Why You Should Invest In Homeownership.
Purchasing a Home can be a big and sometimes daunting task because oftentimes we associate the listed or purchase price of a home as the amount at risk of losing…
When in reality, that number is the amount of increased equity that is potentially yours!
The ability to increase your equity through Homeownership can be an important aspect of your earning potential and one of the most stable investments you can make for your future. If you are nervous about taking that next step into homeownership, or hesitant to believe that it can actually benefit you, then this blog post is for you!
Truly, there are so, so many advantages to owning your own home! But, below we will discuss and expand on the financial, emotional, and practical benefits of homeownership:
Specifically:
The Ability to Build Wealth Through Homeownership
What Tax Benefits That Can Come From Homeownership
The Importance of Stability and Security
The Opportunity To Build Equity
Why Prioritize the Long-Term Perspective
Debunking Common Misconceptions of Homeownership
The Ability to Build Wealth Through Homeownership
To start off, let’s take into account the amount of money that you may spend each year on renting a space to live (whether that be an apartment, single-family home, or shared space). Now, imagine if all of those monthly payments were kept in an account with your name on it… You’d probably be much happier to pay those rent checks. Now, while renting a space to live can be the absolute best option for many people in a period of change, travel, or downsizing The fact of the matter is that you do not end up savings.
Once you do own a home, you can take control of increasing its assessed value. And, even if you never put a dollar into the home, the chance may have it that property value rates will continue to rise - as they historically tend to do. “Between 1940 and 2000, the average home value quadrupled even when adjusted for inflation.” [credit karma]
All of this being said, Homeownership builds wealth not only through Equity down the line, but also can serve as a form of forced savings.
What Tax Benefits Can Come From Homeownership
Taxes can be a topic easily overlooked and ignored… until, of course, April rolls around. But, it is incredibly important to take note of the multiple ways that tax breaks and correctly claiming your assets can benefit you all year round.
You can actually deduct the interest that you pay on your loan for up to $750,000 of your mortgage debt (half of that if you are married and filing separately)! All you need is the form 1098 from your mortgage lender or company. There are a few slight caveats involved… such as when filing a home that is a rental or second home, you must live in the home for 10% of the time or 14 days and if it is not the only home you own, interest can only be deducted on one.
The Importance of Stability and Security
Furthermore, homeownership can provide an exceptional amount of both stability and security on top of accomplishing such an important milestone in many people’s lives. By building your equity and net worth, finances can take a back seat when you consider your budgeting as it is a clear number that only changes if you want it to!
It can make all the difference when making additions or providing the necessary product to a home that you own, because you are doing the work that your future self will benefit from. And knowing that your personal belonging, and the spaces you call home are yours and you don’t have the overviewing management of a landlord or property owner.
All in all, research shows that homeowner’s median income is almost double than that of the average renter in the United States this year.
The Opportunity To Build Equity
What is equity? Equity is basically the value or worth of the assets that you own. It is accounting for the money that you would earn if the asset were sold or turned to cash. So, if you own a home that has an assed value of $200,000 and still owe $50,000 for your mortgage payment; then the equity you own would be $150,000. Having more equity in your name can help rise the chances of qualifying for lower interest rates, better premiums in insurance, or other benefits in future purchases or applications.
In the world of networking, Equity can be purchased in the other assets that you add to your home and your belongings. A home is kind of like the base hub for your wealth that you get to use, see and enjoy during the length of you home life.You can also increase your equity by increasing the value of your home with physical add-on, updates or upkeep that many homeowners say they will do, but fail to plan it and act on that plan.
Why Prioritize the Long-Term Perspective
Purchasing a home, or property, is a purchase that is more likely than not intended for a long-term enjoyment or purpose. On average, the length of homeownership has increased roughly three years in the past decade. But, moving and re-locating is inevitable for many families or individuals with job or familial needs that might arise. Regardless of upcoming potential changes, it is important to consider all aspects and walk along side a professional when buying a home so that overwhelm can be minimized and so that your investment can attain its full potential!
Considering the long term effects of any purchase is important, but when buying a home, it is important to take note of all that may be involved down the road. Preparation for the future of your home may include consistent property upkeep, additional costs and maintenance or even plans for investments or featured additions that might increase your value and in-turn increase your return.
Debunking Common Misconceptions of Homeownership
First, it is a common belief that renting is cheaper than buying a home. While it is true that renting can have lower initial costs, homeownership is an asset that can appreciate over time, unlike renting.
And, while a good credit score is essential for securing a favorable mortgage rate, you don't need a perfect score to buy a home. Although a lower credit score may result in a higher interest rate, with time and responsible financial management, you can improve your credit and refinance to a better rate in the future.
Additionally, buying a home doesn't mean you're forever tied to one location. In fact, homeowners have the freedom to sell their property and move whenever they choose. The real estate market is dynamic, and with the right timing, you can potentially profit from selling or renting out your home whenever the opportunity arises.
In conclusion, homeownership is a significant achievement with numerous advantages, but it's crucial to approach it with accurate information. Discussing the advantages and debunking such common misconceptions can help you make informed decisions and understand that the path to homeownership is more accessible and flexible than you might have thought. Don't let these myths or lack of information deter you from pursuing your dream of owning a home. Homeownership has built wealth for many individuals and can provide stability along with an opportunity to receive a profitable return when invested methodically.