Every June, millions of Americans celebrate one of life’s greatest achievements: homeownership. Owning a home is a valuable investment and one that everyone should take advantage of as it offers many benefits.
BENEFITS OF HOMEOWNERSHIP
Homeownership has many financial benefits including financial stability, the opportunity to build wealth, and tax advantages. While renting is a viable housing option, it comes with a lot of volatility. Renting, even long-term, is a temporary circumstance, so a rent payment is typically more expensive than a mortgage payment. In addition, as the housing market changes, the cost of rent increases every year, unlike a mortgage, which locks in a rate for 10 to 30 years.
Owning a home is a long-term investment. When you purchase a home, you’re investing in your future. No matter your purchase price, as you pay down your home loan every month, you will more than likely get a return on your mortgage when you sell your home, and just as the housing market increases rent every year, your home value will hopefully increase too, building you even more wealth. This is obviously very market and area dependent as some markets may see a rapid increase in home prices than others.
Being a homeowner also comes with certain tax advantages. We encourage you to talk with your CPA to ensure you are taking full advantage of all tax benefits available to you.
Sense of Community
Renting is a short-term arrangement for most, so it can be difficult to get established in your community. Neighbors are constantly moving in or out, rent fluctuates year after year, and you must live by the landlords’ rules. However, as a homeowner, you can plant roots with confidence and gain a deeper sense of community for as long as you own the home.
TIPS FOR FIRST TIME HOME BUYERS
Buying your first home is an exciting milestone, but it can also be an overwhelming one. Refer to these tips to help you prepare for one of your most valuable investments.
- Hire a trusted Realtor. Don’t walk through this journey alone, hire a local Realtor to help guide you every step of the way. Don’t be afraid to ask questions and be open and honest about your needs and situation so they can help you find the home that’s right for you.
- Have an emergency fund. With a new home comes new expenses. These could range from the need to buy furniture, remodel areas of the home or prepare for preventive maintenance. Saving three to six months of income will help cover these costs when they arise.
- Get pre-approved. Before you start visiting open houses, determine your maximum purchase price, taking into consideration your budgeted monthly mortgage payment, HOA dues, and any county and city taxes. Include your Realtor in this discussion as they can help you understand some of these costs. When you’re ready to start looking, get pre-approved so you can make a bid with confidence.
- Save funds for a down payment and closing costs. There is no right or wrong amount you should save for a down payment; however, most loan companies will require at least 3-5% of the purchase price. Keep in mind that the higher the down payment you contribute up front, the lower your monthly payment will be. It is recommended to save at least 10% for a down payment, and if you contribute 20% or more, you can avoid private mortgage insurance (PMI), which is an added monthly cost charged by the loan provider to protect them in the event of foreclosure.
ACHIEVING THE AMERICAN DREAM
Owning a home is a dream that many Americans wish to one day fulfill, and while this dream may seem out of reach for many, there are ways aspiring homeowners can start learning about the benefits of homeownership now. Whether you’re looking to buy a house now or in the future, do your due diligence by exploring all your options. Shop around and explore different neighborhoods, school districts, housing types, and even loan options. There are also government assistance programs available to qualifying applicants. Talk with your Realtor and learn more about how you can turn your homeownership dream into a reality.
Owning a home is a major financial decision but it can be one of the best investments of your life. Educate yourself and be prepared financially to take full advantage of everything homeownership has to offer.