What is it about owning a home that makes it such an aspirational cornerstone of the American Dream?
For countless families across the nation, homeownership represents a meaningful way of investing in their families, communities, and wealth. Let’s take a closer look at why:
1. Tax perks
Homeownership can yield some pretty sweet benefits when it comes to tax season. If you itemize deductions on your tax returns, you can reduce your taxable income and save money by deducting the interest paid on your home mortgage. Additionally, when you first buy your home, you can deduct the origination fees (aka points) paid on your loan, regardless of whether they are paid by you or the seller.
Furthermore, you may also be able to deduct your property taxes—but remember, as of 2018, your state and local tax deductions are limited to $10,000 per year. (Various states are now implementing their own workarounds to this cap, so we recommend consulting with your tax professional to determine what makes the most sense for you).
2. Financial gain
In most instances, mortgages offer a certain predictability that makes it easier for you and your family to budget effectively. And over time, as your property increases in value, you accrue home equity—giving you the opportunity to sell for a profit. In fact, if you’re willing to stick it out for the long term, homeownership can be a great way to build wealth. Urban Institute research indicates that the returns on homeownership, not accounting for the tax benefits, tend to be greater than the after-tax returns on a bond index or the S&P 500.
3. Civic engagement
Homeownership’s benefits can extend beyond financial gain. Research from the National Association of Realtors® (NAR) found that homeownership yields “substantial social benefits for families, communities, and the country as a whole.” Ostensibly, owning one’s home instils a sense of pride and belonging, encouraging higher participation in civic life and volunteering, and lowering crime rates.
4. Health benefits
A growing body of research indicates that homeowners tend to be happier and healthier than renters, experiencing a greater sense of control over their lives and higher rates of self-esteem. Additionally, homeowners across all racial and ethnic groups are more likely to report better health outcomes than non-homeowners. This might, in part, be attributed to the stability and wealth-building effect that homeownership affords.
5. Autonomy
Wave goodbye to the days enduring your landlord’s dubious décor choices—when you’re a homeowner, you’re in the driver’s seat! That means that you can feel free to add your own personal flair and finishing touches.
Of course, it also means that you’re responsible for the property’s upkeep, so when something springs a leak, you’re on the hook for fixing it! Just make sure to keep some cash on hand for repairs and other maintenance. They’re all part and parcel of the homeownership experience.
The Bottom Line
Homeownership can offer multiple positive benefits to individuals and society alike—as long as it is sustainable, meaning that the borrower fully understands and is able to uphold the various associated responsibilities. The Great Recession of 2008 introduced some valuable but painful lessons, causing regulators to implement vital safeguards and crack down on predatory lending practices. Still, while today’s housing market is largely safer and more resilient, it’s important that you spend some time assessing your finances and determining whether you’re ready for this big decision.
Need some help figuring out if it’s the right time to take your first step onto the housing ladder? Curious to know which loan programs you’re eligible for? Simplist’s licensed loan experts are here to help walk you through your options and answer any questions you might have, so schedule a call today. Buying your first home should be an exciting experience, and we’re committed to ensuring it is just that. If you’re ready now, you can also get your application started.