Buying a Home: 7 Hidden Benefits of Homeownership

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More Than Just a Roof Over Your Head: The Secret Benefits of Homeownership

There are obvious advantages to to buy a house.

And most importantly, you get a place to live.

But there are a number of other benefits that are slightly or considerably less apparent, and they are not just about money.

There are seven “hidden” advantages of owning a home that most renters are not yet aware of.

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1. Buying a home is usually a good investment

The US Census Bureau has a table of historical values ​​of the house on its website which begins in 1940 and ends in 2000. It uses constant 2000 dollars for all figures to account for inflation.

The Bureau reports that house prices rose the fastest (43 percent) during the 1970s and the slowest (8.2 percent) in the 1980s.

The report shows that the median home price in 1940, adjusted for inflation, was $ 30,600. The same figure in 2000 was $ 119,600.

While some would say that investing in stocks is more profitable, there are other considerations.

Someone who invested $ 30,600 (the median real estate price at the time) in the stock market in 1940 could be a millionaire today in 2000 – assuming they survived a few crashes over the years. years.

But how many people in 1940 had $ 30,600 to invest?

And how much would they have paid in rent over those six decades?

More recently, the CoreLogic Home Price Index showed a national year-over-year change of + 6.0% in August 2016. Not too bad.

2. Homeownership becomes easier over time

The first time around, buying a home often involves financial difficulties. You have to make a down payment and face unexpected homeownership costs. You may feel the pinch for a few years.

But little by little, things are getting easier for two reasons.

First, mortgage payments will not increase with a fixed mortgage. And as you build your career, those payouts get bigger. affordable. Meanwhile, tenants are getting rent increases to go along with their higher wages.

Plus, paying off your mortgage over time means you’re building equity every month. An asset that you can sell or borrow in the future.

3. Tax breaks when you need it most

Mortgage interest and certain closing costs are generally tax deductible (ask a pro about your personal situation). You get most of this relief during the first few years when you pay the bulk of your mortgage interest.

Mortgage insurance and property taxes may also be deductible.

This applies to your federal taxes, and many states allow similar deductions.

Best of all, when you sell your property you can make up to $ 250,000 in profit, tax exempt ($ 500,000 for couples filing jointly).

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4. Tailor your tastes, not your owner’s

Want a menagerie of pets? Does the taste in the decor go up to frightening amounts of gold leaf?

Do you like walls painted in violent purple tones? Or spend your weekends dismantling engines or working with wood in your workshop?

No problem. There is no owner to tell you that these are not allowed. (But it may be a good idea to please future buyers by temporarily adopting more common tastes when you to sell.)

5. Improve your credit score

Buying a home can improve your credit score, especially if you don’t have a long credit history or many installment accounts. This is because your mortgage, provided it is well managed, helps you increase your credit score in three ways:

  • Regular payments show you’re a responsible borrower
  • Credit bureaus often give more weight to mortgage payment history than revolving accounts like credit cards
  • Few landlords report rent payments, so your mortgage gives you an extra count on your credit report

6. Forced savings: accumulation of wealth

You can think of the equity that you build up in your home as you make payments each month as a type of savings. Unlike renters, you have no choice but to increase your equity.

The Harvard University Joint Center for Housing Studies confirms it. In fact, one of their studies showed that homeowners acquire 46 times as much net wealth as there are tenants.

For every $ 1,000 accumulated by non-homeowners, those who own a home earn $ 46,000.

Almost 60 percent of homeowners’ wealth is in the form of home equity.

Of course, tenants are also free to save. However, for most people who don’t have a portfolio of stocks, mutual funds, and other investments, homeownership is the most reliable way to build wealth.

7. You’ll make better apple pies

Okay, that’s not true: you probably won’t make better apple pies. But the National Association of Realtors (NAR) website has links to studies and reports that make some pretty extraordinary claims about the benefits of homeownership, including:

  • Better mental and physical health
  • Improved community engagement
  • Higher education levels for children of owners

Of course, you must choose to get involved in your neighborhood and support your children’s efforts.

Only you can decide the validity of this seventh homeownership benefit. But you might find the other six quite convincing.

What are the mortgage rates today?

If you are considering buying a home, today’s low mortgage rates can help you take the plunge.

Check the rates today to get started and see what you can afford.

Check your new rate (Sep 18, 2021)

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