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The added responsibilities of owning a home can be off-putting to potential homebuyers. After all, the burden of paying for anything that goes wrong or any repairs that need to be made falls entirely on you. When paired with the confusion associated with getting a mortgage, some prospective buyers just give up and drop the search altogether. If you’re frustrated with the process, don’t give up quite yet! There will be payoffs to the hard work you’re putting in, and there are numerous upsides to the additional responsibility. From having a secure place to raise your family to an array of financial benefits, you’ll be more likely to appreciate the decision you made once you’re actually sitting in your own property. If you’re still on the fence about buying a home, take a look at a few of the advantages homeowners enjoy.
While the money you put into a rental only allows you to stay there for a given amount of time, the money you put towards your home increases your net worth by building equity. When you pay your monthly mortgage payment, a portion of it goes towards interest, and a portion goes toward the house. As you continue to pay more towards the house, you increase the percentage of the home you own, increasing your equity. That money you’ve already put into the home then becomes available to reinvest in the house, or in something else, when cash isn’t a viable option.
That’s why a mortgage is sometimes called “forced savings.” Like depositing money in a savings account, paying money towards your mortgage is building your financial future.
A long-term investment
A home is a smart investment. Generally, your house will increase in value over time, so at the end of your mortgage, you’ll have a property that’s worth more than it was when you started. Renting a house only provides for the present, and any repairs or changes you make to the house become the property of the owner. When you own, you essentially save that money instead of spending it, and the improvements you make increase the value of your home long-term.
Owning a home can help you pay less annually in income tax. The federal government offers deductions for the interest and property tax of your mortgage. This is most helpful early on in your mortgage when a majority of monthly payments goes towards interest.
There are other tax deductions you could qualify for too. Depending on your specific circumstance, you may be able to get deductions for home-related purchases or your private mortgage insurance.
Freedom to customize
Nobody can tell you what to do or what not to do with your home. When you’re the owner, you’re free to create the living space you’ve always dreamed of. You can paint the walls, make renovations, and own pets--all without anybody else’s permission. You can live more comfortably since you know you can tailor the house to best suit the needs of you and your family.
Making a fifteen- or thirty-year commitment may seem scary, but it’s incredibly helpful when regulating your day-to-day costs. Whereas renters have to deal with sometimes unpredictable increases in rent, you’ll pay the same monthly payment for the duration of the loan. Not only is helpful for budgeting, but it can help you put more into savings. For renters, pay raises often go with an increase in rent. Homeowners already know their housing expenses so any extra income can be saved.
Aside from more predictable finances, many homeowners find having their own places is significantly less stressful. As a renter, you’ll move more frequently, and may encounter difficulties finding a new place when you do. But when you own your own home, you stay in the same place and don’t have to worry about looking for somewhere else to go. This makes it easier to develop long term relationships and allows you to make greater investments in your community.
Improve your credit score
Debt usually doesn’t help your credit score, but a mortgage is known as “good debt” and can actually improve it. By sending in monthly payments on time, you show lenders you’re reliable and low risk. Next time you want to take out a loan—for a new car, for your business, or for something else—you’ll be a better borrower in the eyes of the lender and will likely get a better deal.
Decided to start the search? Find out how to get preapproved for a loan.