in the right economic climate, and maintain the home in a way that appeals to buyers, the more profit you are likely to see.
Building Credit History
Making your monthly payments on time for such a significant loan amount as a mortgage will build your credit score substantially. Maintaining a home loan looks very good to creditors and will qualify you for several perks, like better terms and reduced rates, for future loans.
Paying a Fixed Rate
Renters are often shocked by annual rate increases and have no way of making long term budget plans with confidence. A fixed mortgage rate makes it possible to maintain the same housing payment for decades, regardless of cost-of-living increases. Paying the same amount every month allows for simpler retirement planning and a wonderful reassurance that one day, no monthly payments will be required at all.
Pride of Ownership
It feels wonderful to have a place that is all your own, especially since you can make it just how you like it. This level of satisfaction and sense of accomplishment can enhance your happiness and sense of well-being, benefiting those around you as well.
Property Maintenance and Improvements
Your home is your stake in your community and taking care of it or improving it is a way of increasing value to your neighborhood.
Owning a home creates a sense of community, stability, and increases civic engagement.
Owning your own home means you can finally get that cat, dog, hamster, snake, iguana, ferret, or other pet you’ve been longing to adopt. Owning a pet can have many health benefits like increased exercise and time spent outside, and decreased loneliness.
Owning a home helps grow the GDP. Every 10% increase in housing market wealth results in almost $150 million additional consumer spending (.8% of GDP) as well as billions in increased federal tax revenue.
Housing-related expenses have accounted for more than one-sixth of the country’s economic activity over the past three decades. Add in that many homeowners acquire pets once they purchase a home, you can add in the nearly $1 billion Americans spend on their pets annually.
New Business Opportunities
Homeowners can access credit to start or expand a business, generating new jobs, more readily than renters by using their home as collateral for small business loans.
Sources: BMi, SiborBlog