There's good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.
Despite these facts, homeownership rates have taken a hits since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. One statistic shows that the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965.
The top benefits of homeownership haven't changed, even in the face of a down economy.
Here are the top five:
1. Savings: You'll find that long-term homeownership is still a way to get big savings.
2. Tax Breaks: Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.
3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but if the home appreciated in value, it may be worth $200,000. This means you have $100,000 worth of equity you've built up over time.
4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is that same now as it will be in 30 years!
5. Security: When you own, it's yours. You can paint, improve, and decorate. No one can ask you to move out. The trees and flowers are yours to enjoy -- for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.
Should you rent or buy? Talk to your CPA or real estate professional on what your true costs of homeownership are. They can run an analysis taking into account everything from yearly costs to selling costs and broker fees.
Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you'll have a real asset. That brings real stability.
Home affordability is at near record highs. Now is a great time to run the numbers and see if buying makes good financial sense. If it does, then you're in store for a wealth of benefits that only homeowners can experience.
Sincerely,
Deepak Verma
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