If you've been renting a home or condominium, it may seem easier and more cost-effective to continue as a renter for the foreseeable future. While the real estate market has seen some downturns in recent history, there are still very compelling emotional and financial reasons to own your home.
For decades, part of the American dream included purchasing a home. It's the outward sign of success and provides an opportunity to shape your living environment and community in ways that are unavailable or difficult for renters. Some studies even suggest that homeowners report greater life satisfaction and exhibit better psychological health than non-homeowners.
Owning a home generally offers greater stability and security. Homeowners don't have to check with a landlord to make improvements or change paint colors or flooring. That control seems to have an effect on self-esteem and the homeowner's sense of security. Homeowners live in their homes for longer periods of time than do renters, creating a stability for their families and their communities.
If living in an environmentally conscious way is important to you, owning your home gives you the opportunity to shape your living environment to lessen your "carbon footprint" and save a little money. Solar power, reclaimed building materials and rainwater collection tubs are just a few of the environmentally friendly improvements homeowners can make without interference from a landlord. Tax incentive and monthly cost savings on the solar power are side benefits, as well.
In the short-term, homeownership continues to make sound financial sense. Homeowners receive a variety of tax incentives in the form of mortgage interest tax deductions, property tax deductions and capital gains exclusions for those living in their homes for two of the past five years. All in all, those tax deductions can add up to significant annual cost savings. The capital gains exclusion is a benefit realized once the home is sold.
Purchasing a home should be viewed, at least in part, as an investment. Sometimes investments experience temporary losses, but the long-term outlook for real estate investment is still strong. Even if the current market is lower than you wish, as you continue to make house payments you are creating long-term equity that can be used to help finance other life events such as college educations, weddings, travel and vacation property.
Owning a home also strengthens your credit rating as you make consistent, on-time mortgage payments. In the long run, that improved credit rating can help you obtain financing for a variety of life's needs and luxuries.
Downturns in the market in recent history shouldn't sour you on owning a home. There are still abundant reasons owning a home is a wise financial and emotional decision.
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