As a renter, you’re paying rent every month but you never have any ownership in the home or apartment that you’re renting. On top of that, your rent can increase on you as well as the landlord having the option to not renew your lease, forcing you to move. By becoming a homeowner you can remove these risks as well as take advantage of the many benefits of owning a home of your own. A few major benefits of becoming a homeowner are as follows:
- Pride of homeownership – having a place that you own to call home also known as the American dream. As mentioned above, you no longer have to worry about your rent increasing on you or whether your landlord will renew your lease. Once you own a home, your mortgage payments are fixed for the next 30 years, assuming you get the most common 30 year mortgage plan.
- Tax deductions – there are a couple different ways you can reduce your personal income when you own a home. The first one is mortgage interest deduction. Assuming that you used a loan to purchase a home you’re able deduct the mortgage interest that you pay on your mortgage. The second allowable tax deduction is property tax. As a homeowner you can deduct your annual property tax bill. Lastly, as a homeowner there may be available tax deductions available out there if you make energy saving improvements to your home such as: higher efficiency furnace, water heater, or windows. These programs have limited availability, so you’ll have to check what programs are currently available if any.
- Creation of wealth – becoming a homeowner has been proven to be one of the best ways to create wealth for you and your family. This is possible through ownership of equity in a home when you become a homeowner. Equity is the difference between the current market value of your home and your current mortgage balance. Note that real estate isn’t always guaranteed to go up in value, however, historically real estate values have risen over the years. Also, depending on your city and it’s path of progress home values can increase tremendously in a short amount of time, think places like Silicon Valley or Denver where home prices have doubled or more as major companies moved in or the city becomes a very desirable place for people to move to driving up the value of homes. When you’re renting, you don’t own the equity in a home so you’re not able to capture the increase in wealth. Instead your monthly rent just goes out of your pocket and into your landlord’s pocket to paydown their mortgage balance which in turn increases their equity and overall wealth. This is why your goal should be to own a home as soon as you can financially. So that you can start capturing equity and growing your wealth through the appreciation of your home.
Of course, owning a home comes with a lot of responsibilities in itself: maintenance and minor to major repairs from time to time. However, the benefits discussed above outweigh these new responsibilities and the decision to be a perennial home renter.