Thinking Of Buying A House? Here Are 10 Financial Benefits To Owning A Home
Homeownership can sometimes feel like the money-sucking black-hole of finances.
Foundations crack, termites eat your structure, pipes burst, and wiring fails…the list is endless. No matter how much time, effort, and money you put into the property, things keep breaking.
There’s no question that homes require a lot of upkeep and cost a lot of money. If homeownership was nothing but a leech on finances though, no one would own a home.
It can be hard to see the financial benefits of homeownership after spending a lot of money on a repair or knowing that you could be facing a huge repair bill down the road.
Despite the costs, homeownership does have financial benefits. Whether the benefits outweigh the associated costs is something that can only be decided by each individual homeowner. That being said, here are ten financial benefits of homeownership to that make the whole experience seem worth the hassle.
1) Cost saving choices
Aging, energy-inefficient appliances can take a huge toll on your utility bills. Especially older toilets, water heaters, washing machines, and dishwashers use way more water than necessary and can seriously rack up your utility bills.
If a renter isn’t happy with energy inefficient appliances, their only choice is to propose changes to the landlord or move to a new place if the landlord won’t pay for upgrades. When you own your own home, you get to decide which kind of appliances you use in your home. You don’t have to be at the mercy of the landlord or property manager to make energy efficient changes that can save you hundreds of dollars every year and potentially thousands of dollars in the long run.
By learning the most cost effective ways to maintain your home, you can make energy efficient changes that will save you a lot of money on your bills every year.
2) Homeownership is an investment
One of the biggest arguments for owning a home is that your housing payment is an investment, unlike renters who see no return on that monthly expense. Each monthly payment contributes to the principal.
Taking every factor into consideration when buying a home will help your house become an investment instead of a money drain. Making the right choices can help ensure that the purchase of your home will become a beneficial part of your finances.
3) Fixed monthly payments
Fixed rate mortgages give homeowners financial stability not afforded to all renters. Unlike renters who can face unexpected housing cost increases, homeowners can enjoy the benefits of a fixed-rate mortgage, which can be especially helpful if you lock into a low-interest mortgage rate. Knowing that you won’t be facing a jump in your housing costs really helps stabilize your budget and helps your finances.
4) Homeownership improves your credit score
Homeownership can actually improve your credit score. Making your monthly mortgage payments on time creates a reliable payment history with which to prove your credit-worthiness. As your credit score improves you could even consider refinancing for a lower interest rate on your home to save even more money.
5) Homeownership aids in getting loans
Assuming your mortgage doesn’t over-extend your debt to income ratio, homeownership can help you get approved for a loan. Once you’ve proven credit-worthiness, you could become eligible for better loan opportunities with lower interest rates and great credit cards with excellent reward programs. Another loan perk of homeownership is the potential to get a home equity loan.
6) It can lower your car insurance payments
Many car insurance companies offer lower rates or special discounts only available to homeowners. Lower monthly car insurance payments aren’t a reason to become a homeowner, but it’s definitely a financial perk.
7) Encourages you to have a sizable emergency fund
Once you decide to buy a home, you will learn fairly quickly how to protect your finances as a homeowner. One of the most crucial elements of properly maintaining your home, and protecting it as an investment, is to have a sizable emergency fund to take care of unforeseen issues with your home.
Having a large home emergency fund will keep you from incurring repair cost debt. Also, if you end up not needing the emergency fund for your home, you can always fall back on that account for other financial emergencies.
8) Tax breaks
Tax breaks are by far one of the biggest incentives of homeownership. For example, up to $100,000 of interest incurred on home-improvement loans are tax-deductible. Property taxes are almost always tax-deductible as well. Energy efficient home-improvement changes, like installing new windows and storms doors, can also give you a tax credit of up to $500.
Homeowners who decide to install renewable energy sources like wind or solar energy can deduct 30% of their total equipment and installation costs from their taxes until December 2016. If you decide to use renewable energy for you home, there’s even the chance that you could receive a paycheck from the city every month by selling your home-produced energy back to grid.
9) It can become a source of passive income
By choosing a solid home and making cost-effective changes, your home can become a profitable investment.
For example, through a buildup of equity or rising home costs, your house could become a sizable nest egg. Once you no longer owe on the mortgage, you could sell the home for a cash payout with which to reinvest or you could rent out the property for a form of passive income.
10) Homeownership can aid in retirement expenses
Some elderly home owners choose to take advantage of their home equity in retirement by using a reverse mortgage. Reverse mortgages can be really beneficial for people who might not have saved enough money to live on in their retirement years.