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Should You Buy a Home? Here’s What to Know
You’ve saved for a down payment, have your finances in order and peruse through real estate websites every night before bed. And though you’ve got your sights set on a quaint Colonial with a close commute to work, you haven’t quite made the jump to start the home buying process — but we’re here to help. Our list of the top seven benefits of owning a home will give you the nudge you need to say goodbye to your landlord and hello to your own humble abode. Let’s take a look.
Home ownership can be an investment. Owning a home is an investment because, over time, it’ll typically appreciate in value. As you make payments and pay off your mortgage, your debt goes down but the value of your home in a good market may go up — meaning, eventually when you sell it, you should be able to make a profit.
Opportunity to build equity. Paying hundreds, if not thousands, of dollars a month for rent is a lot like throwing money out the window when you compare it to paying for a home each month. Sure, your rent payment gets you a roof over your head, but when you buy a home, that money may start building equity. What is equity? Your home equity is the market value of your home minus what you owe. Each month, you’ll make a mortgage payment, and part of that payment goes towards interest, while the other part goes towards your principal balance. Consider equity the portion of your property that you actually “own,” or the amount that you’ve paid off.
Homeowner tax benefits. When you buy a home, you’re contributing to economic growth — and the government rewards you for this by offering a tax incentive. One of the biggest incentives is being able to deduct interest from mortgage payments on your tax return. This is particularly helpful when first paying off your mortgage, since much of the payment is applied to your interest. Keep in mind, this all depends on the value of your home and your personal tax situation.
Raise your credit. Do you want to improve your credit score? Making your full mortgage payment on time helps build your credit, since it shows that you’re a responsible borrower. And, as your mortgage loan balance reduces, your credit score will continue to rise, since your credit score is tied to how much you owe.
Enjoy stability of your housing costs. If you have a mortgage on your home, you’ll choose between a fixed rate or an adjustable rate that you’ll have for a certain term (usually a 30, 20 or 15 year term). A fixed-rate mortgage, which allows you to make the same payment for the entire length of the term, is one of the most popular types of mortgage. This is favorable considered to a rental payment, because rent, on average, continues to climb year after year. Having stable monthly payments helps you create a predictable monthly budget and you won’t have to worry about your payments increasing.
More personalization opportunities. As a renter, you have limited options for modifying your space. A huge appeal to owning a home is putting in the time to make it exactly how you like it. From the colors of your walls to the tile on your bathroom floor, a home that you call yours can be transformed however you choose. And any home improvements you make typically mean an increase in your home value, which is great for when you want to sell your home.
Pride of ownership. With owning a home comes great pride — you’ve accomplished a deep-rooted American dream held by many. The sense of pride you’ll feel as the keys are dropped in your hand is a benefit you might not recognize until home ownership is a reality. Not only that, but when you own a home, you become part of a community as you build relationships with neighbors, your kids become part of the school system, you can vote for local politicians and involve yourself within your community.
Owning a home comes with many benefits — but perhaps the best benefit is having a place to call your own. Don’t forget that owning a home means you have to protect it, too. Part of the home buying process is securing homeowners insurance. Connect with an American Family Insurance agent to learn more about how home insurance ensures you’re protecting what matters most.