Unexpected Benefits of a Being a Homeowner
Homeownership provides a variety of benefits – some of which are obvious, and others that are not so immediate nor tangible.
Nearly 65 percent of households in the United States own their own homes. This rate of homeownership has stayed fairly stable throughout the years since 1960. Among the milestones of life, becoming a homeowner is one of the top accomplishments many Americans look forward to and can have many unexpected benefits.
More Than a Roof Over Your Head
True, owning a home means you have shelter, but you can have that with renting, also. Homeownership provides a variety of benefits – some of which are obvious, like shelter from the elements, and others that are not so immediate nor tangible.
Homeownership provides many intangible benefits that can enhance your quality of life. Reaching this milestone represents a form of wealth; it is a source of pride and provides a modicum of stability. But in recent years, the benefits of homeownership have come into question. Is it really worth the time and effort to become a homeowner?
Financial Benefits to Owning a Home
It is no surprise that saving money is not easy for most Americans. Homeownership can work as an automatic savings plan for first-time buyers. Your monthly mortgage payments force you into saving, over time. As you pay down the loan principal, your investment in your home increases.
The argument over whether or not it is better to rent or own a home is ongoing. It comes down to a person’s desire for ownership over borrowing. Renters can expect an increase of about 3.3 percent on their rent each year. While it may seem like a small amount, over the years, it adds up. A monthly fixed mortgage payment can be equal to or less than a monthly rent payment. The mortgage payment is not going to increase as time goes on, whereas the rent will. The mortgage payment will allow you to protect yourself against inflation and, with good management, will also allow you to add to your savings account.
While rent increases are about 3.3 percent annually, homes have been appreciating at a rate of about 3.6 percent each year. This value appreciation can develop into a nice safety net for homeowners, where renters will just keep paying increasing amounts of rent.
It is also an established fact that many people will choose homeownership over renting for the tax break. Each year, the government establishes some type of tax benefits for homeowners. These breaks are an enticement for first-time buyers. Your CPA can explain which tax breaks will apply to your situation.
Equity and Income Growth
Investing in your future is a wise move that everyone should be looking into. Homeowners have more net worth than renters. In fact, a homeowner can have a total net worth 47.5 times that of a person who rents. This translates into more financial freedom and better opportunities for investing.
Equity in your home is another big financial gain that comes with homeownership. Every payment you make helps build the equity in your home. As the years pass, the equity in your home grows. Over time, this equity affords you the ability to finance some of your fondest dreams: college education for the kids, a big wedding, a dream vacation or startup costs for a new business.
Non-Tangible Benefits of Homeownership
Even though there are many reasons why it makes financial sense to buy a home, there are other, less tangible, benefits of being a homeowner that you may find equally as important.
Mental and Physical Health
Being king or queen of your castle does wonders to boost one’s self-confidence and self-esteem. In fact, homeownership has been shown to improve psychological health as well as physical health. According to studies, homeowners are generally in better health than their renting counterparts. They have a vested interest in keeping up their property, which can have a ripple effect on health.
Better health of homeowners can be attributed to many things, including the exercise needed to keep the grounds and home in good shape. Homeowners tend to be happier and more self-confident. Taking pride in one’s home adds to self-esteem and self-confidence. The endorphins released during the physical exercise needed for things such as mowing the lawn or doing housekeeping also help improve mood.
There are social benefits to being a homeowner as well. Putting down your roots in the neighborhood of your choice provides a sense of permanency. So many things can upend your long-term goals when you are a renter, but when you are a homeowner, you are the captain of your own ship. Your family becomes part of the fabric of the neighborhood and that stability is important.
You and your children can form long-lasting bonds with neighbors. Research shows benefits for kids who are growing up in a home. There is a sense of safety and security that is often elusive in renting situations. Parents become involved in the community because homeownership automatically makes you a stakeholder. You care about what happens.
Another benefit that has been proven is the educational benefits kids reap when their parents are homeowners. Children coming from families that own homes are more likely to graduate from high school. They also have higher test scores and lower rates of behavioral problems. In addition to providing stability for your kids, you also model financial responsibility for them. Homeownership gives your children a solid base for their financial education.
These are just a few of the tangible and non-tangible benefits of homeownership. Marking off the kids’ heights on the kitchen door jamb as they grow is yet another tangible and at the same time intangible benefit of homeownership. Over the years, each mark holds cherished memories, and, for some families, those marks will last a lifetime.
At Galaxy Lending Group, we would be happy to help you finance your dream home. Contact us for more information. Let us tailor a mortgage loan that will help you discover the benefits of homeownership.